Medicare was first launched in 1965 and is a federal healthcare insurance program initially offered to people aged 65+. In 1972, this program was revised to include people with long-term disabilities and kidney failure but are below the 65-year threshold.
Currently, Medicare has more than 44 million beneficiaries, which roughly translates to 15% of the U.S. population. It plays a key role in the nation’s health security and has helped pay for many people’s home healthcare, physician visits, hospice care, etc.
It’s no surprise that Medicare is expected to grow at a rate of 7.6% annually between 2019-2028. It is also projected to have the highest enrollment growth.
If you’re new to Medicare, here’s everything you need to know!
What Do Medicare Plans Cover?
Before you enroll in healthcare plans, it’s important that you understand what is covered and what you’ll pay for. Since Medicare has different coverage options, choosing the plan which will give you the best coverage can be overwhelming.
There are 5 main plans, and we’ve broken them down for you:
Medicare Part A
Medicare part A is mainly hospital insurance, and it covers most inpatient costs. You, however, have to be officially admitted to a healthcare facility, as ordered and signed by a doctor. Some of the covered services include; blood transfusions, wheelchairs and walkers, part of home healthcare services, and hospice care.
This plan sometimes offers partial coverage for care in skilled nursing facilities, but qualification is based on your inpatient hospital stay. You have to be formally admitted for 3 consecutive days by the doctor’s orders.
What Are the Costs for Medicare Part A?
Most people get this plan for free, but this is dependent on your income. You won’t have to pay monthly premiums if you or your spouse paid FICA taxes for about 10 years while working.
However, if you didn’t pay any medicare taxes, you’ll have to pay for deductibles on the services covered under this plan.
If you’re 65+, you are also eligible for the premium-free part A if;
- You qualify for the Railroad and Social security benefits but haven’t applied for them,
- You receive retirement benefits from the Railroad Retirement Board (RRB) and social security.
If you’re below 65 years, you’re only eligible if you have ESRD (End-Stage Renal Disease) and have received benefits for at least 2 years.
This plan’s premiums depend on how long you & your spouse paid Medicare taxes while working. The standard Medicare plan A monthly premiums for 2021 are $259 or $471.
Medicare Part B
There are 2 primary services covered under Medicare part B;
- Preventive services: this is healthcare administered to prevent certain illnesses or detect them early enough when treatment will be most effective. If your healthcare provider agrees to be paid the amount approved by Medicare directly, you won’t incur any costs.
- Necessary medical services: this includes the medical supplies required to treat or diagnose certain medical conditions.
Some of the services covered under this plan include; medical supplies, clinical research, emergency department and ambulance services, cancer screening, and certain outpatient prescription drugs.
This plan also covers mental health services, including inpatient treatment, outpatient, and partial hospitalization.
What Are the Costs for Medicare Part B?
The standard monthly premium for medicare part B is $148.50, but you could pay more or less depending on how much you earn. If you receive benefits from the Office of Personnel Management, RRB, and social security, the premiums will automatically be deducted from your payments. Those who don’t receive benefits are sent bills.
If you go to healthcare providers who accept Medicare, most of the services will be covered at no additional cost. You’ll, however, have to pay for the services that aren’t covered by this plan.
Medicare Part C
This plan is also referred to as Medicare advantage and is offered by pre-approved organizations that abide by the set medicare rules. It covers most services in part A and part B plus extra services, not covered including vision, dental, and hearing. To purchase Medicare part C, you have to be registered to the original medicare plans.
The 4 main types of medicare advantage plans include; Medical Savings Account (MSA) Plan, Preferred Provider Organization (PPO), Health Maintenance Organization (HMO), and Private Fee-for-Service (PFFS).
What Are the Costs for Medicare Part C?
The amount of monthly premiums you pay is dependent on the type of plan you enroll for. You, however, have to see healthcare providers within your service area, or you’ll incur extra costs.
Medicare advantage plan usually has lower out-of-pocket costs, and they are dependent on;
- Whether the plan you’re on charges monthly premiums.
- Copayments or coinsurance.
- The type of medical services you need and how often you visit a doctor.
- Whether you comply with the plan’s regulations, e.g., visiting healthcare providers within your network.
- Whether the plan you’re on pays for your medical insurance premiums.
For the lowest costs, make sure you visit doctors within your service area and plan’s network.
Medicare Part D
This is a separate cover for prescription drugs that aren’t included in the other plans. Medicare part D is usually optional, but we advise that you enroll in this plan when you’re first eligible so that you don’t incur a late enrollment penalty. Most of the drugs covered in this plan often have to be administered by a healthcare professional, including insulin injections.
How Much Does Medicare Part D Cost?
The costs for this plan are dependent on your preferred pharmacy, the medication you take, and the plan you’re enrolled for. Most of the time, you have to pay monthly premiums and additional costs depending on your income. Sometimes you may even pay deductibles and make copayments.
This is a supplemental insurance program that fills the gaps of the other Medicare plans. It’s only sold by private companies and covers other healthcare costs like deductibles, coinsurance, and copayments. Depending on the plan you’re on, Medigap also covers some medical services when you travel outside the U.S.
It’s important to note that Medigap and Medicare’s advantage plans are different. Medigap only supplements your original medicare policy, while Medicare part D covers more services than the original pans. You also can’t sign up for this plan if you have a Medicare advantage plan.
Some of the services not covered under this plan include; private duty nursing, long-term care, vision, hearing aids, and dental care.
What Are the Costs for Medicare Supplement?
To sign up for Medigap, you must have enrolled for the original medicare plans. You have to pay monthly premiums to the insurance company in addition to the premiums for Medicare part B. The premiums vary depending on the company you buy the plan from.
This plan only covers one person, so you’ll have to buy separate plans if you and your spouse both want Medigap coverage.
What Is Not Covered In Medicare?
While Medicare covers a considerable number of healthcare services, most plans typically don’t cover;
- Medical services that aren’t considered necessary include cosmetic surgery, acupuncture, and fitness programs.
- Long-term care (custodial care) in assisted living facilities or nursing homes. Medicare, however, covers most of your medical needs and short-term care in nursing homes if you’re eligible for rehab working and skilled nursing care. For daily activities such as feeding, dressings, and bathing, you’ll have to pay for them yourself.
- Medical services offered outside the U.S. territory except in special circumstances.
- Routine eye care, hearing, and dental services, including dentures, dental extractions, regular checkups, hearing aids, and prescription glasses. Medicare, however, covers necessary medical care in this category, like jaw reconstruction and cataract surgery.
- Routine foot care like the removal of calluses and corns. If you have foot problems as a result of medical conditions like diabetes, blood clots, and chronic kidney disease, most plans will cover it. Your healthcare provider, however, has to produce evidence that the foot care is medically necessary.
How Does Medicare Work?
Once you turn 65, you can either choose to enroll for parts A & B or the Advantage and Medigap plans through approved private insurers. You can sign up 3 months prior to your birthday months or 3 months after. If you, however, have a chronic kidney condition or disability and receive social security benefits for it, you can sign up at any time.
To make any changes to your current Medicare plan, you have to wait for the annual open enrollment period that runs from 15th doctor to 7th December annually.
The Key Takeaways
In a nutshell, Medicare has 5 plans; Part A and B (also known as original Medicare), Part C, Part D, and Medigap. Part A is often premium-free depending on how long you and your spouse worked and paid for medicare taxes. The prescription drug coverage and Medigap, on the other hand, are offered and managed by private insurers, which is why the monthly premiums vary.
Medicare coverage is dependent on state & federal laws, national coverage decisions on various medical services, and local coverage decisions by private insurers.