The U.S. federal health insurance program known as Medicare can be a cause of confusion among many of those on the verge of becoming eligible for it. With that in mind, we thought we’d take a quick look in this guide at what it is, how it works and what benefits you can expect from it.



What is Medicare?

In simple English — Medicare is a health insurance program funded either by the government or private health insurance providers. This program is managed by the Centers of Medicare & Medicaid and is available to the eligible citizens for the United States – or legal permanent residents that have lived in the country for five or more years.

Eligibility for Medicare coverage generally kicks in once a member of one of the above groups reaches 65 years old or is disabled. However, such conditions as amyotrophic lateral sclerosis – also known as Lou Gehrig’s disease or ALS – and end-stage renal disease requiring dialysis or a kidney transplant can also qualify you for Medicare at any age.

 

Top Medicare Insurance Companies

 

How can you obtain Medicare coverage?

There are two general routes to Medicare coverage: the government-run health insurance program known as Original Medicare or a Medicare Advantage plan, as is available through private insurance providers contracted by Medicare.

If your age, your disability, or your – possible – diagnosis makes you eligible for Medicare, then you’ll have to sign up for the original Medicare program. If you still understand us so far, things are made a bit more complicated by the fact that Original Medicare consists of two parts: Part A (hospital coverage) and Part B (medical coverage). So, let’s take a closer look at what’s included in those respective ‘parts.’

 

Medicare Part A

As we touched on above, this is the type of Medicare health insurance also referred to as Medicare hospital insurance, with the likes of inpatient hospital, skilled nursing facility, hospice and eligible home health care potentially covered.

You can generally expect the hospital services covered by Part A to include services and equipment that are medically required for the treatment of your condition. This may mean coverage for a semi-private room, general nursing services and the prescription drugs required for your inpatient treatment.

Long-term care – or the type of care you can generally expect a nursing home or other long-term facility to provide – is perhaps surprisingly not included in Part A coverage. You will normally be automatically enrolled in premium-free Part A from the age of 65, provided that you have spent at least 10 years (40 quarters) in Medicare-covered employment and paid taxes for Medicare while working. However, if you haven’t worked for a sufficiently long time to gain Part A coverage for free, you also have the option of manually signing up for it and paying a monthly premium.

 

Medicare Part B

Part B is the part of Medicare that usually covers such medically necessary outpatient services as durable medical equipment, doctor visits, lab tests, ambulance services, preventative services and mental health care.

Coverage may be provided for you under Part B if you are in need of walkers, hospital beds or other medically necessary durable medical equipment. However, such coverage may be on the condition of you renting or buying the equipment from Medicare-enrolled suppliers.

The preventative services covered by Part B, meanwhile, range from screenings for certain diseases and health conditions, annual ‘Wellness’ exams and tobacco cessation counselling to nutrition therapy and some vaccines such as hepatitis B shots and flu shots.

Prescription drug coverage is also included in Part B – typically the medications that must be administered by a doctor, such as injectable drugs or medications given by infusion. To take advantage of any other prescription drug benefits under Original Medicare, however, you’ll need to register for Medicare Part D coverage, as we explain in further detail below.

One of the big differences between Medicare Part A and Part B is that most people pay a monthly premium to access the latter, which may vary from one year to the next.

 

An outline of the other Medicare coverage options

After enrolling in Part A and/or Part B, there may be other forms of Medicare coverage of which you can take advantage, such as Part C (Medicare Advantage plans), Part D (prescription drug benefits) and Medicare Supplement insurance (also known as Medigap).

Medicare Advantage plans, for instance, enable you to access Original Medicare coverage through Medicare-approved private insurance firms. This enables you to obtain at least the same level of benefits that Part A and Part B would give you, except hospice care, which continues to be covered under Original Medicare Part A.

But as we mentioned earlier, one of the definite drawbacks of Original Medicare is the restricted prescription drug benefits that you can obtain, and coverage is only provided for medications you receive in certain inpatient and outpatient situations.

This is precisely why beneficiaries of Original Medicare may instead be interested in registering for Medicare Part D – which is separate prescription drug coverage. It’s important to remember, though, that these plans give you standalone prescription drug benefits, and continued enrollment in Part A and/or Part B is needed for your hospital and medical coverage.

Finally, Medicare Supplement – or Medigap – plans may provide invaluable assistance with the payment of out-of-pocket costs that Original Medicare doesn’t cover, such as copayments, coinsurance, deductibles and emergency overseas health coverage.

 

Medicare Supplement Plans

Medicare Supplement Plans are designed to protect you from unexpected large medical expenses. If covered under Medicare Part A and Part B you will pay a deductible for both. In addition, you could face a 20% coinsurance payment on all medical expenses. In the event of a large medical bill following an accident, operation or the need for longer term care, you could face a bill of tens of thousands of dollars if you are not covered by a suitable Medicare Supplement Plan.

Medicare Supplement Plans are private insurance plans provided by health insurance companies and some of the most popular plans are listed below;

  • Medicare Supplement Plan F: A comprehensive supplemental plan covering all deductibles, coinsurance and excess payments in Medicare Parts A & B. With this type of supplement you should not have to pay anything towards medicare approved medical expenses.
  • Medicare Supplement Plan G: A very similar plan to F above. The main difference between Plans G and F is that it does not cover the annual deductible of $183 associated with Medicare Part B.
  • Medicare Supplement Plan N: Plan N also does not cover the Part B deductible discussed above. In addition you will be responsible for copays for outpatient medical expenses (up to $20 per visit) and emergency room expenses (up to $50 per visit). The exception is that, after the Medicare Part B deductible is met, you will be responsible for copays for outpatient medical services, not to exceed $20 per visit, and copays for emergency room visits, not to exceed $50 per visit.

 

How can you decide on the right Medicare coverage for you?

The above information should have hopefully given you some insight into the various available forms of Medicare coverage, and if you’re still unsure which options you should be investigating, it’s a good idea to consider your individual circumstances and needs.

If, for instance, you are a frequent traveller and would rather not have to worry about provider networks, you might be interested to know that under Original Medicare, healthcare services are obtainable from any provider or doctor that accepts Medicare assignment.

Alternatively, you may need to visit the doctor regularly and incur high out-of-pocket costs, in which case, a Medicare Supplement plan may put your mind at ease when it comes to meeting some of these expenses under Original Medicare, such as deductibles and copayments.

There’s a lot to think about when you’re attempting to select the best elements of Medicare for you, and the above should only serve as a starting point for more detailed research into your healthcare requirements and how they can be most appropriately met.

 

Disclaimer: Our service is not intended to be, nor should it be construed as financial advice. We help our readers make informed decisions via impartial information and guides. Where appropriate, we may introduce partner companies who can provide services relating to financial products.

*