Medicare Parts Explained

It’s essential to take the time to understand the different parts of Medicare.

Those who do are in a better position to maximize Medicare benefits, which protects both your health and your bank account. 

Below, we briefly explain the different parts of Medicare.

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The History Of The Four Parts Of Medicare

  • In 1965 President Lyndon B. Johnson signed Medicare into law, which included both Part A and Part B.  
  • The Balanced Budget Act of 1997 expanded Medicare to include Part C (Medicare Advantage).
  • And in 2003, George W. Bush signed the Medicare Prescription Drug, Improvement, and Modernization Act, which brought about Part D.

The Four Different Parts of Medicare Explained

Part A

Medicare Part A is your hospital insurance. It covers all your inpatient care services at hospitals, nursing facilities, and hospice care. Part A would cover your room and board if you were to need intensive or specialized care. Here’s what it covers:

  • Inpatient hospital care
  • Skill nursing facility care
  • Skilled nursing care not custodial or long term care
  • Hospice care

Costs

Most Americans receive their Part A benefits for free. Throughout your working career, you’ve pre-paid your Part A premiums through automatic deductions taken from your paycheck in the form of Medicare taxes. 

As long as you’ve worked 40 quarters (10 years) in which you paid Medicare taxes, your Part A premiums are free.  However, Part A does have a $1,408 deductible.  

Part B

Medicare Part B is your doctor’s insurance. It covers all your outpatient medical care — services such as office visits, simple surgeries, ambulance rides, dialysis, chemotherapy, and other like services.  Part B covers services that fall under the following two categories: 

  • Medically necessary outpatient services 
  • Preventive services

If you have a specific service, test, or item that you want to find out if it’s covered, you can search Medicare covered services here.

Costs 

Unlike Part A, your Part B premiums are not free. Every year Medicare Part B premiums get adjusted; in 2020, the standard premium is $144.60. The annual deductible for your Part B benefits is $198.  

Part B also has a 20% patient responsibility coinsurance. In other words, after the annual deductible has been reached, you’ll pay 20% on all outpatient care services. Medicare pays the remaining 80%.  

There is no out of pocket maximum for this coinsurance. As a result, most people choose to cover this financial gap with a Medicare Supplemental Insurance policy.  

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Part C

Medicare Part C – Medicare Advantage. These are private health insurance policies that expand your Original Medicare benefits to include vision, dental, hearing, and prescription drug coverage. Medicare Advantage also includes all of your Original Medicare benefits. These bundled insurance plans provide and all in one solution to your health care needs. 

Costs 

Private insurance carriers set the price for Medicare Advantage plans. In exchange for a single set monthly premium, Medicare Advantage plans eliminate out-of-pocket medical expenses by covering all coinsurance, copayments, and deductibles. These plans are particularly beneficial to individuals in poor health and can save you thousands of dollars every year. 

Part D  

Medicare Part D provides prescription drug coverage. These are private insurance policies that allow you to add coverage to your existing Medicare benefits. 

Prescription drugs have become almost a necessity for senior living. Without a Part D plan, you’ll pay out-of-pocket for all of your prescription drugs. Medicare mandates that all Part D plans provide multiple drugs in every single category. 

Costs

Private insurance carriers set the price for Medicare Part D plans. However, the premiums are low and very affordable. As a result, nearly 60% of all Medicare beneficiaries own a Part D policy. Another way to get prescription drug coverage is through Medicare Advantage.

Eligibility For The Different Parts Of Medicare  

All U.S. citizens age 65 and above are eligible for Medicare. All four parts of Medicare are available for all individuals eligible for Medicare. 

Enrollment

There are multiple Medicare enrollment periods to sign up and customize your Medicare benefits.  

Initial Medicare Enrollment – begins three months before your 65th birthday, includes your birthday month, and continues for the following three months. You must sign up for Part A and Part B during this window to avoid a financial penalty. You may also enroll in Part C and Part D during this period.  

General Open Enrollment – takes place from January 1st through March 31st each year. This period is only for enrolling in Part A and Part B.  

Annual Enrollment – occurs every year between October 15th and December 7th. This yearly period allows you to customize your Medicare benefits by adding, changing, or dropping, Medicare Advantage, Medicare Part D, and Medicare Supplemental insurance.  

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Our independent agency enables you to customize your Medicare benefits to protect both your health and your finances.  

Our services are free. And there’s never any obligation when speaking with an agent. We’re here to help you the entire way through. 

We’ve helped thousands of clients understand the different parts of Medicare and customize their benefits. See what we can do for you. 

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