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The ABCD's of Medicare
Original Medicare (Parts A & B) has important benefits, but it does not cover everything. Programs such as Part D (Prescription Drug Plans) and Medicare Supplement (Medigap) offer additional benefits such as prescription drug coverage and emergency care abroad. There is also the option to select a Medicare Part C (Medicare Advantage) plan which may offer additional benefits to Parts A and B.
There are many plans to choose from and several combinations you can create with the options available to you. Compare the fundamentals of each type of Medicare plan:
Part A
- Pays for inpatient hospital care, skilled nursing facility, & some home healthcare
- Most citizens or permanent U.S. residents over the age of 65 are eligible for free Part A insurance, while people with 39 quarters or less of Medicare-covered employment will pay a premium of $254/month (30-39 quarters) or $461/month (0-30 quarters)
- For 2010, there is a deductible of $1,100 during the first 60 days of each benefit period, as well as coinsurance amount of $275/day (days 61-90) and $550/day (91-150 days) for hospital stays and $137.50/day per benefit period (days 21-100) for Skilled Nursing Facility coinsurance
- The Gaps:
- During a hospital stay, Part A does not pay: the yearly deductible, the coinsurance amount after 60 days of being hospitalized for any one benefit period, the cost of the first three pints of blood, and medical expenses when traveling abroad
- During a stay in a skilled nursing facility, Part A does not pay the coinsurance amount for each day after 20 days ($137.50 for days 21-100)
- For home health care, Part A does not pay anything for non-medical personal care services and does not pay 20% of the approved cost of medical equipment or non-skilled care
Part B
- Pays for eligible physician services, outpatient hospital services, & certain medical equipment
- Medicare Part B requires payments of a monthly premium of $110.50/month unless your income is over $85,000 (single) or $170,000 (married) in which case it may be higher
- The Part B deductible for 2010 is $155/year and once you meet this amount you pay 20% of the Medicare-approved amount
- When you first become eligible for Medicare Part A, there is a seven-month initial enrollment period in which to sign up for Part B in order to avoid paying penalties for signing up late
- The Gaps:
- Part B does not pay for the yearly deductible, 20% of the Medicare approved amount for medical services, 20% of hospital charges for outpatient services, preventative or routine exams and testing, and treatment not considered to be medically necessary
- Part B does not pay for prescription drugs, dental care, eye and hearing exams
Part C (Medicare Advantage)
- Provides all Part A & B coverage through a private health plan
- Must cover medically-necessary services, may have lower premiums than Medigap, & certain plans also have a prescription drug benefit available (MA-PD)
- You must be enrolled in Medicare Part A & Part B in order to enroll in Medicare Advantage
- Benefits such as hearing, dental, vision, and preventative care may also be covered
- MA plans may come in several forms (HMO, PPO, PFFS, and SNP) and require beneficiaries to use in-network doctors and facilities (with the exception of medical emergencies)
Part D (Prescription Drug Plan)
- Provides prescription drug coverage for brand name & generic prescription drugs
- You can choose a stand-alone Part D plan by adding drug coverage to your Original Medicare or Medigap plan, or you can get drug coverage along with the rest of your Parts A and B coverage by using a Medicare Advantage plan
- You will want to evaluate cost, coverage, and convenience when comparing Part D plans, as plans will vary in the following categories: premiums, deductibles, co-pays, whether there is coverage in the "coverage gap", which drugs are covered and rules for getting drugs, whether the plan has a mail-order option, and which pharmacies are part of the network
- Premiums vary by plan, but deductibles may not be higher than $310
- In order to enroll, you must first be enrolled in Part A & Part B
- The Coverage Gap is between $2,830 and $4,550
Medicare Supplement (Medigap)
- Medigap is a policy designed to pay for some of the medical expenses not covered by traditional Medicare
- Depending on the plan, Medigap may pay Part A and B deductibles and may pay part or all of Part B coinsurance amounts
- Covers copayment or coinsurance of certain services, may include coverage for emergency care abroad, and may have optional coverage for additional benefits such as hearing and vision
- A medigap plan does not come with prescription drug coverage, so you will also need to obtain a prescription drug plan
- Premiums will vary by plan and carrier, and plans are available that will pay the Part A and Part B deductibles
