Understanding Medicare: Breaking down Parts A, B, C, and D

Medicare is a federal health insurance program primarily for individuals aged 65 and
older, though younger individuals with certain disabilities may also qualify. The program
helps cover a variety of healthcare needs, from hospital stays to prescription
medications. However, Medicare is divided into different parts, each covering specific
services. Understanding what each part covers can help beneficiaries make more
informed decisions about their healthcare options.

Four key parts of Medicare: A, B, C, and D

Medicare Part A: Hospital Insurance
Medicare Part A is designed to cover inpatient hospital care, skilled nursing facility care,
hospice care, and some home health services. It’s sometimes referred to as “hospital
insurance” because it primarily covers services related to hospital stays.
What’s Covered Under Part A?

• Inpatient hospital care: Coverage includes room and board, nursing services,
  surgery, and other necessary hospital services.
• Skilled nursing facility care: After a hospital stay, Part A helps cover care in a
  skilled nursing facility (not custodial or long-term care).
• Hospice care: For individuals with terminal conditions, Part A covers hospice
  services.
• Home health services: Part A also covers certain home health services like
  skilled nursing and physical therapy after a hospital discharge.
  Costs:
  Most people don’t pay a premium for Medicare Part A if they or their spouse paid
  Medicare taxes while working. However, there are costs such as deductibles,
  copayments, and coinsurance for services received. Hospital deductible resets every 60
  days.

Medicare Part B: Medical Insurance
Medicare Part B covers outpatient care and other services that Part A doesn’t. It is often
referred to as “medical insurance” and includes essential medical services like doctor
visits, preventive care, and some outpatient therapies.
What’s Covered Under Part B?

• Doctor visits: Whether you’re seeing a primary care physician or a specialist,
  Part B covers most services.
• Preventive care: This includes screenings for conditions like cancer and
  diabetes, flu shots, and wellness visits.
• Outpatient hospital services: If you need outpatient procedures or emergency
  room visits, Part B will help cover costs.
• Durable medical equipment: Items like wheelchairs, walkers, or home oxygen
  equipment are covered by Part B.

Costs:
Part B requires a monthly premium, which can vary depending on your income. There is
also an annual deductible, and after that, you typically pay 20% of the Medicare-
approved amount for most services. Medicare Beneficiaries are required to be enrolled
in Part B when they turn 65, unless they have “qualified coverage” under their
employment or spouses’ employment. There are cost penalties associated with late
enrollments.

Medicare Part C: Medicare Advantage Plans
Medicare Part C, or Medicare Advantage, is an alternative way to receive Medicare
benefits. These plans are offered by private insurance companies approved by
Medicare. They cover all services provided by Part A and Part B, and many also offer
additional benefits like vision, dental, and hearing coverage. Part C plans often include
prescription drug coverage (Part D). These are also referred to as “Managed Care
Plans.”

What’s Covered Under Part C?

• All Part A and Part B services: Medicare Advantage plans must cover
  everything that Part A and Part B would, with some exceptions.
• Additional benefits: Many Medicare Advantage plans offer extra benefits such
  as dental care, hearing aids, and gym memberships.
• Prescription drug coverage: Many plans include Part D coverage, so
  beneficiaries don’t need to enroll in a separate Part D plan.
  Costs:
  The costs of Part C can vary widely. In addition to the monthly Part B premium,
  beneficiaries may also pay an additional monthly premium for the Medicare Advantage
  plan. There are often copayments, coinsurance, and deductibles as well.

Medicare Part D: Prescription Drug Coverage
Medicare Part D provides prescription drug coverage, which is essential for those who
require regular medications. Part D is offered through private insurance companies
approved by Medicare.
What’s Covered Under Part D?

• Prescription drugs: Part D helps cover the cost of both brand-name and
  generic prescription drugs.
• Medications administered at a doctor’s office: Certain drugs administered in
  a doctor’s office or outpatient setting are covered by Part D.
  Costs:
  Part D comes with a monthly premium, and like Part B, the cost can vary depending on
  the plan and income level. There may also be an annual deductible and copayments for
  medications. Starting in 2025, the Inflation Reduction Act, IRA, put in place more cost
  savings, such as $2000 cap on out of pocket medication costs, $35 insulin, and drug
  manufacturer discounts. Some beneficiaries may face additional penalties if they fail to
  enroll in a Part D drug plan when they become eligible.

Choosing the Right Coverage
Understanding the different parts of Medicare is essential in choosing the best plan for
your healthcare needs. You can get basic coverage with Parts A and B, or opt for
additional coverage through Part C (Medicare Advantage) and Part D (Prescription Drug Plan). Keep in mind that some people may need to combine Original Medicare (Parts A and B) with a separate Part D plan and/or a Medigap policy for additional coverage.

When selecting Medicare plans, consider factors like:

• Your healthcare needs: Do you need more coverage, such as dental or vision,
  or do you need coverage for specific medications?
• Costs: What are the premiums, deductibles, and out-of-pocket costs for each
  option?
• Providers: Do your doctors accept Medicare or participate in Medicare
  Advantage plans?

Choosing the right combination of Medicare parts can be overwhelming, but it’s crucial
for ensuring that you have access to the health services you need while managing your
costs effectively.

Conclusion
Medicare offers essential health coverage to millions of Americans, but understanding
the differences between Parts A, B, C, and D is key to maximizing its benefits. Whether
you stick with Original Medicare or explore Medicare Advantage, each part provides
vital coverage for a range of healthcare services. Take the time to meet with a Medicare
Broker and review your options during open enrollment periods to find the plan that best
suits your health needs and budget.