What is Medicare?
Medicare is a federal health insurance program in the United States primarily designed for individuals aged 65 and older, but also available to some younger people with disabilities and those with End-Stage Renal Disease. It is divided into parts A (hospital insurance), B (medical insurance), C (Medicare Advantage, offering an alternative way to receive your Medicare benefits), and D (prescription drug coverage), each providing different types of healthcare coverage.
Medicare Part A, also known as hospital insurance, primarily covers inpatient hospital care. This includes stays in a hospital or skilled nursing facility, as well as some home health care and hospice care. Part A is usually premium-free for those who have worked and paid Medicare taxes for a certain amount of time (typically 10 years or 40 quarters). However, it does have a deductible and it only covers a portion of the total cost, meaning beneficiaries may still have out-of-pocket expenses. Furthermore, Part A only covers hospital stays up to a certain number of days, after which the patient may be responsible for a larger portion of the cost.
Medicare Part B, on the other hand, is known as medical insurance and covers outpatient care. This includes doctor visits, preventive services like screenings and vaccines, mental health services, ambulance services, and durable medical equipment. Part B also covers some services that are often needed for conditions that require hospitalization, like physical therapy. Unlike Part A, Part B usually requires a monthly premium, which can vary based on income. It also has a deductible, and typically covers 80% of the Medicare-approved amount for covered services, leaving the patient responsible for the remaining 20%.
A type of Medicare health plan offered by a private company that contracts with Medicare. Medicare Advantage Plans provide all of your Part A and Part B benefits. Medicare Advantage Plans include:
Health Maintenance Organizations
Preferred Provider Organizations
Private Fee-for-Service Plans
Special Needs Plans
Medicare Medical Savings Account Plans
If you’re enrolled in a Medicare Advantage Plan:
Most Medicare services are covered through the plan
Medicare services aren’t paid for by Original Medicare
Most Medicare Advantage Plans offer prescription drug coverage
Each Medicare drug plan has its own list of covered drugs (called a formulary). Many Medicare drug plans place drugs into different "tiers" on their formularies. Drugs in each tier have a different cost.
A drug in a lower tier will generally cost you less than a drug in a higher tier. Your prescriber may think you need a drug that's on a higher tier. If so, you or your prescriber can sometimes ask your plan for an exception to get a lower copayment.
Medicare Supplement (Medigap)
A Medicare Supplement Insurance (Medigap) policy helps pay some of the health care costs that Original Medicare doesn't cover, like:
Medigap policies are sold by private companies.
Some Medigap policies also cover services that Original Medicare doesn't cover, like medical care when you travel outside the U.S. If you have Original Medicare and you buy a Medigap policy, here's what happens:
Medicare will pay its share of the Medicare-approved amount for covered health care costs.
Then, your Medigap policy pays its share.