Medicare helps insure tens of millions of Americans every year. According to the Centers for Medicare and Medicaid Services (CMS), Medicare covered 45.2 million people in 2008 and paid a total of $462 billion in benefits.
People age 65 or older and some disabled Americans can receive numerous benefits from this health insurance program, including hospital care and prescription drug coverage. But not all plans are alike. Medicare has four main parts: A, B, C and D. Knowing what these parts cover can help you decide which coverage is best for you.
Medicare Part A encompasses hospital insurance. It covers inpatient care in hospitals, skilled nursing facilities and hospices, and some home health care as well. According to Medicare.gov, most people don’t pay a premium for Part A. If they paid Medicare taxes while working, they automatically get free Part A coverage. If you’re not eligible for free Part A coverage, you still may be able to buy it, according to the Social Security Administration (SSA).
Americans become eligible for Part A benefits at age 65, according to SSA, if you meet one of the following criteria:
- You receive or are eligible to receive Social Security benefits.
- You receive or are eligible to receive railroad retirement benefits.
- You or your spouse is eligible. You may be eligible even if your spouse is deceased or if you are divorced.
- You are the dependent parent of a fully insured deceased child.
If you are younger than age 65 and are eligible for Social Security benefits, or have certain conditions like Lou Gehrig’s disease, you’re also eligible for free Part A benefits, according to SSA.
Those who are eligible for free Part A coverage also can get Part B coverage. Part B provides medical insurance, and it comes with a monthly premium, according to Medicare.gov. It covers medically necessary services and some preventive services like flu shots, mammograms and prostate cancer screenings.
According to SSA, if you are 65 or older and are a U.S. citizen or a lawfully admitted noncitizen who has lived in the United States for at least five years, you can buy Part B coverage — even if you’re not eligible for free hospital insurance (Part A).
Part C encompasses Medicare Advantage plans. Medicare Advantage plans are plans purchased through Medicare-approved private companies. A Medicare Advantage plan includes Part A and Part B coverage (and usually Part D coverage), and it may include additional benefits like dental insurance, vision coverage, and health and wellness programs. You must be eligible for Part A and Part B coverage if you want a Medical Advantage plan.
Medicare Advantage plans generally take the form of health maintenance organizations (HMOs) and preferred provider organizations (PPOs). In addition to paying your Medicare Part B premium, you’ll also pay a premium for the Advantage plan, according to Medicare.gov.
Some seniors prefer Medicare Advantage plans because they let them choose an insurer and customize their coverage. Despite being run by private companies, Medicare Advantage plans are required to offer, at a minimum, the same benefits that regular Medicare does.
Medicare Part D provides prescription drug coverage. Those with hospital insurance (Part A), medical insurance (Part B) or a Medicare Advantage plan (Part C) are eligible for prescription drug coverage. You’ll pay a premium for this plan in addition to any other Medicare plan premiums.
If you have a Medicare Advantage plan, be careful — if your plan already includes drug coverage and you enroll in Part D, you may be kicked out of your Medicare Advantage plan and automatically enrolled in original Medicare, according to Medicare.gov.
Part D is associated with the notorious Medicare donut hole. This coverage gap can bring some pretty steep out-of-pocket costs between the point when you use up your drug benefits for the year until the point where catastrophic coverage kicks in.
“Part E” is your effort
Medicare won’t cover all of your medical expenses, but it can help cut back your overall health care costs. To make sure you’re covered, don’t miss your enrollment period, which begins three months before your 65th birthday, according to Medicare.gov. Signing up during your enrollment period (even if you’re not ready to retire) will ensure that you don’t experience any coverage delays.