Medicare is a national social insurance program that the US Federal Government has had in place since 1965. This health insurance program is for people over the age of 65 and for younger people who have certain disabilities and people with kidney failure.
Medicare beneficiaries are offered benefits for various services through several parts of Medicare. There are several different Medicare programs that all cover different healthcare costs.
Medicare Part A covers in-patient hospital care, skilled nursing care, nursing home care (as long as custodial care is not the only care you need), home health care, and hospice. A Medicare beneficiary can go to any hospital that accepts Medicare patients, there is no specific network that exists.
Medicare Part B covers doctors’ and other outpatient medical care, ambulance service, durable medical equipment, mental health, getting a second opinion before surgery, and some preventive services to help maintain your health. Again, Medicare beneficiaries can choose any doctor who will accepts Medicare patients without having to worry about a network of providers.
Medicare Part C (known as Medicare Health Plans or Medicare Advantage Plans) covers all services that Medicare covers, including Part A, Part B, and often Part D (for prescription drugs). Medicare Advantage are often network plans where you have a defined network and must use doctors and hospitals that participate in that network. Medicare Advantage plans are administered by private insurance companies and often provide more benefits than the minimum required by Medicare. Many of these plans will offer some benefits for vision, hearing and dental which are not covered by Medicare. While only about 30% of all Medicare beneficiaries are on these types of plans, their popularity is growing in many parts of the country.
Medicare Part D pays for prescription drugs for Medicare beneficiaries. These plans are also offered through private insurance companies through either a stand-alone plan, or through as part of a Medicare Advantage plan.
Currently there are about 48 million Americans on our Medicare system, with approximately 40 million of them over the age of 65. Medicare covers on average about 1/2 of the healthcare costs for most people. Some things are not covered by Medicare including: long-term care, dental services, dentures, vision, hearing, routine foot care, accupuncture, and cosmetic surgery.
Medicare doesn’t pay for 100% of the costs of covered services. Medicare beneficiaries are responsible to cover some of the costs of thier healthcare. Here is a breakdown of what Medicare beneficiaries will be repsonsible to pay for in 2012:
Medicare Part A: Hospital Insurance
Most people don’t pay a premium for Medicare Part A because they paid Medicare taxes while they were working. If you didn’t, and you have to pay a premium, it can be up to $411 per month in 2016. There are also many others services you’ll be paying for even though they are covered by Medicare Part A.
Hospital Stay: In 2016 YOU pay…
- $1,288 deductible per benefit period
- $0 for the first 60 days of each benefit period
- $322 per day coinsurance for days 61 – 90 of each benefit period
- $644 per “lifetime reserve day” coinsurance for days 91 – 150
Skilled Nursing Facility Stay: In 2016 YOU pay…
- $0 for the first 20 days of each benefit period
- $161 per day for days 21 – 100
- All costs for each day over 100 of each benefit period
Part B: Medical/Physicians Services
Everyone pays a premium for the Part B services offered through Medicare. Most people pay the standard amount which is $104.90 per month. However, you’ll pay a different premium amount if:
- You enroll in Part B for the first time in 2016.
- You don’t get Social Security benefits.
- You’re directly billed for your Part B premiums.
- You have Medicare and Medicaid, and Medicaid pays your premiums. (Your state will pay the standard $121.80)
- Your modified adjusted gross income as reported on your IRS tax return from 2 years ago is above a certain amount.
If you’re in 1 of these 5 groups, here’s what you’ll pay:
|File Individual Tax Return||File Joint Tax Return||You Pay|
|$85,000 or less||$170,000 or less||$121.80|
|$85,001 – $107,000||$170,001 – $214,000||$170.50|
|$107,001 – $160,000||$214,000 – $320,000||$243.60|
|$160,000 – $214,000||$320,000 – $428,000||$316.70|
|above $214,000||above $428,000||$389.80|
Medicare Part B only covers part of the cost of your medical care. Medicare beneficiaries are responsible for the following costs:
- Annual Part B deductible of $166 per year (in 2016)
- 20% of all Medicare-approved expenses
- Blood that is in excess of 3 pints per year
- Part B Excess charges (physicians can charge the Medicare patient up to 15% more than what Medicare allows)
Medicare Supplement, or Medigap insurance policies cover the costs that you as the patient would normally have to pay. A Medicare Supplement policy will only cover a service if it’s covered by Medicare Part A or Part B. Most Medicare beneficiaries who are on original Medicare will buy a Medicare Supplement policy to help pay for their portion of the costs. Click HERE FOR MORE INFORMATION ON MEDICARE SUPPLEMENT.
Part D: Prescription Drugs.
Signing up for a Part D presciption drug plan is optional. However, if you decide not to sign up for a Part D plan when you are initially eligible, there will be a penalty when you eventually do sign up. This is to prevent people from only signing up when they get sick and need to start using a lot of expensive medications. The amount you pay for a Part D plan is also based on your income. If your income is above a certain limit, you will pay an income-related monthly adjustment in addition to your plan premium. The chart below shows what those adjustments would be.
|File Individual Tax Return||File Joint Tax Return||You Pay|
|$85,000 or less||$170,000 or less||Your Plan Premium|
|$85,001 – $107,000||$170,001 – $214,000||$12.70 + Your Plan Premium|
|$107,001 – $160,000||$214,000 – $320,000||$32.80 + Your Plan Premium|
|$160,000 – $214,000||$320,000 – $428,000||$52.80 + Your Plan Premium|
|above $214,000||above $428,000||$72.90 + Your Plan Premium|
Plan premiums for Part D plans can range from about $15 per month up to $70 per month, depending on the level of coverage.
Part C: Medicare Advantage or Medicare Health Plans
Medicare Advantage Plans, also known as Medicare Health Plans are offered by private insurance companies who contract with Medicare. These plans are designed to offer the same benefits that would be covered by Medicare Part A and Part B, and many of them also offer Part D (prescription drug) benefits as well. Medicare Advantage Plans always cover emergency health care, and urgently needed health care. The only thing a Medicare Advantage plan doesn’t cover is hospice care because hospice care is always covered under original Medicare. In order to enroll in a Medicare Advantage plan you must be enrolled in Medicare Part A and Part B, which means you’ll be paying the Part B premium of $104.90 per month (for most people). Medicare Advantage plans may also have an additional monthly premium charged by the insurance company, so you’ll need to shop around for the best plans in your area. Many Medicare Advantage plans DO NOT charge an extra monthly premium. With most of these plans you’ll pay a copay when you go see the doctor or go into the hospital. In that sense, these plans are very similar to private or group health insurance that most people have while they are in their working years. Many Medicare Advantage plans also offer additional benefits not covered by Medicare such as vision, hearing and dental care. Insurance companies add on these benefits to make their plans more appealing. Medicare beneficiaries can change to a different Medicare Advantage plan each year during the Annual Enrollment Period, or when they move to a different part of the country.
START AN APPLICATION TODAY for a Medicare Supplement or Medicare Advantage plan available in your area.
The Centers for Medicare and Medicaid Services has published a great booklet to help you learn more about how Medicare works. You can find it here: MEDICARE AND YOU.
This is another helpful brochure they put together called CHOOSING A MEDIGAP POLICY.