Medicare is a federal health insurance program designed for seniors and people with certain disabilities. The Centers for Medicare & Medicaid Services (CMS) oversees and manages Medicare. To be eligible for Medicare, you must be an American citizen or permanent legal resident, and at least one of the following listed items must apply to you as well:
- You are at least 65 years old.
- You receive disability benefits from the Social Security Administration (SSA) or the Railroad Retirement Board (RRB), regardless of age.
- You have been diagnosed with amyotrophic lateral sclerosis (ALS), also known as Lou Gehrig’s disease.
- You have end-stage renal disease (ESRD).
Medicare in Depth:
What Medicare Covers
Medicare is made up of four different parts, each one designed to cover different medical expenses. These four parts include:
- Medicare Part A (Hospital Insurance)
- Medicare Part B (Medical Insurance)
- Medicare Part C (Medicare Advantage Plans)
- Medicare Part D (Prescription Drug Coverage)
Want to know more about the 4 parts of Medicare? Click on the links above to learn more about each part. There are also 10 Medicare Supplement plans (Medigap) in 2020 that help pay additional expenses not covered by your Medicare coverage.
How does Medicare Work?
We now know what Medicare is, but how does it work? This is where most get confused as there are so many parts and numbers to keep track of. Let’s break it down into its main parts.
Part A will cover Medicare inpatient care. This includes care in a hospital, skilled nursing facility, and in limited circumstances at home. For most, Part A is automatic and premium free once eligible for Medicare. Part A will have cost sharing for covered services, deductibles, and a limit on the amount of days you can receive coverage.
Take a closer look at Medicare Part A.
Part B will cover outpatient care. This includes doctor visits, specialist visits, emergency care, urgent care, ect. Part B will have a yearly deductible of $198 in 2020. Once the deductible is met, Medicare will pay 80% of covered services, leaving 20% of the cost. Part B does have a monthly premium and is optional.
Take a closer look at Medicare Part B.
Medicare Part C is a federally regulated program offered through private insurance companies that helps alleviate the costs of Parts A & B. Medicare Advantage plans are often managed care plans (HMO & PPO) that usually offer more coverage than Medicare at a more affordable price. These plans often include Part D built in and can even offer coverage for things usually not covered by Medicare like vision, dental, hearing, over the counter and more. These plans are dependent on your local area and do change year to year so it is important to review your plan each year.
Take a closer look at Medicare Part C (Medicare Advantage).
Medicare Part D plans are federally regulated prescription drugs plans offered through private insurance companies. All Part D plans use a tiered system to price drugs and a list of covered drugs called a formulary. It is very important to review your coverage each year as these plans do change year to year.
Take a closer look at Medicare Part D.
Medicare Supplement plans are often called “Medigap” plans as they “fill in the gaps” left by Parts A & B. Medigap plans are standardized plans offered by private insurance companies that work in conjunction with Medicare. Medicare will pay its share first, then your Medigap plan will cover its share. Medigap plans will usually only cover what Medicare covers so you will need to add a Part D prescription drug plan and any additional coverage needed such as dental and vision.
Take a closer look at Medicare Supplement (Medigap).
How is Medicare Funded?
Medicare is primarily funded by taxpayers in a combination of general revenue, payroll taxes, and premiums paid by Medicare beneficiaries. This money goes into a fund controlled by the Social Security Administration (SSA) to help pay when a Medicare beneficiary uses its service.
You have probably looked over your paycheck deductions and noticed FICA (Federal Insurance Contributions Act) deductions. The FICA tax deduction is 1.45% of your earnings and goes towards Medicare. Your employer also matches this contribution totallying 2.9%. It doesn’t seem like much but with millions contributing it adds up quickly. Part A takes most of this funding which explains why Medicare Part B has a monthly premium and Part A does not.
Medicare Part B is mainly funded by its monthly premium. For most, the Part B premium is $144.60 in 2020, and can be more depending on your reported income from 2 years prior.
We find here at AHIC that many of the people we meet with seem to forget that they have been paying for Medicare much of their life. When they do come of Medicare age, many think that they should stay with their employer coverage because they hear Medicare is confusing or may not be as good of coverage. However, most of the time this is not true, Medicare for most will be the very fairly price and offers comprehensive coverage. Remember, you have already paid for and are entitled to this coverage.
Still needs assistance?
Still have questions or need assistance applying for your Medicare benefits? You are not alone, AHIC is here to help. If you would like someone to walk you through the entire process of applying for Medicare, shopping for plans and selecting the right one, please click on the link below. Our services are at NO COST to you and we will be here to help you for the lifetime of your policy.
Let an American Healthcare Insurance Consultant help you today!