With open enrollment October 15 through December 7, now is a good time to visit questions on Medicare. In this post, we'll take a closer look at Medicare's different "parts."
Medicare Part A
Medicare Part A is often referred to as "Hospital Insurance" because it covers medically-necessary hospital care, skilled nursing facility care, hospice, and home health services. Nursing home care may also be covered as long as custodial care isn't all you need. If you or a spouse qualify by earning enough credits (see below), you will pay no premiums for Medicare Part A coverage.
Medicare Part B
Medicare Part B is often referred to as "Medical Insurance" or sometimes "Outpatient Insurance." It covers medically-necessary doctor services, supplies, certain medical equipment, x-rays, lab tests, preventive services, and so on. If you or a spouse qualify by earning enough credits (see below), you will pay a premium for Medicare Part B coverage.
For 2017, if you've been collecting Social Security and having your Medicare premiums withheld, you've been paying around $109 monthly for Part B (under the "hold harmless" provisions). Pay directly and your cost is $134 monthly. And higher income folks pay even more under the Income Related Monthly Adjustment Amount (IRMAA).
Most people will automatically become eligible for both Medicare A and B upon earning (or spouse earning) 40 credits over the course of 10 years of work and contribution to the system. There are residency requirements as well as some exceptions, including:
- A disabled person entitled to disability benefits under social security or railroad retirement benefits is automatically entitled to Medicare after 24 months of disability benefits.
- People with End Stage Renal Disease (ESRD) automatically qualify, subject to certain requirements.
- Someone who works past age 65 may enroll in Medicare Part A but choose to continue using their employer's health insurance plan and wait until later to enroll in Medicare Part B.
- Uninsured people (haven't met the 40 credits threshold) may purchase Medicare once they reach age 65, subject to certain requirements.
Medicare Part C
Part C is the section of Medicare policy that allows private health insurance companies to provide benefits under "Medicare Advantage" plans. These plans must offer at least the same benefits as original Medicare (Parts A & B), but there are different rules, costs, and coverages. Many Medicare Advantage plans also include prescription drug coverage.
If you choose Medicare Part C (Medicare Advantage), you are choosing it instead of Parts A, B, and D.
Medicare Part D
Part D is Medicare's optional prescription drug coverage. It's a more recent addition to Medicare policy, having started in 2006. More info on Part D here.
And for the bonus round....
Medicare Supplement ("Medigap")
Medicare Supplement ("Medigap") insurance is offered by private health insurance companies to cover some of the "gaps." For example, some of the copayments, coinsurance, and deductibles that aren't covered in the underlying Parts A & B.
Note that Medicare Supplement policies are not permitted with a Medicare Advantage (Part C) plan.
There are many Medicare Supplement plans, each with a different level of coverage and identified by a different letter of the alphabet (e.g. Plan F). But the plans are standardized. So Medicare Supplement Plan A will have the same coverage when offered by ABC Insurance Company as when offered by XYZ Insurance Company. Only the cost will be different.
And here's some more on Original Medicare (Part A & B) Eligibility and Enrollment.