All those letters! It’s one of the first things everyone discovers about Medicare – Part A, Part B, Part C, Part D. It’s supposed to make things simple, but it does the opposite.
Unfortunately all you can do is read as much as you can and get comfortable with the terminology. Based on experience, it’s best to do your research at least a few months before you or your loved one becomes eligible for Medicare. Of course, you can count on the Medicare Reporter to make sure the process is as painless as possible. But I won’t lie to you – some things are gonna hurt.
Medicare: the sum of its parts
Medicare is made up of different health-insurance policies called parts. Most are designated by letters of the alphabet. When you sign up for Medicare, you’ll learn that each part has a specific meaning, its own set of functions, and pays for different healthcare services. Knowing the difference between each part can make your healthcare decisions much easier, less stressful, and more cost effective.
An overview of Medicare’s parts
Medicare Part A
This is the Medicare policy that pays for many of your costs when your doctor has admited you to the hospital (inpatient). It includes doctors, room, meals, treatment, tests, and medications. It also covers care in a skilled nursing-facility (not the same thing as a nursing home), hospice care, and some home health-care.
There’s a deductible before Medicare payments start - $1,484 in 2021. After that, Medicare pays 100% of the costs for up to 60 days of hospitalization. If you’re hospitalized for longer than 60 days, you and not Medicare pay $371 a day for days 61-90. After 90 days you must dip into what Medicare calls your 60 lifetime-reserve days.
Most people don’t pay a Medicare Part A premium as it was already paid out of payroll deductions while they were employed.
Medicare Part B
Medicare Part B generally pays 80% of your doctor and clinician bills in a doctor’s or therapist’s office, or when you get treatment in a hospital as an outpatient. Outpatient care generally refers to care received in a hospital or ambulatory care unit that doesn’t involve being admited to the hospital. It also covers diagnostic tests such CAT scans, MRIs, mammograms, laboratory tests, ambulance services, some medical equipment (known as durable medical equipment), inpatient and outpatient mental health-care, and some prescription drugs under very limited circumstances.
Part B has a monthly premium ($148.50 for most people) that under most circumstances is deducted from your Social Security payment before you see it show up in your bank account every month. It also has an annual deductible, $203 in 2021.
Tip: Part B pays 80% of what Medicare allows a participating doctor to charge you, not your doctor’s normal, much higher fee.
Medicare Part C/Medicare Advantage (MA)
Medicare Part C, also known as Medicare Advantage is not really Medicare at all, but private insurance that replaces Medicare for those who are eligible for Medicare. It’s provided by the same insurance companies that provide health insurance to Americans not on Medicare i.e. United Healthcare, Blue Cross/Blue Shield, Aetna, Humana, Cigna etc. If you choose Part C, you’ll pay a premium directly to the insurance company.
And this is where Medicare gets even more confusing.
This Medicare/private insurance concoction allows Medicare (a federal, taxpayer-funded program) to contract with private, for-profit health insurance companies. With Medicare Part C, the federal government pays private insurance companies a fee for each Medicare beneficiary they insure; the sicker the beneficiary, the higher the fee the insurance company is paid.
If you’re tempted to see some nefarious opportunities here, don’t resist that urge. They’re abundant and I will discuss them at length in future issues.
In the quagmire that is Part C/MA you’ll see terms like traditional Medicare, original Medicare, and straight Medicare mentioned in the vast number of advertisements for Medicare Advantage insurance plans. These terms are used interchangeably and they all mean exactly the same thing – Medicare Part A and Medicare Part B. But insurance companies want you to believe that you are better off buying their insurance rather than sticking with the federally-administered traditional Medicare.
Companies that issue Part C/MA insurance are required to cover everything covered by original Medicare, but they aren’t required to cover them in the same way or for the same price.
If you enroll in Part C/MA you won’t use your government-issued red, white, and blue Medicare card when you go to the hospital or doctor. Instead, you’ll use an ID card from the insurance company just as you did with your employee health-insurance. You’ll also be confined to the insurance company’s network of doctors, hospitals, and non-hospital treatment facilities. Plus, if your Medicare Part C/MA plan includes drug benefits, those will be limited by what’s been approved by that insurance company. This is known as a drug formulary.
Medicare Part C/MA generally includes hospitalization (Part A), doctors and other clinicians (Part B), and medication (Part D). I’ll be devoting an entire separate issue to Medicare Part C because like everything else Medicare-related, it’s complicated.
Tip: When you call a doctor or other healthcare provider to make an appointment, you’ll always be asked about your insurance coverage. If you say Medicare, that refers to Parts A and B only. If you have a Part C/MA plan you’ll have to tell the doctor’s office the name of your insurance company and the name of the specific plan you have. Not every healtcare provider that accepts Medicare accepts the dozens of different insurance plans sold as Part C/MA, and some don’t accept any at all. I’ll get to why in a future issue.
Medicare Part D
Medicare Part D is also private insurance, but this component covers prescription medications you get at a pharmacy. If your doctor advises you take to aspirin or other pain reliever for example, that’s not covered as a prescription drug unless it’s prescribed in a prescription-strength dose. You’ll pay a separate premium for one of these plans, and as I mentioned above, you’ll be confined to the insurance company’s drug formulary.
Tip: There are other ways to pay for your prescription drugs and I’ll cover that too in future issue of the Medicare Reporter.
Medigap/Medicare supplement insurance
Another private insurance policy, this is paid for every month directly to the insurer. Depending on the specific plan, it covers some or all of the costs not covered by Medicare Parts A and B. Supplement policies are designated by letters of the alphabet, and availability depends on where you live. While not every insurance company offers every plan, each Plan A or Plan G for example offered by a company must be identical to every other Plan A or Plan G offered by others; premium prices differ from company to company.
Medicare/Medicaid Dual Eligibility
Some people qualify for both Medicare (the federal program for those over 65 and some people under 65 who have a certain disabilities or end-stage diseases) and Medicaid (the federal-state program for those below a certain income). The two programs work together for those who qualify.
A final note:
If you choose traditional Medicare (Parts A and B) you can add a Part D plan and/or a Medigap plan.
If you choose Part C/Medicare Advantage all the Medicare functions are generally included and you won’t need AND can’t get Medicare’s other parts along with it. The exception is that some Part C/MA plans don’t include Part D and if that’s the case you can get a separate Part D plan.
Is there something specific you’d like to see the Medicare Reporter explain? Contact themedicarereporter@gmail.com