If you’re getting ready to retire, you should start brushing up on the basics of Medicare. There are four Medicare parts in total, and it’s important to know what each one entails before you start dotting the I’s and crossing the T’s on your paperwork. We’re just going to cover the bare-bones basics in this article to give you a solid foundation and help simplify things going forward. Understanding this basic information first will help you put together a comprehensive Medicare plan at a cost that is most affordable to you.
Four Parts of Medicare
There are four parts to Medicare that apply to every individual senior who enrolls in the program. Those (creatively named) parts include Part A, Part B, Part C, and Part D. Part A typically covers hospital expenses. Part B helps with your outpatient costs (like regular check-ups and non-hospital care). Part D helps seniors pay for their prescription drugs. Part C is a whole different animal compared to Medicare’s other three parts – but it includes the same benefits as the first two parts of Medicare and usually also helps with prescription drug costs.
Medicare Part A
Part A has benefits in place to help seniors as you pay for inpatient hospital care and similar services. In addition to hospital care, Part A helps pay for hospice care if you have been diagnosed with a terminal condition; home health care and home health aid services; and skilled nursing facilities. Seniors who have worked at least 40 quarters consecutively during their employment years will not have to pay a monthly premium for Part A. But you will have a deductible to pay per benefit period if you require care, as well as coinsurance costs which will vary based on the length of your hospital stay.
Medicare Part B
Part B basically encompasses regular doctor visits. This includes doctor care and durable medical equipment. Part B also helps cover the costs of minor outpatient procedures like simple surgeries and physical rehabilitation. Part B costs a monthly premium which varies based on your income. Medicare Part B also costs an annual deductible. After you meet your deductible, you’ll have a coinsurance payment which costs 20% of your Medicare-approved cost of treatment.
Medicare Part C
Part C – also known as Medicare Advantage – is a completely separate health plan compared to the other three Medicare parts. Part C starts off by offering the exact same benefits that Part A and B do. Most plans usually include some sort of prescription drug plan similar to what you would get if you were enrolled in Part D. And you may have an option to include vision and/or dental coverage with your plan.
Medicare Advantage works similarly to a typical health insurance policy because these plans are managed by private health insurance companies – not the government. You will pay a discounted monthly premium based on what options you choose and how much the government is willing to contribute. If you enroll in Medicare Advantage, you cannot enroll in Medicare Parts A, B, or D. This rule is in place to protect you from paying too much for duplicate coverage.
Speaking of duplicate coverage, seniors should know that it is illegal for someone to try to sell you a Medicare Advantage policy if you are already enrolled in Original Medicare ( Parts A and B). If you have doubts, be sure to contact your local CMS office to ask questions or report them if necessary.
Medicare Part D
Part D is also managed by private providers, but it is endorsed and regulated by the government. You pay a monthly premium that varies based on where you live and what your provider needs to give you the best care. Seniors who are on expensive prescriptions may fall into what is known as the Part D “donut hole”. But once you hit a certain annual out-of-pocket expense cap, emergency coverage will kick in and discount your medications to a more manageable level until the first of the next year.