A Summary of Medicare’s Four Parts

 

As an individual in your mid-60s, you may be faced with important life decisions, including when to retire and whether to downsize. One crucial decision you need to make concerns how you will access Medicare. You must choose which Medicare option to take and must do so in a timely manner.

Medicare is a federal health insurance program created for individuals who are 65 or older. It is also designed to assist younger people who live with certain medical conditions or disabilities.

Medicare consists of four parts:

Part A: Hospital Insurance – This covers inpatient hospital care, short-term nursing facilities, hospice care, and other healthcare services provided at home. There is a premium associated with Part A, but most people won’t have to pay it out of pocket. You may face a penalty if you do not sign up for Part A when you turn 65.

Part B: Medical Insurance – This provides coverage for physician visits, ambulance services, and durable medical equipment. Individuals enrolled in Part B, commonly referred to as “Original Medicare” or “traditional Medicare,” have the flexibility to seek medical care from any provider or facility in the country that accepts Medicare. However, Part B excludes certain services like vision, hearing, dental, and prescription drugs. Furthermore, Part B covers only 80% of the associated costs. Those opting for Original Medicare are responsible for either covering the remaining 20% out of pocket or acquiring a supplemental Medigap plan to offset this expense.

Medigap Plans – These are offered by private insurance companies and subject to federal regulation. They involve a monthly fee influenced by factors such as age, gender, geographic location, and tobacco use. These rates experience annual increases, and there is no cap on out-of-pocket expenses for Original Medicare Parts A and B. For most enrollees, the monthly premium for Part B is automatically deducted from their monthly Social Security or Railroad Retirement benefit. Beneficiaries with incomes exceeding a specific threshold incur a higher Part B premium.

Part C: Medicare Advantage – These plans differ from Original Medicare in that they offer additional benefits, such as coverage for vision, dental, or hearing care, and prescription drugs. The monthly premiums for Medicare Advantage Plans will vary according to your particular plan, but in many situations, the premium will be as low as $0. If you choose to enroll in a Medicare Advantage Plan, you still have to enroll in Original Medicare (Parts A and B) and pay the premiums for those parts before selecting a Medicare Advantage Plan.

Part D: Prescription drugs – These are prescription drug plans offered by private health insurance companies and regulated by the federal government. Under Part D, each plan has a formulary according to which drugs are priced. Beneficiaries who elect Original Medicare must also select a Part D plan to avoid a penalty. As with Part B, the penalty lasts a lifetime.

It is important to note that if you do not enroll in Parts A and B when you are first eligible, you may have to pay a late enrollment penalty. The penalty for Part B is a lifetime premium increase, and the penalty for Part D is a monthly premium increase. The experienced attorneys at Ericson, Scalise & Mangan, P.C. can work in conjunction with a Medicare professional to help you make the best decision.

Do you have questions?

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