Medicare Basics (Parts A & B)

What is Medicare?

Medicare is a federally administered health insurance program in the United States, begun in 1966, which provides health coverage to nearly 55 million Americans above the age of 65, along with other individuals who are eligible due to certain disabilities. The program helps with the cost of health related expenses, but it does not cover all medical expenses, including long-term care.

You have choices in the types of Medicare coverage you want to receive. You can choose to only participate in the federal health insurance program, known as "Original Medicare" (Part A and Part B), but you may face significant out-of-pocket costs with deductibles, co-pays, and other expenses that are not covered by those plans.

 

To reduce your out-of-pocket expenses, there are a variety of health insurance plans offered by private insurance companies to supplement the coverage provided in Parts A & B.  Most popular are plans known as Medicare Advantage, Medicare Supplement (Medi-Gap), or Prescription Drug (Part D) plans.  These plans cover some of the costs that the federal "Original Medicare" Part A & Part B do not.

Who is Eligible for Medicare?

A person who has been a U.S. citizen / legal resident for at least five consecutive years and is at least one of the following :

  • Age 65 or older

  • Younger than 65 with a qualifying disability

  • Any age with a diagnosis of end stage renal disease (permanent kidney failure requiring dialysis or a kidney transplant)

Overview of Original Medicare Part A (Hospital Coverage): 

Original Medicare includes Part A, also known as Hospital Insurance. It covers inpatient care received from a qualified hospital, skilled nursing facility, or hospice residence in the United States that is enrolled in Medicare and accepts Medicare patients. Most inpatient facilities accept Medicare, but it is always a good practice to confirm this in advance.  All medical treatment and services provided are billed by the healthcare provider to the federal government first.  Any charges not covered by Medicare are then billed to the patient. 

Medicare Part A (Hospital Insurance) includes:

  • A semi-private room

  • Skilled nursing services

  • Specialty Unit Care, such as Intensive Care

  • Medical equipment, supplies, and prescriptions used during an inpatient stay

  • X-rays, medical equipment, and lab tests while an inpatient

  • Recovery room and operating room services

  • Some blood transfusions

  • Hospital meals

  • Inpatient or outpatient rehabilitation services after a qualified inpatient stay

  • Part-time, skilled care for the homebound

  • Hospice care for the terminally ill, including some medications

Premiums for Part A Coverage:

Most people don't pay a monthly premium for Part A (sometimes called "Premium-Free Part A"), because they have worked more than 40 quarters or ten years of employment in the past and Medicare taxes were withheld through payroll deductions. 

If you or your spouse worked less than 40 quarters or ten years, you may be required to pay a monthly premium for Part A. For example, if you paid Medicare taxes for 30-39 quarters, the standard Part A premium is $259/month in 2021. If you paid Medicare taxes for less than 30 quarters, the standard Part A premium is $471/month in 2021.

 

Deductibles and Co-Pays for Part A:

 

Important Note:  Although you may not pay a monthly premium for this hospital coverage, you may incur significant out-of-pocket expenses each year due to the deductible and co-pay schedules. You will pay a deductible for each admittance into a hospital, skilled nursing facility, or hospice residence (i.e., $1,484 for each admittance in 2021).  In addition, you will be responsible for paying a daily rate for each inpatient stay that exceeds the scheduled limits for each type of facility.

 

Since there is no maximum limit on how much you are required to pay out-of-pocket each year, your costs can escalate quickly if you have multiple hospitalizations or experience the need for extended, long-term hospitalization in any given year.

Overview of Original Medicare Part B (Medical Insurance): 

Original Medicare also includes Part B, known as medical insurance. It covers doctor visits and outpatient medical care received from a qualified provider in the United States that is enrolled in Medicare and accepting Medicare patients. Not all healthcare providers accept Medicare patients, so you do need to select healthcare providers that accept Medicare patients for your care.

 

Part B (Medical Insurance) Coverage:

  • Doctor visits, including when you are in the hospital

  • Annual wellness visit and preventative services, like mammograms and flu shots

  • Clinical Laboratory services, like blood and urine tests

  • X-rays, CT Scans, EKG’s, MRI’s, and some other diagnostic tests

  • Some health programs, like smoking cessation, cardiac rehab, and obesity counseling

  • Physical therapy, occupational therapy, and speech-language pathology services

  • Diabetes screenings, diabetes education, and certain diabetes supplies

  • Mental Health Care

  • Durable medical equipment for use at home, like wheelchairs and walkers

  • Ambulatory surgery center services

  • Ambulance and emergency room services

  • Skilled nursing care and health aide services for the homebound on a part-time or intermittent basis

Premium for Part B Coverage:  

Part B coverage requires participants to pay a monthly premium, based on their previous year's annual income.  If you have higher income, you may be required to pay a higher Part B premium.  

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Deductibles & Co-Pays for Part B:

Healthcare providers bill the cost of medical services directly to the federal government.  You are responsible for out-of-pocket expenses including the annual deductible and co-pays (typically 20% of the costs for doctor's services, outpatient therapy, and durable medical products). 

Important Note:  Since there is no maximum limit on how much you are required to pay out-of-pocket each year, your costs can increase if you have a significant number of doctor visits or outpatient services throughout the year.  

What is Not Covered by Original Medicare A or B?

  • Personal expenses while hospitalized

  • Hospital days beyond certain set limits per benefit period

  • Prescription drugs

  • Chiropractic, acupuncture, and massage therapy 

  • Eye exams, eyeglasses, or contact lenses 

  • Most dental care & dentures

  • Hearing exams or hearing aides 

  • Cosmetic surgery

  • Home Health Care

  • Long Term Care & Custodial Care

  • Concierge Care (i.e., concierge medicine, retainer-based medicine, boutique medicine, platinum practice or direct care)

  • Covered items or services you get from a doctor, who is not part of the Medicare system, or other provider (except in the case of an emergency or urgent need)

  • Most healthcare provided outside of the United States 

Frequently Asked Questions About Original Medicare A & B:

Question 1:  Can you get health care from any doctor, other health care provider, or hospital?
Answer:  In most cases, yes. You can go to any Medicare-Enrolled physician, other health care provider, hospital, or other facility that accepts Medicare Patients. Visit Medicare.gov to find and compare providers, hospitals and facilities in your area.
 

Question 2:  Does it cover prescription drugs?
Answer:  No. Original Medicare doesn’t cover prescription drugs (with a few exceptions).  You can add drug coverage by purchasing a Medicare Prescription Drug Plan (Plan D) during the Initial or Special Enrollment Periods.

Question 3: Do I need to choose a Primary Care Doctor?
Answer:  No, you don’t need to choose a Primary Care Doctor.  However, any doctors you do choose must be enrolled in Medicare.

Question 4:  Do I have to get a referral to see a Specialist?
Answer:  In most cases, no, you don’t need to have a referral for to see a Specialist. However, the Specialist you do choose must be enrolled in Medicare.

Question 5: Should I get a Supplemental Policy?
Answer:   You may already have Medicaid / Medi-Cal, military, employer, or union coverage that may pay any expenses that Original Medicare doesn’t cover.  If not, you may want to purchase a Medicare Supplement Insurance plan, also know as Medigap, if you are eligible. However, if you don’t purchase a Medigap plan during the Initial Enrollment Period (IEP) or Special Enrollment Period (SEP),  you may not be eligible due to health underwriting guidelines. During the Initial or Special Enrollment Periods,  there are no health underwriting guidelines.

What Options are Available to Add Additional Insurance Coverage
to Original Medicare A & B?

Medicare Part C (Medicare Advantage):

Medicare Part C (Medicare Advantage) plans, are offered by private insurance companies that are approved by Medicare.  These plans combine Part A, Part B, and in most cases, Part D benefits into one plan. Most Advantage Plans include prescription drug coverage (typically offered through a Plan D prescription drug plan) and offer additional benefits as well, often with no additional premium.

Medicare Supplement or Medigap (sometimes known as Parts A, B, D, G, K, L, M, N):

Medicare Supplement plans, also known as Medigap plans, are offered by private insurance companies to help pay some of the health care costs that Original Medicare doesn’t cover like co-payments, coinsurance, deductibles, and non-covered expenses. These plans supplement, rather than replace, your Original Medicare benefits, so you still need to have Medicare Parts A and B.  

Medicare Part D (Prescription Drugs):

Once you have enrolled in Medicare Part A and/or Part B, you can purchase prescription drug coverage with a stand-alone Prescription Drug Part D plan, offered through an insurance company, or with a Medicare Advantage plan that includes prescription drug coverage.

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