What is Medicare?
Medicare is a federal health insurance program designed for people who are 65 and older. Additionally, people with certain medical conditions or permanent disabilities can also benefit from this program.
Similar to Social Security, Medicare is an entitlement program that most US citizens become eligible for by working and paying taxes for a minimum period of time; which is typically 40 quarters (10 years). Most people join the Medicare program after turning 65 years old, or when they retire and leave their group health insurance.
The Foundation of Medicare Coverage is Comprised of Four Parts:
“Original Medicare” consists of Part A and Part B. Together, they provide the foundation for your health insurance coverage.
Part A – This is commonly known as hospitalization insurance. This mostly covers the cost of your time in the hospital (inpatient care), skilled nursing facility care, hospice care, home health care, and more.
Part B – This helps cover your doctors visits and other services including: outpatient procedures, x-rays, lab tests, and preventative services.
“Medicare Advantage Plans” are known as Part C. This combines Part A and Part B coverage.
Part C – These plans are offered by private insurance carriers who have a contract with Medicare and are required to offer the same benefits as Original Medicare. You may enroll in this option to replace your “Original Medicare” (Part A and Part B).
Part D – This is your prescription drug coverage. This is offered to everyone with Medicare. Most Part C plans cover prescription drugs; however, you may be able to add drug coverage to some plans, if they are not already included.
What is Covered by Original Medicare?
The combination of Parts A & B of Medicare become our basic hospitalization and medical coverage while on Medicare. This foundation of coverage is usually complemented by either electing a Medicare Supplement, or Part C Advantage plan.
Medicare Part A
Medicare Part A is often referred to as “hospital insurance” since it covers your care while in a hospital. It will also cover some care in nursing facilities, assisted living, home health care, hospice and more.
In general, Part A covers:
- Skilled Nursing Facility Care
- Inpatient Care in Hospital
- Nursing Home Care (as long as custodial care is not the only care you need or long-term care)
- Hospice Care
- Home Health Care
Medicare Part B
Medicare Part B is medical insurance and covers services such as Doctors, X-rays, lab tests and other outpatient services.
In general, Part B covers:
- Outpatient Care
- Clinical Research
- One-Time “Welcome to Medicare” Wellness Exam
- Annual “Wellness” visit every 12 months
- Laboratory Tests – X-rays, blood work, etc.
- Ambulance Services
- Durable Medical Equipment (DME) – Wheelchairs, walkers, hospital beds, home oxygen equipment, etc.
- Prosthetics & Orthotics
- Mental Health Care
- Preventative Services
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How Much Does Part A Cost?
You usually do not pay a premium for Part A as long as you or your spouse paid Medicare taxes while working for at least 40 quarters. An easy rule of thumb is if you are eligible for Social Security Benefits then you should be eligible for Medicare Part A at no cost. If you need to buy Part A, you will pay up to $458 each month in 2020. People with less than 40 quarters work experience but more than 30 quarters, can get a pro-rated premium of $252 per month in 2020.
Most people get premium-free Part A. You can get premium-free Part A at 65 if:
- You already get retirement benefits from Social Security or the Railroad Retirement Board.
- You’re eligible to get Social Security or Railroad benefits but haven’t filed for them yet.
- You or your spouse had Medicare-covered government employment.
If you’re under 65, you can get premium-free Part A if:
- You have received Social Security or Railroad Retirement Board disability benefits for 24 months.
- You have End-Stage Renal Disease (ESRD) and meet certain requirements.
In most cases, if you choose to buy Part A, you must also have Medicare Part B (Medical Insurance) and pay monthly premiums for both.
Part B Costs:
You pay a premium each month for Medicare Part B (Medical Insurance). Most people will pay the standard premium amount. However, if your modified adjusted gross income as reported on your IRS tax return from 2 years ago is above a certain amount, you may pay an Income Related Monthly Adjustment Amount (IRMAA). IRMAA is an extra charge added to your premium.
How Much Does Part B cost?
Most people pay the Part B premium of $144.60 each month, however consult the chart below if you have an individual income over $87,000 or joint income over $174,000.
Social Security will contact some people who have to pay more depending on their income. The amount you pay can change each year depending on your income. If you have to pay a higher amount for your Part B premium and you disagree (for example, if your income goes down), use this form to contact Social Security.
If you don’t sign up for Part B when you’re first eligible, you may have to pay a late enrollment penalty.
