What Medicare Covers

To understand what Medicare covers, we need to learn a little bit more about the Part A and Part B of Medicare. When the government program began, these Part A and Part B were the first types of coverage. So when a person refers to “Original Medicare,” we are explicitly talking about Medicare Parts A and B. As time evolves, the Medicare Program grew to include other coverage options. Still, Parts A and B remain the core of the program. And this is why it is so important to understand them the best possible.

Medicare Part A

What Part A Covers and How Much it Costs

Sometimes we referred to Part A as the “hospital insurance.” We don’t necessarily need to be admitted to a hospital for Part A to cover the services we receive. While Part A covers inpatient care carried within a hospital, skilled nursing facility, or mental health hospital, it also covers home health services and hospice care. Part A covers hospital-related costs and meals provided by the facility, a semi-private room, and services such as rehabilitation therapy, medical supplies, medical appliances, and lab tests. If the facility itself offers you prescription drugs, those are also covered under Part A.

Though most people don’t pay a premium for Part A, this one is not free.

If you or your spouse have paid Medicare payroll taxes while working, you will not pay any monthly premium for Part A. Otherwise, you will have to pay the following premiums:

When you use Part A, you’ll have to pay a deductible of $1,364 per period before Medicare begins to cover your care. A deductible is an amount you pay out of pocket before your insurance provider pays any expenses.

Medicare defines a “benefit period” as beginning on the day you’re admitted to a hospital or nursing facility on an inpatient basis and ending when you haven’t received any inpatient care for 60 days in a row. Once a benefit period has ended, a new benefit period begins if you’re newly admitted to a hospital or nursing facility. There is no limit to the number of benefit periods you can have during your lifetime.

There are additional coinsurance charges after paying your deductible for Part A. These charges are based on the number of days you receive care during a benefit period. Hospital coinsurance charges are:

Daily coinsurance for care in a skilled nursing facility per benefit period is:

For eligible home health services and hospice care, there is no daily coinsurance rate. However, you will pay 5 percent of the Medicare-approved rate for inpatient respite care through the hospice.

In any inpatient care situation, it’s always possible that your doctor will recommend care that Medicare doesn’t cover. Make sure to ask your provider if a specific treatment or service is covered so you know in advance how much it will cost.

PART B

Coverage and Costs

Part B is the coverage you’ll likely rely on most while on Medicare. It covers outpatient services, such as doctors’ appointments, necessary surgeries, preventive care, outpatient mental health care, and ambulance services. All participants pay a monthly premium for Medicare Part B. In 2019 the standard monthly premium was $135.50. Single individuals earning more than $85,000 a year and couples making more than $170,000 jointly per year will pay more.

On top of your monthly premium, you’ll also pay a deductible and coinsurance fee for any services you receive. Beginning in 2019, the annual deductible for Part B is $185, meaning you’ll have to pay $185 out of pocket each year before Medicare begins to cover your care. After you have reached your deductible, the coinsurance rate is 20 percent of the Medicare-approved cost for any service. So, suppose you’ve already hit your deductible and require a procedure with a Medicare-approved cost of $200. In that case, you’ll pay $40, and Medicare covers the rest.

What's Not Covered

Before you check into a hospital or other facility, make sure that it accepts Medicare. Otherwise, there’s no guarantee you’ll be covered. It’s also important to note that though Part A does cover care within skilled nursing facilities, this is only true for short-term care. Your Medicare coverage does not extend to long-term care.

Suppose you are worried about covering your deductible or coinsurance for services covered by Parts A and B. In that case, you may want to enroll in a Medigap plan, which will help cover the costs.

MEDIGAP

Consider a supplemental plan if you’ve got regular healthcare expenses that aren’t covered by Medicare Parts A and B. Many seniors live on a fixed income —which is why Medicare is meant to be affordable. However, even with its low costs, Medicare’s deductibles and coinsurance rates can still be a financial burden. That’s why there’s also Medigap, also known as Medicare Supplement Insurance. Private insurance companies sell Medigap policies, but they are strictly regulated by the government. They come in various standardized plans and are built to help cover the cost associated with Parts A and B.

Medigap plans are named by a letter of the alphabet (much like the different parts of Medicare). They each have a different monthly premium, which reflects their different levels of benefit. Depending on which plan you sign up for, your Medigap insurance may cover your deductibles for Parts A or B, as well as the coinsurance for any services you receive. Medigap plans can also cover things that Original Medicare doesn’t cover. For example, while Medicare will cover the cost of getting a blood transfusion, it won’t cover the cost of the first three pints of blood you receive.

Blood is often free, but a Medigap plan will cover the first three pints if you are charged for it. Medigap plans may offer significant savings on healthcare costs, but you’ll need to sign up within six months of enrolling in Part B. After that, government restrictions no longer apply. Your coverage could be denied, or you may be charged a higher rate due to your age or a preexisting condition. Whenever you apply, be sure to ask multiple companies for quotes. Just because the plans are standardized doesn’t mean the premiums are. Each company calculates its premiums cost differently, so it pays to shop around.

Yes! There is a Part D

In 2006 Medicare Part D when into effect to help beneficiaries with the cost of prescription drugs. Part D is provided by private insurers, so the plans vary according to providers. Make sure to understand how Plan D works before selecting one, the covering and how much you will be paying for your medications.

To be covered by Part D, the medication must be:

Prescribed by a Doctor. Part D does not cover over-the-counter medications or vitamins.
Medically necessary. It does not cover drugs for cosmetics causes or stuffs like weight loss or erectile dysfunction.
Taken on an Outpatient Basis. Part A covers the drugs given to you in a hospital or nursing facility. Part B covers medications administered to you in a doctor's office. And Part D only covers medicines taken at home. For example, insulin, antidepressants, or other commonly prescribed medication.

Plans are not required to cover all drugs, but they must cover some drugs in each of the following classes:

Your plan formulary is the list of drugs covered by your plan. Suppose your doctor determines that you need a prescription outside of your plan’s formulary. In that case, you may request an exception from your insurer. When you make the request, you’ll have to include a statement describing why you need this particular drug and why a similar medication within your plan’s formulary isn’t suitable for you.

Both generic and brand-name drugs are covered by your plans and vary in how much they charge for each. Plans could make changes to their formularies during the year by removing some drugs or adding new ones. Suppose your recipes are affected by the changes. In that case, you may end up paying more for a medication you have been taking, or you may need to request an exception if your drug is no longer covered.

How to Get Part D

Part D of Medicare is provided by private insurance companies. They are rigorously regulated by the government to meet specific standards. Most people will enroll for Part D when they sign up for Part B. But suppose you have drug coverage through another source that is as good as that of Medicare, also known as “creditable prescription drug coverage.” In that case, you can delay Part D enrollment without a late penalty. To help you find a plan, the government offers an online tool, the Medicare Plan Finder (medicare.gov/find-a-plan), to help you find available plans where you live.

Suppose you want to abandon or change your plan. In that case, you can do it during the open enrollment period from October 15 to December 7 each year. Some circumstances do allow for changes outside of this period, such as moving to another State.

What About Costs

The majority of Part D plans have a monthly premium (monthly payment) and an annual deductible (annual payment). In 2021, the average monthly premium for Part D plans is about $ 33.06. High-income individuals also have to pay the additional Income Related Monthly Adjustment Amount (IRMAA), required by the government, in addition to their premium. Deductibles can differ by plan but are limited to $445 for 2021.

Based on price, Part D plans normally separate drugs into different tiers. Mostly, you will have a lower copayment for generic drugs. Brand-name medications and more expensive drugs regularly have higher copayment or coinsurance rates.

The Donut Hole

There is a coverage gap in which your Part D is not in full coverage; this gap is also known as “The Donut Hole.” The Donut Hole or coverage gap is a temporary period where your Part D coverage is not in full effect. Meaning that there may be a time when you will have to pay more copayment for your drugs.
Read more about the Donuts Hole

What Medicare Covers