The AbC & D of medicare

Original Medicare consists of Part A (hospital inpatient insurance, also includes skilled nursing facilities, hospice) & Part B (medical insurance, includes medically necessary physician services & preventative care).  

Medicare is available to people age 65 or older, or under the age of 65 with certain disabilities, or any age person with end stage renal disease.

Parts A & B cover 80% of most medical bills.

Beneficiaries pay the deductibles, co-pays & co-insurance, which is the remaining 20% of hospital & medical costs, with no yearly limit on what beneficiaries pay out-of-pocket.

Medicare Part A premium is zero if a beneficiary or their spouse have met the minimum Social Security work requirement, which is at least 10 years of paying Medicare taxes working full-time.
Part B is not free. The standard Part B premium is $174.70 monthly for 2024 & will cost more if in a high-income bracket. 

Original Medicare does not cover most outpatient prescription drugs, routine Dental, Vision, Hearing or Long-Term Care.

Now for some good news, with Original Medicare, a beneficiary can use any doctor or hospital that accepts Medicare, anywhere in the U.S. & at least 98% of all doctors and hospitals in the U.S. accept Original Medicare.  

It is important to know your initial enrollment period begins three months before the month you turn 65 and ends three months after your birth month. 

If you haven’t signed up by the end of your initial enrollment period, you could pay more for your Medicare benefits due to government penalties.

If you are age 65 or older & already receive Social Security benefits, you will be automatically enrolled in Part A & B. 

If you or your spouse are still working when you turn 65 & already covered through an employer group health plan, it might make sense to delay enrolling in Part B. 

 In short, Medicare is not one size fits all. You have options & you need to make decisions within certain time frames so you won’t face government penalties & extra costs later. 

Part C, widely known as Medicare Advantage, replaces Original Medicare Part A & Part B.  Medicare Advantage plans are offered by private insurance companies contracted by Medicare. These plans are an alternative way to receive your Medicare healthcare benefits. By design & regulation they must be the equivalent of Original Medicare benefits. 

Medicare Advantage plans typically include Part D (prescription drug coverage), most include coverages for vision, hearing & dental. These plans will have provider networks, feature low or no premiums, co-pays, co-insurance, deductibles & capitated annual out-of-pocket costs. Note, you will still be obligated to pay your Medicare Part A & Part B premiums when enrolled in an Advantage Plan.

Medicare Advantage plans come in various forms, including Health Maintenance Organizations (HMOs) & Preferred Provider Organizations (PPOs), there are other types of plans but not as commonly utilized. 

The most important thing to understand about Medicare Advantage plans is you will have limitations that you would not have under Original Medicare, including: 

1) Networks. Medicare Advantage plans have select networks of hospitals & doctors. Both HMO's & PPO's will have networks, some less restrictive than others.  

2) Prior Authorizations. Many medical procedures will require prior authorizations from the insurance company & they can deny services recommended by your doctor.

Medicare Advantage plan networks, costs & coverages, etc. can all change annually.  It is important to review your plan every year for any changes & determine if you want to keep it or switch to another plan that better suits your needs. 

 Medicare Prescription Drug plans (Part D) will cover a significant amount of the costs of outpatient prescription drugs for Medicare beneficiaries.  Part D plans are an optional coverage offered by private companies contracted with the federal government. 

Part D plans can be a stand-alone or bundled into Medicare Advantage plans. You can be in either plan, but not both. 

For 2024, the average Medicare beneficiary will have a choice of 21 stand-alone Part D plans & 36 Medicare Advantage drug plans (MADP). 

Stand-alone Part D plans do have a premium that can range from $0 to over $100+ monthly. 

Every plan will vary in their list of covered medications (called a formulary), coverages, costs, deductibles & utilization management (e.g. quantity limits).  

It is important to know if you don't maintain creditable drug coverage & don't join a Part D plan when you first become eligible, you will likely pay a late penalty to join a Part D plan. 

By federal regulation, the Plan D maximum out-of-pocket drug cost for enrollees for 2024 is $8,000. 

Part D plans should be reviewed annually for changes that will impact your specific prescriptions, pharmacy preference, costs & coverages.