If you are soon to be one of the 62.6 million people in the U.S. who are enrolled in Medicare, you might be wondering what it’s all about. Medicare is run by the federal government and provides health insurance benefits for people 65 and older, and for younger people who are living with certain disabilities and illnesses.
There are four different parts of Medicare – A, B, C, and D – which cover different aspects of health care. Each of the four parts helps beneficiaries cover some medical expenses, but they don’t pay for everything. Choosing which parts of Medicare you should sign up for depends on your health care needs and your budget, but they can be confusing. Here’s a quick look at what the differences are between Medicare Part A, Part B, Part C, and Part D.
Original Medicare benefits
Original Medicare includes Part A which is inpatient hospital insurance, and Part B which is outpatient medical insurance. If you have Original Medicare and want prescription drug coverage, you can enroll in a stand-alone Medicare Part D Prescription Drug Plan.
Medicare Part A is premium-free for most recipients and covers your health care services while you are an inpatient in a hospital, skilled nursing care facility, or hospice facility that accepts Medicare assignment. These services can include a semi-private room, general nursing care, meals, medications, and others. Part A also covers some home health care services.
For Medicare Part A to begin covering its share of covered health care expenses, you are responsible for paying a deductible of $1556.00 (in 2022). This deductible amount covers a benefit period that begins at the start of your inpatient stay and ends after you have been out of the hospital for at least 60 days.
Part A also has coinsurance, the amount of which is increases with the number of days you are in the hospital. For example, there is $0 coinsurance for days 0 through 60. Days 61 through 90 carry a $389.00 (2022) coinsurance charge per day, and so on.
Medicare Part B is the other half of Original Medicare. Part B covers medically necessary health care services and preventive care services.
Original Medicare Part B covers visits to any physician or specialist in the country, but only if they accept Medicare assignment. This is one of the differences between Original Medicare and Medicare Advantage which is explained in more detail below.
Medicare Part B typically pays 80 percent of the final approved cost for covered services and supplies. You pay the remaining 20 percent of the cost after you cover your annual Part B deductible.
Medicare Part D prescription drug coverage
If you are enrolled in Original Medicare, you can also purchase a stand-alone prescription drug plan. These Part D plans are sold by private insurance companies that are Medicare-affiliated. Each plan has its own list of drugs that it covers, its own copayment charges, deductibles, and monthly premiums. Alternatively, you can choose to enroll in a Medicare Advantage plan that includes prescription drug coverage.
Medicare Advantage or Medicare Part C
Shortly after the Medicare program began in the United States, private-sector health insurers began offering Medicare Advantage (Part C) plans as an alternative to Original Medicare Parts A and B. These private insurance providers are required by the federal government to provide all the same benefits that Medicare Parts A and B cover. But the providers also have the option to include additional benefits.
Today, many Medicare Advantage plans include prescription drug coverage as part of their core coverage. Many providers also give beneficiaries extra benefits such as routine dental, vision, and hearing care, as well as bonus perks like fitness club memberships.
If you enroll in a Medicare Part C plan you typically pay a monthly premium to your private provider, in addition to your Medicare Part B premium. While there is no out-of-pocket spending limit with Original Medicare, Medicare Part C plans typically have an annual spending limit for covered Medicare expenses.
Another difference is that Medicare Advantage plans generally require that beneficiaries use health care providers, medical suppliers, and medical facilities that are in a specific network of providers that the plan provider sets. Depending on the plan you choose, you may be able to go out of network for a higher cost.