What are the Parts of Medicare

What are the different parts of Medicare?

There are four parts of Medicare: Part A, Part B, Part C and Part D. In general, these four parts cover different services. While this may seem like a complex system, it’s a highly customizable one, and the right combination of parts will ensure you get the coverage you need. Read on to understand how each of these parts will pay your health care bills, so you can pick your Medicare coverage carefully.

Original Medicare: Parts A and B

Medicare Part A and Part B make up what’s commonly referred to as Original Medicare or Traditional Medicare. Together, these create a fee-for-service-health plan that covers your hospital and medical insurance services. That means, after you pay your deductible, Medicare pays its share of the Medicare-approved amount, and you pay your share. This coverage is provided by a federal government agency called the Centers for Medicare and Medicaid Services (CMS).

Medicare Part A – Hospital Insurance

Medicare Part A is often referred to as hospital insurance because it covers hospital stays, as well as some hospice care and some skilled nursing care following hospitalization.
When you enroll in Medicare, you receive Part A automatically. For most people, there is no monthly premium, but there is a deductible per benefit period which can vary from year to year.

Generally, Part A covers:

• A hospital stay deemed necessary by a doctor
• A stay in a skilled nursing facility or nursing home when that care is short-term, ordered by a doctor and follows a hospital stay
• Home health care following a hospitalization for services your doctor orders, like physical, occupational and speech therapies
• Hospice care when certified as terminally ill

With Part A, you pay:

• No premiums (as long as you qualify)
• Deductible per benefit period for inpatient hospital care
• Coinsurance for hospital and skilled nursing facility stays lasting longer than what’s covered
• Small copays for outpatient drugs and inpatient respite care

Medicare Part B – Medical Insurance

Medicare Part B is often referred to as medical insurance because it covers outpatient care, such as health care received in a doctor’s office or clinic. You’re not required to enroll in Part B if you have creditable coverage, like through an employer or spouse. If you don’t enroll when you’re first eligible and you don’t have creditable coverage from another source, you’ll likely have to pay a penalty when you do enroll. That penalty comes in the form of higher monthly premiums for as long as you’re in the program.

Generally, Part B covers:

• Medically necessary services: Services or supplies necessary to diagnose or treat your medical condition and that meet accepted standards of medical practice.
• Preventative services: Health care to prevent illness or detect it at an early stage when treatment is most likely to work best.

With Part B, you pay:

• Monthly premium that can increase with your income
• Annual deductible
• Typically, 20% of the costs for each covered medical service

Original Medicare and Medigap

While Medigap, or Medicare Supplement Insurance, is not officially a “Part” of Medicare, it’s important to note how it works with Parts A and B. As the name suggests, Medicare Supplement Insurance helps supplement Original Medicare. It’s private insurance that helps fills the “gaps” in Medicare, by covering out-of-pocket costs like copays, coinsurance and more.

Medicare Advantage: Part C

Medicare Part C, also known as Medicare Advantage or MA, is a private health insurance alternative to Original Medicare. Sold by private insurance companies, Medicare Advantage provides all-in-one coverage by combining your Part A and B (and usually Part D) services into one plan with additional benefits. You must have Medicare Parts A and B before qualifying to enroll in a Medicare Advantage plan.

In addition to medical and hospital services, Part C may also cover:

• Prescription drugs
• Routine vision care
• Routine dental care
• Routine hearing care
• Fitness memberships
• Transportation to doctor visits
• Meal delivery after hospitalization
• Plus more!

Each year, insurance companies set the amounts they charge for premiums, deductibles and services. The insurance company (rather than Medicare) decides how much you pay for the covered services you get.

With Part C, you pay:

• Low monthly plan premiums, starting at $0
• Part B premium (unless covered by the plan)
• Annual deductible (if required by the plan)
• Copays and coinsurances for covered services, starting at $0

Prescription Drug Plans: Part D

Medicare Part D, commonly referred to as Prescription Drug Plans or PDP, is stand-alone coverage sold by insurance companies. In most cases, Original Medicare doesn’t cover prescription drugs. So, if you’re concerned about the costs, you’ll want to purchase a Part D plan or a Medicare Advantage Plan that includes Part D.

You can enroll in Part D only if you have Medicare Parts A and B or have a Medicare Advantage Plan that doesn’t include drug coverage. If you don’t enroll in Part D when you’re first eligble, you may have to pay a late penalty. Like with Part B, Part D late penalty comes in the form of higher monthly premiums for as long as you’re in the program.

With Part D, you pay:

• Monthly premiums
• Annual deductible (if required by the plan)
• Copays and coinsurances for covered prescriptions

Which Parts of Medicare Do I Need?

It depends. Your personal health status, budgetary restrictions and lifestyle will dictate which parts of Medicare you need. There’s a lot that Original Medicare Parts A and B won’t cover on their own including long-term care, routine dental or eye care, dentures, hearing aids and more. If you want more comprehensive coverage, you may need to consider Medigap Insurance and Part D or Part C.