Medicare - Frequently Asked Questions and Answers
Medicare, like many government programs, is complicated. For starters, it consists of four parts. Most individuals sign up for the first two parts (Part A and Part B) around the time they turn 65 since there is an initial enrollment period 3 months prior and after the individual’s birthday.
Medicare Part A covers institutional care in hospitals and skilled nursing facilities as well certain care given by home health agencies and care provided in hospices. Any person who has reached age 65 and who is entitled to Social Security is eligible for Medicare Part A without charge. That is, there are no premiums for this part of the Medicare program.
Like many conventional health insurance plans, the hospitalized patient must pay a deductible before Medicare begins paying for treatment. This deductible, which changes annually, is $1,364 in 2019. After the deductible is satisfied, Medicare pays virtually all costs of the hospitalization for the first 60 days except for telephone, television and treatments that Medicare considers experimental. After 60 days the patient is responsible for more of the cost of his her or her care. The amount depends on the length of the hospital stay.
Medicare Part B basically covers “outpatient” care: office visits to medical specialists, ambulance transportation, diagnostic tests performed in a doctor’s office or hospital on an outpatient basis, physician visits while the patient is in the hospital, and various outpatient therapies. Part B also covers a number of preventive services.
Unlike Part A, Medicare Part B charges a monthly premium that is adjusted annually. For 2019 this premium is $135.50 (per person) per month, although it is higher for higher income individuals and married couples. Like Medicare Part A there is a deductible that the participant must pay before Part B benefits begin. For 2019 the deductible is $185. Once it is satisfied, Medicare pays 80% of what Medicare considers a reasonable charge for the item or service. The beneficiary or individual is responsible for the other 20%. It is important to know that in an effort to control costs Medicare Part B does not cover eye glasses or contacts in most cases, hearing aids, routine foot care or most dental services (and this is only a partial list of services that are not covered).
Because there is a premium for Part B, individuals can turn it down. However, for those who decide to enroll in Part B later, there is a 10% penalty (the premium increases permanently by 10%) for each month the individual was eligible for Part B, but didn’t sign up, unless the person qualifies for a special enrollment period.
Medicare Part C is more commonly known as a Medicare Advantage Plan. These plans are offered by private companies approved by Medicare. If an individual joins a Medicare Advantage plan it will provide all of his or her Part A and Part B coverage. Most Medicare Advantage also offer prescription drug coverage (Part D). Many also offer extra coverage such as vision, hearing, dental and/or wellness programs such as gym memberships.
Medicare pays these private companies a fixed amount each month for the care of their enrollees. These companies must follow rules set by Medicare, but each can charge different out-of-pocket costs to their enrollees. Further, they have different rules for how their enrollees get services such as referrals to specialists. Most are structured like HMOs or PPOs in that their enrollees can only consult physicians and utilize facilities that are in their networks. These rules can change each year.
Medicare Part D is prescription drug coverage that is an optional benefit offered to everyone who has Medicare. There are two ways to get this coverage. Medicare Part A and Part B participants can sign up to add Part D through what are called Prescription Drug Plans or “PDPs”. Each PDP plan has a monthly premium and provides a list of covered drugs so it is important for participants to choose a PDP that covers their prescriptions. Medicare Advantage plan participants generally have prescription drug coverage as part of their plan.
Adding to the complexity of the Medicare system is the availability of so-called Medicare Supplement or “Medi-Gap” plans which are offered by private insurance companies. These plans are designed to cover deductibles, co-insurance amounts and other out-of-pocket costs not covered by Medicare. These plans are standardized in that each covers certain costs and is identified by a letter such as “E”. However, the cost for each plan varies by company and location.