Original Medicare is federal health insurance to cover America’s senior citizens 65 years and older. Those with specific disabilities who receive Social Security disability benefits can also qualify for Medicare before age 65. It’s best to understand the different Medicare parts to grasp the type of healthcare coverage you are about to enroll in. You will also want to become familiar with the different Medicare plans, such as Medicare Supplement plans and Medicare Advantage plans, so you can decide if you want one of these additional plans and which one is the right one for you. So, how does Medicare work? Keep reading to find out!
As briefly mentioned above, Original Medicare comes from the federal government. Medicare covers healthcare services that are medically necessary to diagnose or treat an injury, illness, or disease under Medicare’s guidelines. There are two separate parts to Medicare, Part A, and Part B, and they both cover a different set of services. But prescription medications are not covered by either of these parts. Therefore, you will want to purchase a Part D plan from an insurance carrier for drug coverage.
Medicare Part A covers inpatient services, and you can think of it as insurance for your hospital room and board. Part A covers a semi-private hospital room, three square meals a day, any lab services, and medications you receive as an inpatient. If you are discharged from the hospital and require having a skilled nursing facility stay, Part A covers the Medicare-approved charges. Part A also covers hospice and home health care.
The 2022 Part A deductible is $1,556. Once you pay the deductible, Medicare will cover the Medicare-approved charges for up to 60 days. If you are in the hospital for more than 60 days, you will begin to pay a daily copayment.
Medicare Part B covers your outpatient services. For example, Part B covers the Medicare-approved charges for doctor visits, durable medical equipment, ambulance rides, mammograms, lab testing, certain vaccinations, preventative care, and much more.
The annual Part B deductible in 2022 is $233. After you pay the deductible, Medicare will cover 80% of your medically necessary outpatient services, and you will pay the remaining 20% coinsurance. Now, keep in mind that Medicare does not have a maximum out-of-pocket limit. So, that 20% coinsurance can be pricey if you receive an expensive healthcare service, such as chemotherapy.
Due to Medicare’s out-of-pocket costs, many beneficiaries enroll in a Medicare Supplement or a Medicare Advantage plan for cost-sharing help.
Private insurance carriers sell Medicare Supplement plans, also known as Medigap plans. These plans help cover the gaps in Medicare, such as deductibles, copays, and coinsurance. Medigap plans work as secondary coverage to Original Medicare Part A and Part B. If Medicare approves a service, your Medigap plan will payout. If Medicare denies a service, so will a Medigap plan.
Medigap plans do not have network restrictions. Therefore, you can travel across the U.S. and use a Medigap plan if the doctor accepts Original Medicare. If they take Medicare as insurance, they must accept your Medigap plan.
There are ten Medicare Supplements on the market and two high deductible plans. Each plan covers a different set of benefits. But these plans are standardized, meaning whether you purchase Plan G from carrier ABC or carrier DEF, it will have the same benefits. The only difference between carriers is the monthly premium.
Medicare Advantage plans, also known as Medicare Part C, are sold by private insurance carriers. When you purchase an Advantage plan, you opt out of Original Medicare. You will receive your Part A, and Part B benefits from that carrier, and the carrier will set your cost-sharing amounts for your healthcare services. Many Advantage plans include a Part D plan, so you wouldn’t need to purchase a Part D plan if you enroll in one of these plans.
The private insurance carrier will create a network of doctors and pharmacies you can visit and receive coverage from your plan. The two most purchased Advantage plan types are HMO and PPO plans.
When you have an HMO Advantage plan, you will want to stay in-network for your healthcare services. If you go outside the network, you will pay the bill’s total cost unless it’s an emergency. PPO Advantage plans provide more flexibility since you can go out of network and have coverage, but your cost-sharing amounts will be higher than in-network services.
The maze of Medicare can be confusing, so it’s best to understand how Medicare works before you apply! You don’t have to go at it alone, though. Contact a reputable Medicare broker to shop plans in your area and assist with your Medicare enrollment.