Medicare Costs and Coverage

Medicare coverage provides affordable health care to seniors and some disabled individuals. With Medicare coverage, beneficiaries receive coverage for hospital stays, medical services and prescription drugs.

Individuals may select from one of four plans during their Medicare enrollment period. Which plan they choose depends on their medical needs and if they have an existing health plan.

In most cases, Medicare Part A coverage is free. Medicare Parts B, C and D, however, require the beneficiary to pay premiums, deductibles and coinsurance. Individuals are not limited to Medicare coverage for their health insurance. They may have an existing insurance plan, in which case both Medicare and their insurance pays for the medical bills. The sections below can provide more information on Medicare coverage, Medicare costs and what beneficiaries can expect when applying for benefits.

What is Medicare coverage?

Medicare coverage refers to a type of health insurance plan geared towards seniors and some disabled individuals. For these individuals, Medicare coverage provides them with an affordable option to receive important medical care and prescription drugs. To qualify, individuals must be at least 65 years of age. A person may also be eligible if they meet one of the following criteria:

  • Have end stage renal disease (ESRD)
  • Have amyotrophic lateral sclerosis (ALS)
  • Receive disability benefits from Social Security for 24 months
  • Receive disability benefits from the Railroad Retirement Board for 24 months

Related Article: Eligibility Requirements for Medicare

A person must apply for coverage during their initial enrollment period, which generally begins three months before they turn 65 years of age. If an individual has a qualifying disability, they are automatically enrolled in the plan.

Types of Medicare Coverage

Medicare consists of a variety of plans from which individuals may choose. Beneficiaries may elect one or several of the plans depending on their needs. Some of the plans are free while others may require beneficiaries to pay a premium. Below outlines the Medicare plans available:

  • Medicare Part A – Hospital visits
  • Medicare Part B – Medical services
  • Medicare Advantage (Medicare Part C) – Comprehensive Coverage
  • Medicare Part D – Prescription Drugs
  • Medigap – Gap insurance

What does Medicare cover?

When applying for Medicare coverage, applicants select a plan based on their needs. Which Medicare coverage they choose depends on their medical needs as well as the presence of an existing healthcare plan. In general, each plan covers the following services:

Medicare Part A

Medicare Part A pays for a variety of inpatient care for beneficiaries. It includes inpatient hospital care, hospice and short-term care at a skilled nursing facility . The plan also pays for eligible home health services such as physical therapy, occupational therapy, speech-language pathology services. The program requires the beneficiary’s doctor to certify that the individual requires certain services before paying for them.

Medicare Part B

When an individual requires general medical treatment, they must enroll in Medicare Part B. Under this plan, Medicare pays routine doctor’s visits. The program also pays for preventive medicine such as diabetes screening, lung cancer screening, obesity screenings and some vaccinations.

Medicare Part C

Beneficiaries may choose to purchase Medicare coverage through what is known as a Medicare Advantage plan—or Medicare Part C. With a Medicare Advantage plan, individuals select a plan offered by a third-party insurance company that has contracted with Medicare to provide the service. The plan offers beneficiaries their Part A and Part B coverage in one plan. Many Medicare Advantage plans also include Part D prescription drug coverage.

Medicare Part D

Medicare Part D helps patients pay for out-of-pocket costs associated with their prescriptions. Part D is an optional plan, and an individual must enroll and pay for it separate from Part A or Part B.

Medigap

Medicare coverage does not pay for all out-of-pocket costs associated with care. Individuals may purchase gap insurance to help pay for the items not covered by Part A or Part B.

How does Medicare coverage work when a beneficiary has other health insurance?

Medicare coverage does not always pay for services rendered to a beneficiary. In some cases, individuals may have private health care coverage in addition to their Medicare coverage. In those cases, Medicare must “coordinate benefits” with the other insurance company. Under this scenario, one plan known as the primary payer pays the initial cost of services. The secondary payer, often Medicare, pays the remaining balance.

Medicare Pays First

While Medicare is usually the second payer, there are times when the health plan becomes the primary payer. The following scenarios outline when Medicare is the primary payer on the beneficiary’s bills:

  • The beneficiary has retirement benefits from a former employer
  • The beneficiary is 65 years of age or older and has a group health plan based on their employment or their spouse’s employment, and the employer has less than 20 employees
  • The beneficiary is younger than 65 years of age, disabled and has a group health plan based on their employment or their spouse’s employment and the employer has less than 100 employees
  • The beneficiary has Marketplace coverage and then ages into Medicare

Medicare Pays Second

There are times when Medicare is the secondary payer on the beneficiary’s bills. In this scenario, the primary payer pays what is due on the medical bills. The company then forwards the bill for the remainder to Medicare. Medicare pays second when:

  • The beneficiary is 65 years of age or older and has a group health plan based on their employment or their spouse’s employment where the employer has 20 or more employees.
  • The beneficiary is younger than 65 years of age and has a health plan based on their employment or their spouse’s employment where the employer has 100 or more employees.
  • The beneficiary has end stage renal disease (ESRD).

The rules about coordination of benefits are very specific. Medicare beneficiaries should check with their insurance company for details about who should pay first. They may also contact Medicare with questions about their Medicare coverage by calling 1-855-798-2627. TTY users should call 1-855-797-2627.

How much does Medicare cost?

Beneficiaries must pay for their Medicare in the form of premiums. They must also pay a Medicare deductible for their coverage. For most individuals, there is no fee for Medicare Part A coverage. Beneficiaries must pay monthly Medicare premiums for their Part B coverage. The monthly premium is the amount Medicare charges for the insurance plan.

Deductibles and Coinsurance

Individuals must also pay a Medicare deductible. The deductible refers to the amount the beneficiary must pay for their services before Medicare pays for the rest. While Medicare pays most of the costs for services, it does not cover all costs. Given that, beneficiaries must pay a coinsurance which represents the amount the beneficiary must pay for each service.

The following shows the Medicare fee schedule for all plans:

Plan Premium Deductible Coinsurance
Part A Free

 

$422 for those paid Medicare taxes for less than 30 quarters

 

$232 for those who paid Medicare taxes for 30-39 quarters

$1,340 deductible for each benefit period Days 1-60: $0 coinsurance for each benefit period

 

Days 61-90: $335 coinsurance per day of each benefit period

 

Days 91 and beyond: $670 coinsurance per each “lifetime reserve day” after day 90 for each benefit period (up to 60 days over your lifetime)

 

Beyond lifetime reserve days: all costs

 

Part B $134

*Costs may be higher depending on beneficiary’s income

 

$183 per year 20% for each service
Part C Varies Per Plan – Contact Insurance Company for Details

 

Varies Per Plan – Contact Insurance Company for Details Varies Per Plan – Contact Insurance Company for Details
Part D Varies Per Plan – Contact Insurance Company for Details

 

Varies Per Plan – Contact Insurance Company for Details Varies Per Plan – Contact Insurance Company for Details
Medigap Varies Per Plan – Contact Insurance Company for Details Varies Per Plan – Contact Insurance Company for Details Varies Per Plan – Contact Insurance Company for Details

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