Medicare has deductibles?

Did you know?

Although Medicare is a federal government-run program, it holds many similarities to regular insurance plans? Medicare actually has several coverage options.

Let’s get into it.

The Centers for Medicare and Medicaid Services (CMS) is part of the Department of Health and Human Services (HHS) that oversees federal healthcare programs that cater to those with financial hardship, with disability needs or who are 65+ years of age. 

Medicare is health insurance for the following individuals:

• People aged 65 years or older
• People under 65 with certain health disabilities
• People of any age with end-stage renal disease (aka ESRD, which is permanent kidney failure requiring dialysis or kidney transplant)

There are four parts to Medicare (Parts A, B, C and D). No one person can be covered by all four parts, but many gain multi-part coverage. Individuals seeking coverage from Medicare must enroll in each part separately. 

Open enrollment for Medicare ended December 7, 2021. 

PART A

Also called hospital insurance, Part A includes inpatient hospital stays, care in a skilled nursing facility, hospice care and some home health care. Most Medicare recipients pay $0 of monthly premium for Medicare Part A, which is why Part A is often referred to as premium-free Part A. 

To qualify for premium-free Part A at age 65 a patient must fit one of the following definitions:

1. They get retirement benefits from Social Security or the Railroad Retirement Board.
2. They’re eligible to get Social Security or Railroad benefits but haven't filed for them yet.
3. They or their spouse had Medicare-covered government employment.

If an individual is ineligible for premium-free Medicare Part A, it can be purchased with a monthly premium fee that is separate from the Part B premium. Typically Part A must be purchased in conjunction with Part B coverage. See more at Medicare.org.

PART B

Also called medical insurance, Part B includes services from doctors or other health care providers, outpatient care, home health care, durable medical equipment and some preventive services. Part B is similar to regular insurance in that Medicare Part B recipients pay monthly premiums for this insurance coverage, though the Part B premium is automatically deducted from an individual’s benefit payment if they obtain benefits from Social Security, the Railroad Retirement Board or the Office of Personnel Management. If they do not receive benefits from one of those three places, the individual will receive the bill.

Medicare Part B premiums are based on income, but the standard (and lowest) premium amount for upcoming 2022 coverage is $170.10 monthly. Part B has a deductible of $233 for the upcoming 2022 year. After deductible is met for the year, Medicare Part B recipients typically pay 20% of the Medicare-Approved Amount for the following things:

• Most doctor services (including most doctor services while in a hospital inpatient)
• Outpatient therapy
• and Durable Medical Equipment (DME).

To see if a service is covered by Medicare Part B, visit Medicare.org.

Original Medicare

Original Medicare is essentially Parts A and B provided directly from Medicare to the recipient. Individuals enroll in Parts A and B directly through the Medicare website. Those with Original Medicare have their choice of doctors, hospitals and providers that accept Medicare. Original Medicare covers about 80% of health care costs and individuals must pay the premium and deductible discussed above.

PART C

Also called Medicare Advantage (MA) Plans, Part C is another way to gain Medicare coverage, but this time through a Medicare-approved private insurance company. Part C includes all the benefits and services covered under Part A and B. Usually these plans include Medicare prescription drug coverage (Medicare Part D). Part C is the closest to any other health insurance plan.

In most Medicare Advantage plans you’ll need to use in-network providers with your insurance provider, or else you’ll have to pay more or all of the costs accrued for services rendered.

There are copays and coinsurance for Medicare Advantage plans.

You may also pay additional premium costs on top of your part B expenses with some plans. Each plan has different costs and rules and some may come with extra coverage for vision and dental. 

PART D

Also known as Medicare Prescription Drug Plans, Part D is added drug coverage to Medicare. Many individuals obtain Part D and Original Medicare coverage (Parts A and B). A monthly premium is added (in addition to Part B’s premium) to gain this coverage.

A couple things to keep in mind: 

1.  A Medicare recipient will pay a late enrollment fee per month if the individual signs up for Part D outside of enrolling for Parts A and B. To avoid penalty, sign up for Part D at the same time as Parts A and B OR sign up in less than 63 days without prescription drug coverage through something like an employer, TRICARE or Veteran’s Affairs. 
2. If drug coverage can be obtained through an individual’s Medicare Advantage Plan, the individual must receive prescription drug coverage through this plan.

Medicare patients in need of assistance paying for Medicare may be eligible for federally funded programs. Visit Medicare.org for more information.

Medicare Supplemental Insurance Policies (Medigap)

This coverage is offered through private insurance companies to fill in the gaps in Original Medicare. Individuals with Medigap pay a monthly premium in addition to their Part B premium and costs vary between policies and companies. Medigap plans do NOT work with Medicare Advantage Plans, and in fact, it is illegal for someone to sell someone a Medigap plan if they already have a Medicare Advantage plan.

Medicare Medical Savings Account (MSA) Plans

Like high-deductible, HSA plans, Medicare Medical Savings Account Plans are a consumer-directed Medicare Advantage Plan. These plans let the individual choose their health care services and providers. MSA plans typically don’t have a network of doctors, other health care providers, or hospitals. MSA plans don’t usually cover Medicare Part D.

For more information, see 10 Steps to Use a Medicare MSA Plan.

Other Medicare health plans

Some types of Medicare health plans have a mixture of the aforementioned health care coverage and are offered by private insurance companies, but are NOT considered MA or MSA plans. Some plans provide Medicare Part A and Part B coverage, while most provide only Part B coverage or Part D. 

While these plans are NOT considered Medicare Advantage Plans, they must adhere to the same rules, for the most part. Each type of plan has special rules and exceptions, so advise patients to thoroughly research these plans before enrolling.

For more information, see Medicare.gov.

Feel free to send patients  this video about finding a Medicare plan that’s right for them. See Medicare costs at a glance for more details.

Patients can explore Medicare options through a quiz to best fit their needs here.

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