Understanding Medicare Parts A B C & D
Understanding All the Parts of Your Medicare Coverage
Ask most people to define Medicare and they'll tell you that it's health care coverage from the federal government for U.S. citizens age 65 and older. That's certainly true. But to be sure you're getting the most from your Medicare coverage, it's important to understand all of Medicare's parts, and what each one covers.
Who is Eligible for Medicare?
First off, let's be clear about who is eligible for Medicare. Even if you're not 65 yet, you may still be able to take advantage of Medicare. That's because people of any age who are disabled, or have End-Stage Renal Disease (kidney failure), may qualify for Medicare.
To determine if you're eligible for Medicare, you can use the Medicare Eligibility Tool at Medicare.gov.
Understanding Medicare Parts A through D
Medicare is split into four parts, A, B, C and D. Each part covers a specific set of health care services or expenses.
Part A-Medicare Part A is often referred to as hospital insurance. You'll need it if you're ever admitted to the hospital, for any reason. However, Part A covers more than just hospital stays. You'll also be covered for:
- Inpatient care at a skilled nursing facility
- Inpatient rehabilitation
- Home health care Hospice care
Part B-This is medical insurance for issues that don't require hospitalization, including preventive care. You'll want Part B for coverage that extends to:
- Doctor visits
- Outpatient treatment
- Preventive care services (screenings & checkups)
- Home health services
- Durable medical equipment (including diabetes supplies)
- Ambulance services
- Mental health services
Part C-Also known as Medicare Advantage, Part C refers to private health insurance plans that provide Medicare coverage. Private insurers who offer Medicare Advantage plans are required to provide the same benefits as Medicare Parts A and B, and some carriers provide even more benefits/services.
Medicare Advantage plans:
- Must be approved by the Centers for Medicare and Medicaid Services (CMS), the federal agency that oversees the Medicare program
- Must maintain a contract with CMS to provide Medicare coverage
- Can offer prescription drug coverage (see Part D, below) as part of their plan offering
- May offer additional services/programs not offered by original Medicare
- May require you to use a specific network of doctors and hospitals
- May require you to pay additional premiums, copayments, coinsurance, deductibles or other out-of-pocket expenses
Medicare Supplement, or Medigap, plans: Medigap plans cover many of the out-of-pocket expenses (copayments, coinsurance, deductibles, etc.) that original Medicare does not. Only private insurance companies offer Medigap plans, and there are currently 10 plans from which to choose. Keep in mind, however, that not all Medigap plans may be available where you live.
Understanding The ABC's and D of Medicare
Part D-Part D is Medicare prescription drug coverage. Sometimes referred to as MA-PD, Medicare prescription drug plans:
- Are provided by private health insurance companies
- Can be offered as stand-alone plans or as part of a Medicare Advantage plan
- May require you to use specific pharmacies or get some of your medications by mail
How Much Does it Cost?
Part A is free for most people, as long as you are already receiving benefits from Social Security. Part B requires you to pay a monthly premium, which can change from year to year. In addition, individuals with high incomes may need to pay more for their Part B premium. If you have limited income, you may qualify for a special Medicare savings program from your state.
Prices for Part C, Medicare Advantage plans and Medigap plans, as well as Part D, prescription drug coverage, vary based on your selected plan and insurance carrier. To find a plan in your area, you can use the Medicare Plan Finder at Medicare.gov, or contact a qualified Medicare insurance agent.
What are Late Enrollment Penalties?
If you don't sign up for Medicare Part B and/or D as soon as you become eligible, you could wind up paying more in monthly premiums down the road. To keep costs down for everyone, Medicare needs everyone to begin paying their Part B and D premiums as soon as they're eligible.
The reason is simple...if everyone waited until they were sick to enroll in Part B or Part D, Medicare would never be able to sustain itself. The cost of paying for care for individuals who are ill and/or require expensive medications would far outstrip the amount of money taken in by Medicare in the form of premiums. So Medicare needs everyone to begin paying their premiums for Parts B and D as soon as they're eligible so there's enough money to care for everyone when they need it.
How Much are the Late Enrollment Penalties?
The late enrollment penalty for Part B is approximately 10% for every 12-months that you weren't enrolled, but could have been.
Part D has a similar late enrollment penalty, but the calculations are a little more complicated. You can be assessed a late enrollment penalty if, once your eligible for coverage, there is a period of 63 or more days where you go without Part D or other creditable prescription drug coverage (from a previous employer, for example). The penalty is calculated by multiplying 1% of the national base beneficiary premium by the number of full months you were eligible for coverage, but didn't enroll.
Still Have Questions? Talk to an Expert.
If you're eligible for Medicare, it's important to make sure you're getting all the coverage you deserve. Fortunately, understanding your options doesn't have to be complicated. At MedicareSolutions.com, we've put together a number of informative articles on a variety of Medicare-related topics. And Medicare.gov is the official website for Medicare beneficiaries.