You’ve probably heard of Parts A and B, Advantage plans, Medigap, Part ‘D for drug’, but it’s enough to make anybody’s head spin, so let’s explain each part.
Part A (hospital coverage): Part A helps cover inpatient care in hospitals, skilled nursing facility care, hospice care, and home health care. It is for everybody age 65 and over regardless of if you’re taking social security or continuing to work and have other health insurance. Part A is usually free, but if you don’t qualify for premium-free Part A, you do have the option to purchase it.
Part B (medical coverage): Part B helps cover the rest of your medical care costs, such as:
- Services from doctors and other health care providers
- Outpatient care
- Preventative care
- Durable medical equipment (like wheelchairs, walkers, hospital beds, and other equipment)
Part B has an annual deductible you must pay toward these covered services, and then Part B usually covers 80% of the remaining covered services.
Part B comes with a monthly premium that can change from year to year. You can enroll in Part B when you turn 65, but if you have other medical insurance, such as through an employer, you may qualify to delay enrolling in Part B without incurring a penalty. Part B comes with a monthly premium that can change from year to year. You can enroll in Part B when you turn 65, but if you have other medical insurance, such as through an employer, you may qualify to delay enrolling in Part B without incurring a penalty.
Medigap/Supplement: Medigap, or ‘Supplement’ coverage is additional insurance you can purchase to help cover leftover costs after Part A and Part B have paid their share for covered services. These plans are sold by private insurance companies but are standardized across companies and are named after the letters of the alphabet. For example, Plan G sold by Premera is identical to Plan G sold by UnitedHealth. There is significant variation in coverage across the offered plans, as-is reflected in the cost of their monthly premiums. Medigap/Supplement plans are accepted anywhere that accepts Medicare. Medigap/Supplement plans do not cover prescription medications.
Part D (prescription coverage, “D for Drug”: Part D helps cover the cost of prescription drugs. Specifically, prescriptions that you administer yourself – infusions or other drugs administered by a medical professional are covered by Part B. You can choose your own Part D plan based on the prescriptions they cover, the plan deductible, the monthly premium, and the pharmacies they contract with. If you don’t enroll in Part D when you become eligible, you could face a permanent monthly penalty. If you have other health insurance coverage at the time you turn 65, you may be able to delay enrollment and avoid the penalty.
Medicare Advantage: Medicare Advantage plans function more similarly to private insurance that you’re used to via employment or the Marketplace. While you still need to be enrolled in Part A and B to be enrolled in an Advantage plan, the Advantage plan bundles your medical care coverage experience. Your plan would have a deductible, cost-sharing expenses, and an out-of-pocket-maximum. Your plan would also likely be subject to in and out of network guidelines (there may only be coverage if you stay in-network), and you may be subject to pre-authorization requirements for covered services. Advantage plans usually roll prescription coverage into their overall coverage as well.
The bottom line: Everybody enrolls in Part A and Part B. You then choose if you want to go the Advantage route, or add a Medigap/Supplement policy and Part D. More on this important decision in our next video.
