One of the most important concepts describing Original Medicare’s benefits is that Medicare’s intent is to cover medically necessary services and procedures to treat diseases and conditions.
Original Medicare is health insurance that is good in any U.S. state or territory with any medical professional or facility that accepts Medicare.
Original Medicare has no maximum annual out of pocket costs. You can create a maximum out of pocket limit on your health care costs by adding a Medicare supplement or trading in your Medicare for a Medicare Advantage plan (Part C).
Medicare Advantage Plans (aka Medicare Part C) replace your Original Medicare with a privatized version. See below for details.
- If you are wanting to compare your Employer Group Healthcare plan to Medicare, try our free Medicare vs. Employer plan comparison calculator.
- Of course, an important factor in deciding about your Medicare coverage is the cost of Medicare vs any alternative health insurance options.
What is Medicare?
Medicare is a federal government health insurance program for U.S. citizens and legal U.S. residents who are age 65 and older, or under 65 and permanently disabled.
Traditional (aka Original) Medicare comes in three parts. Medicare Part A is your inpatient coverage. Medicare Part B is outpatient and physician services and Medicare Part D covers prescription drugs. Below, I provide details on each.
You may be asking “What about Part C”. Medicare Part C replaces A & B. That is discussed in detail below.
Considering that virtually everyone who reaches retirement age eventually enrolls in Medicare, it’s surprising how little most know of Medicare, what it covers and what it costs. This article is meant to answer your questions about Medicare. It goes over Medicare coverage, how Medicare Advantage plans differ from Original Medicare, Part D prescription drug coverage and much more.
Also in this article we link to other posts that provide greater detail on the various subjects we touch upon, so you can be fully informed and make an informed decision about your Medicare choices.
When Must I Enroll in Medicare?
When and how to sign up for Medicare deserves much more than a few paragraphs. It depends a lot on your personal situation. That is why I have an entire article and video titled “How to Sign Up for Medicare and When“.
Medicare enrollment is not automatic unless you are on Social Security Income at least four months prior to your 65th birthday month. It’s easy to make a permanent mistake. I encourage you to watch the video and/or read the article.
You may also find our Medicare enrollment calculator handy to help identify your initial enrollment period.
Is Medicare Better Than Group Healthcare?
As we discuss the benefits of Original Medicare, keep in mind that it is Medicare’s intent to cover that which is medically necessary to treat a disease or a condition. To help determine medical necessity, Medicare leans on your doctor.
No Preauthorization’s Required
Whether it’s your primary care doctor or a specialist, there are no preauthorization’s required. There is never an insurance company, nor a government agency involved in your healthcare decisions.
With traditional Medicare your healthcare decisions are between you and your doctor. The doctor will provide you with the medical services deemed necessary for treatment. If the service is covered by Medicare, your insurance will pay their portion of the medical bill.
No Network Limitations
In addition, with Original Medicare you have no network limitations. You can see any doctor or visit any medical facility in the United states or its territories and be covered by Medicare.
When you add a Medicare supplement plan (discussed below) you have coverage that is almost always better than group coverage and at a lower total cost.
Is Medicare Free?
There are a lot of “Medicare Myths” quickly dispelled once a person starts to research Medicare. The first myth is that Medicare is free. It is not.
The Cost Medicare Part A
Most people will not pay a monthly premium for Medicare Part A. That is because Part A is paid for via payroll deduction. That’s the Medicare tax you see deducted from your paycheck during your working years.
As long as you or your spouse have paid that tax for at least 40-quarters, your Medicare Part A is fully paid for. If you or your spouse have fewer than 40-quarters of Medicare taxes, but at least 30 quarters, you can purchase Part A at a reduced amount.
The Cost of Medicare Part B
Medicare Part B requires a monthly premium. The Part B premium changes every year. See current rates here and here. There is a base premium everyone must pay. In general, that base premium is about 20% to 25% of the full cost of Medicare Part B. Higher income Medicare beneficiaries are expected to pay a larger portion of the full cost of Part B via an Income Related Monthly Adjustment Amount or IRMAA charge.
If you would like to learn more about IRMAA and see if you qualify to pay more, please see my article titled “What is IRMAA?“
For lower income Medicare recipients there is a Hold Harmless rule (see full article) that prevents you from experiencing higher increases in Medicare cost than your increases in Social Security Income.
Are There Penalties for Not Enrolling in Medicare?
Every Medicare eligible US citizen or legal permanent resident in the U.S. who reaches the age of 65 must have either Part B and Part D or creditable healthcare coverage that is roughly equivalent to what Medicare Part A and Medicare Part B covers. For example, employer group health coverage is often considered creditable.
Please see our detailed creditable coverage cheat sheet for more.
There are financial penalties for not enrolling in Part B or Part D during your Initial enrollment Period and not having creditable coverage as an alternative. The penalties are detailed in a blog titled “Medicare Late Enrollment Penalty: Everything You Need to Know.“
What Does Medicare Part A Cover?
Medicare Part A is your inpatient services portion of Medicare. Part A covers you when you are an inpatient in the hospital, hospice care, and skilled nursing facility. You can download and print a copy of what Part A covers and Part B covers using this link. You should also download this great publication by Medicare about inpatient vs outpatient care.
Medicare Part A covers the following services:
All medications administered while an inpatient
inpatient nursing care
inpatient surgery (room and physician fees)
necessary hospital services and supplies
- Inpatient Surgeries
semi-private room and meals
Skilled nursing facility (if discharged to skilled care from the hospital after 3 midnights)
What is the Medicare Part A Deductible?
Medicare Part A has a deductible ($1,600 for 2023) that is a per event deductible. It covers you for an entire benefit period. An inpatient benefit period is defined as starting the day you are admitted as an inpatient and ending once you have been discharged for 60-consective days. Thus, the deductible is all you pay for 60-days of inpatient care.
How Much Are the Medicare Part A Copays?
From days 61 through 90 you pay a daily copay equal to of fourth the Part A deductible. Then starting on day 91 until day 150 you will pay a daily copay equal to one-half the Part A deductible. After your 150th consecutive day as an inpatient you have no more Part A inpatient hospital insurance coverage.
This highlights a weakness of Original Medicare; it does not have 100% coverage and there is no maximum out-of-pocket costs. Both these problems can be solved by adding Medicare supplement insurance as discussed below.
Medicare Part A also includes hospice care for the terminally ill at 100% (except some medications) and skilled nursing facility confinement after being discharged from the hospital.
What Does Medicare Part B Cover?
Part B covers outpatient and physician services as well as preventive services. This is the part of Medicare you use for doctor visits. It’s often simply referred to as your “medical insurance”. Most of your health care costs will fall under Part B.
Medicare Part B covered services include:
Clinical Lab services
- Diabetes supplies
Home health care
Outpatient care (in or out of a hospital)
Preventive Care called “Wellness Visits”
- Preventive Care Cancer Screening.
Some vaccines are covered under Medicare Part B. Vaccines not covered under Part B are covered under Part D.
What Does Medicare Part B Cost?
Medicare Part B has a premium that cannot be avoided. You will pay the Part B premium and any IRMAA charges due even if you trade in your Original Medicare for an Advantage plan. (see my article/video on IRMAA).
There is an annual deductible for Part B. It resets on a calendar year basis every January 01. currently the deductible is under $250 and is not expected to have significant price increases in the future.
Once the deductible is met, Medicare Part B pays 80% of covered medical care. Medical care to prevent illness may be exempt from the deductible. Home health services may be covered at 100%.
Linked below are many of the blog posts I have written to help you better understand your Medicare plan benefits.
Helpful Medicare Articles Include:
Hold Harmless – Medicare’s Hold Harmless protects against rising premiums.
Diabetes – How the different parts of Medicare come together for diabetes care.
Dental – There are many options for including dental insurance in your portfolio.
Durable Medical Equipment – Medicare’s coverage for wheelchairs, walkers and more.
Late enrollment penalty – How to avoid a late enrollment penalty.
Chiropractic services – Which chiropractic services does Medicare cover?
Acupuncture – Does Medicare cover acupuncture?
Ambulance services – How much are ambulance services with Medicare?
Long Term Care – Assisted Living – Does Medicare cover long-term care?
Hearing Aids and exams – are hearing aids covered by Medicare?
Hospice Care – How much will you pay for hospice care?
Cataract Surgery – can I have cataract surgery under Medicare?
Physical Therapy – Will Medicare cover my physical therapy?
Eye Exams – which eye exams will Medicare cover?
Drugs not covered under Part D (Part B drugs)
Rheumatoid Arthritis – how does Medicare cover Rheumatoid Arthritis?
What Are Medicare Advantage Plans?
Medicare Advantage Plans are also referred to as Medicare Part C. But referring to Medicare Advantage as part of Medicare is misleading. In fact, it is so misleading that some in Congress are even attempting to force Medicare to start calling advantage plans by their original name “Medicare replacement policies.”
A Medicare Advantage Plan replaces Original Medicare. When you purchase a Medicare Advantage plan you are literally exchanging your Original Medicare Parts A, B and sometimes Part D for a privatized version operated by a for profit insurance company. Your A & B are suspended until you cancel your Advantage plan.
What Does Medicare Part C Cover?
Another one of the myths of Medicare is that a Medicare Advantage Plan covers everything that Original Medicare covers. That is not true.
By law, Medicare Advantage plans must offer coverage in every category of coverage offered by Original Medicare. Offering benefits in the same category does not mean equal benefits or equal cost.
A good example would be to look at physical therapy. If you have Original Medicare and your doctor prescribes physical therapy, Medicare will pay for the number of visits the doctor has prescribed. With Medicare Part C, the doctor must get preauthorization from the insurance company who will then, typically, limit the number of visits they will pay for. The cost to the consumer depends on the specific plan.
As the example shows, both traditional Medicare and a Medicare Advantage Plan offer physical therapy (the same benefit category), but not the same benefits.
Although Medicare Advantage Plans cover benefits from all the same categories, the amount of coverage and cost to the consumer vary. Every Medicare Advantage Plan offers different benefits and at different costs. In addition, the benefits and costs of every Advantage plan changes every year.
What Are Medicare Part C Extra Services?
Many Medicare Part C plans will include extra covered services like gym memberships, some dental care. Lately, we have seen benefits to help prepare a home for a disability as well as meals for those who are food insecure.
What Is Medicare Annual Enrollment
Because Medicare Advantage benefits and costs change every calendar year, there is a Medicare Annual Enrollment between October 15 and December 07. During this short window, everyone with a Medicare Advantage Plan or Part D prescription drug coverage will be able to see the changes in plans for the comping year and choose the one best for their needs.
So, if you like researching and shopping for health insurance plans, Medicare Part C is perfect you because you will have to re-shop your healthcare insurance every year for the rest of your life.
Are Medicare Advantage Plans Bad?
In my opinion, it’s not so much good or bad, but who are they designed for. In my video “Medicare Explained; the Secret of Who and Why” I detail the demographics of the people who make various decisions with their Medicare. Medicare Advantage plan buyers are overwhelming people who are economically challenged. Many do not have enough funds to pay a medical insurance premium.
When you look closely at Medicare Part C plans, you can see that they divert the cost of Medicare from premiums (as with a supplement) to higher cost for services. They are designed for those who need health insurance, but have little or nothing to spare for a monthly premium. In fact, the largest sector of growth for Part C is in people who are eligible for Medicaid and Medicare. Medicaid is a government healthcare program for those below the poverty level.
What Do Medicare Supplement Plans Cover?
Medicare supplement plans build on Original Medicare. They add to your Medicare coverage by paying many of the copays, deductibles and coinsurance that traditional Medicare leaves as the consumer responsibility.
With a Medicare supplement you can lower your maximum annual out of pocket costs to less than $300. In addition, when you add most supplement benefits to what Part A covers you can be an inpatient in the hospital for a full year and not pay a dime.
Medicare supplements are also called Medigap plans because they fill the gaps in Medicare coverage. Here are the important points about supplemental plans:
Medicare supplement benefits are standardized by the government. They do not change from one insurance company to the next.
Original Medicare remains your primary healthcare. With a supplement you keep the best benefits of traditional Medicare. You can see any doctor or medical facility in the US, and no insurance company has a say in your coverage.
The weakness of a supplement is the monthly premium. Premiums vary from state to state and from company to company. They also increase over time.
You can download a copy of the Medicare supplement benefits here.
Does Medicare Include Prescription Drug Coverage?
Medicare’s primary drug coverage is through it’s Part D plan. Keep in mind, you can also get drug coverage from Medicare part A and Part B. The difference is that the Part D plans are designed for the prescriptions you normally pick up from the drug store or mail order.
The most important to thing to know about Part D right now is that there are two ways you can get Part D. The first is as a stand-alone product. The second is bundled with a Medicare Advantage Plan.
Please see this video and blog post to understand Medicare Part D.
If you get a Medicare Advantage HMO or PPO you cannot get a stand-alone Part D plan. Applying for a separate Part D plan will kick you out of your Advantage Plan.
Does Medicare Part D Cover Vaccines?
Yes, Part D plans must cover most available vaccines. The exceptions are flu vaccines, hepatitis B, pneumonia and Covid-19 which are covered under Part B.
One of the most common questions we are asked is “does Part D cover Shingles vaccines?” The short answer is yes, Part D covers Shingrix. You can read more about Part D and shingles vaccines in the article linked here.
How to Get Medicare Part D
Are Medicare Premiums Tax Deductible?
Yes, Medicare premiums are tax deductible.
If you are self employed, you can take a “top line” tax deduction of your Medicare premiums. If not self employed, you can add your premiums to medical care deductions if they meet certain requirements.
Of course, I have a great article on the subject of tax deductible Medicare premiums that can help you save money. Click here for the article “Are Medicare Premiums tax Deductible?”
Can I use my HSA Account with Medicare?
You can use an HSA account (Health Savings Account) with Medicare, to make your premium and expenses tax free without the mess of tax filing.
You cannot, however, contribute to an HSA once you start Medicare. The tricky part to this is the “6-month rule” with Medicare Part A. You can read the details in my article “HSA and Medicare” so as to make the most of your HSA savings.
What Does Medicare Not Cover?
It’s should be obvious at this point that Original Medicare’s list of health care services covered is extensive. But still, there are things you may personally consider medically necessary that Medicare doesn’t cover. For example, routine dental care, hearing aids or corrective vision care are not covered by Medicare.
I have written an article that details what Medicare doesn’t cover title “What Does Medicare Not Cover?” It not only lists what is not covered by Original Medicare Parts A & B, but also shows you how you can obtain additional coverage. That is useful information.
Medigap Seminars Insurance Agency is one of this country’s premier independent Medicare Insurance brokers. We represent our clients best interest, focusing on education first. We are your first choice when choosing a Medicare Agent that works in your area.
We work with all major insurance companies, most Advantage Plans and all Medicare supplement plans. Plus, our services are free to the consumer. Contact Us today for the best help in the business. you will be glad you did.
Disclaimer: Medicare has neither reviewed nor endorsed this information. Medigap Seminars is not connected with or endorsed by the United States government or the federal Medicare program.