Understanding Medicare Parts A B C & D

Understanding the ABC's of Medicare CoverageUnderstanding All the Parts of Your Medicare Coverage

Ask most people to define Medicare and they’ll tell you that it’s health care coverage from the federal government for people, age 65 and older or for people with certain disabilities. That’s certainly true. But to be sure you’re getting the most from your Medicare coverage, it’s important to understand all of Medicare’s parts, and what each one covers.

Who is Eligible for Medicare?

First off, let’s be clear about who is eligible for Medicare. Even if you’re not 65 yet, you may still be able to take advantage of Medicare. That’s because people of any age who are disabled, or have End-Stage Renal Disease (kidney failure), may qualify for Medicare.
To determine if you’re eligible for Medicare, you can use the Medicare Eligibility Tool at Medicare.gov.

Understanding Medicare Parts A through D

Medicare is split into four parts, A, B, C and D. Each part helps cover a specific set of health care services or expenses.
Part A-Medicare Part A is often referred to as hospital insurance. It helps cover expenses if you’re ever admitted to the hospital, for any reason. However, Part A helps cover more than just hospital stays. It also helps cover:

  • Inpatient care at a skilled nursing facility
  • Inpatient rehabilitation
  • Home health care Hospice care

Part B-This is medical insurance for issues that don’t require hospitalization, including preventive care.  Part B helps cover:

  • Doctor visits
  • Outpatient treatment
  • Preventive care services (such as screenings & checkups)
  • Home health services
  • Durable medical equipment (including diabetes supplies)
  • Ambulance services
  • Mental health services

Part C-Also known as Medicare Advantage, Part C refers to private health insurance plans that provide Medicare coverage. Medicare Advantage plans are required to provide the same benefits as Medicare Parts A and B, and some plans offere even more benefits/services.
Medicare Advantage plans:

  • Must be approved by the Centers for Medicare and Medicaid Services (CMS), the federal agency that oversees the Medicare program
  • Carrier must maintain a contract with CMS to provide Medicare coverage
  • May offer prescription drug coverage (see Part D, below) as part of their plan offering
  • May offer additional services/programs, not offered by Original Medicare
  • May require you to use a specific network of doctors and hospitals
  • May require you to pay additional premiums, copayments, coinsurance, deductibles or other out-of-pocket expenses, but offer a yearly limit on out-of-pocket costs.

Medicare Supplement, or Medigap, plans: Medigap plans pay for many of the out-of-pocket expenses (copayments, coinsurance, deductibles, etc.) that Original Medicare covers but may not pay.  Only private insurance companies offer Medigap plans, and there are currently 10 plans from which to choose. Keep in mind, however, that not all Medigap plans may be available where you live.

Understanding The ABC’s and D of Medicare

Part D-Part D is Medicare prescription drug coverage.  Medicare prescription drug plans:

  • Are provided by private health insurance companies
  • Can be offered as stand-alone plans or as part of a Medicare Advantage plan
  • Many plans offer access to a cost efficient mail order pharmacy

How Much Does it Cost?

Part A is premium-free for most people, as long as you are already receiving benefits from Social Security.  You pay a premium each month for Part B. If you get Social Security, Railroad Retirement Board, or Office of Personnel Management benefits, your Part B premium will be automatically deducted from your benefit payment. If you don’t get these benefit payments, you’ll get a bill. Most people pay the standard premium amount of $134 (for 2017), but it can be higher depending upon your income.

In addition, individuals with high incomes may need to pay more for their Part B premium. If you have limited income, you may qualify for a special Medicare savings program from your state.

Your Medicare Part B monthly premium will be higher if your modified adjusted gross income is more than $85,000 (single), or more than$170,000 (married and file a joint tax return). These amounts may change each year. A few Medicare Advantage Plans may pay all or part of your Part B premium. You would still get all Part A and Part B-covered services. For more information about Part B premiums based on income, call Social Security at1-800-772-1213. TTY users should call 1-800-325-0778.  Benefits, premiums, and/or member cost-share may change on January 1 of each year. You must continue to pay your Medicare Part B premium.

Premiums for Medicare Advantage plans and Medigap plans, as well as Part D, prescription drug plans, vary based on your selected plan and insurance carrier. To find a plan in your area, you can use the Medicare Plan Finder at Medicare.gov, or contact a licensed sales insurance agent at Medicare Solutions.

What are Late Enrollment Penalties?

If you don’t sign up for Medicare Part B and/or D as soon as you become eligible, you could wind up paying more in monthly premiums down the road. To keep costs down for everyone, Original Medicare needs everyone to begin paying their Part B and D premiums as soon as they’re eligible.
The reason is simple…if everyone waited until they were sick to enroll in Part B or Part D, Original Medicare would never be able to sustain itself. The cost of paying for care for individuals who are ill and/or require expensive medications would far outstrip the amount of money taken in by Original Medicare in the form of premiums. So Original Medicare needs everyone to begin paying their premiums for Parts B and D as soon as they’re eligible so there’s enough money to care for everyone when they need it.

How Much are the Late Enrollment Penalties?

The late enrollment penalty for Part B is approximately 10% for every 12-months that you weren’t enrolled, but could have been.

Part D has a similar late enrollment penalty, but the calculations are a little more complicated. You can be assessed a late enrollment penalty if, once your eligible for coverage, there is a period of 63 or more days where you go without Part D or other creditable prescription drug coverage (from a previous employer, for example). Medicare calculates the penalty by multiplying 1% of the “national base beneficiary premium” ($34.10 in 2016) times the number of full, uncovered months you didn’t have Part D or creditable coverage.  The monthly premium is rounded to the nearest $0.10 and added to your monthly Part D premium.  The national base beneficiary premium may increase each year, so your penalty amount may also increase each year.

Still Have Questions? Talk to an Expert.

If you’re eligible for Medicare, it’s important to make sure you’re getting all the coverage you deserve. Fortunately, understanding your options doesn’t have to be complicated. At MedicareSolutions.com, we’ve put together a number of informative articles on a variety of Medicare-related topics. You can also call 1-800-MEDICARE (1-800-633-4227) or visit Medicare.gov to learn more.