If you are new to the Medicare world or will be transitioning out of the workforce soon, you may be wondering how Medicare works. There are many questions to answer but today we’re going back to the basics: the four parts of Medicare.
Each of the four parts of Medicare covers certain health services, some government run and some private. Some of the options overlap, while some offer additional services. Each part is denoted by a letter: A, B, C and D.
What are the 4 parts of Medicare?
The four parts of Medicare are important to know because they make up the options that kupuna have for their Medicare insurance.
Here are the four parts:
Original Medicare (sometimes called traditional Medicare) is made up of Parts A and B; this is the traditional fee-for-service program offered directly through the federal government. Original Medicare insurance can be used for health services nationwide by any medical provider who accepts Medicare assignment. There is no need to get prior authorization from Medicare or your primary care physician before seeking care. Most beneficiaries choose to receive their Parts A and B benefits through Original Medicare.
Part A provides hospital (in-patient) health insurance to seniors. It includes skilled nursing care, hospice care, and limited home health-care services to seniors. Most seniors qualify for free Part A but there is typically a deductible*, coinsurance and/or copayments for each service you receive.
Part B provides medical insurance to seniors. This is the insurance that covers doctor’s visits and health services provided on an out-patient basis. All seniors pay a monthly premium for Part B insurance; the standard monthly premium for Medicare Part B enrollees will be $170.10 for 2022. High-income earners will pay more while low-income, low-resource seniors may qualify for help with their premiums. In addition, the annual deductible for all Medicare Part B beneficiaries will be $233 in 2022.
*A deductible is the amount you pay for covered health care services that must be met before benefits kick in.
Prescription drug coverage
Since January 1, 2006, Medicare has included the option for out-patient prescription drug coverage in the form of Medicare Part D.
Part D plans are standalone private drug plans that cover a list of prescription medications in exchange for a monthly premium. Some plans come with a deductible while other plans have a $0 deductible. Prescription drugs have co-pays, which are a fee that you pay when you get a prescription filled. Typically, generic drugs come with the smallest co-pays while brand-name drugs come with higher copays. Seniors with limited income and resources may qualify for the Extra Help program to help cover the cost of prescription drugs.
Alternative to Original Medicare
Seniors can choose to receive their Part A and Part B (and often their Part D) benefits through a Medicare Advantage Plan.
Part C is called Medicare Advantage or a Medicare private health plan. Seniors who opt for a Medicare Advantage Plan still have Medicare because all plans must include the services covered by Part A and Part B (and members must still pay their Part B premiums). While many Advantage plans have network restrictions, there are several reasons that kupuna may choose a Medicare Advantage Plan over Original Medicare, including:
Includes services that Original Medicare doesn’t cover such as dental, hearing, and vision
Potential cost savings with a maximum out-of-pocket limit (there is no limit for traditional Medicare)
Many Advantage plans have no premiums and offer low or no deductibles
Many plans include Part D benefits, which means a more inclusive insurance experience
Seniors with chronic conditions or specific diseases may benefit from Medicare Special Needs Plans
It is important to understand your Medicare coverage options to get the best possible plan for your needs. Which type of benefits you choose and who you get them from can affect your out-of-pocket expenses and your options for health care providers. Schedule an appointment with a local Medicare agent today: you have until December 7 to change your Medicare plan under the Medicare Annual Enrollment Period.
Our independent insurance agents are dedicated to assisting people on Medicare and those who are ready to transition from employer coverage to personal retirement coverage. We help kupuna understand their benefits options and apply for additional coverage, as needed. Because we represent all the major Medicare Advantage and supplement plans in Hawaii, we are able to offer unbiased advice; all at no cost to our clients.
At PBC, our clients are our number one priority and we look forward to getting to know you and your needs. Call us today at (808) 738-4500 to see how we may be of assistance.