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Navigating Medicare

Do You Understand Medicare? We Can Help!

Your guide to coverage and costs

Medicare is the federal health insurance program for people who are 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant) and has four parts. Each part covers different services.

It is important that you understand your Medicare coverage options so you can make informed choices based on your health, your budget, or both. It is also important to plan your Medicare strategy well before you reach age 65 because you can only change your election under certain circumstances. The following is a basic summary of the four parts of Medicare and the out-of-pocket costs associated with each part.

Medicare Part A - Hospital insurance

Medicare Part A helps pay for four kinds of medically necessary care:

  • Inpatient hospital care
  • Inpatient care in a skilled nursing facility following a hospital stay
  • Home health care
  • Hospice care

Generally, if you paid Medicare taxes for at least 10 years while working, you do not have to pay any premiums for Part A coverage. However, there is a $1,600 deductible for each time you’re admitted to the hospital per benefit period. There's no limit to the number of benefit periods you can have. For inpatient stays, you pay nothing for the first 60 days (after you pay your $1,600 deductible). For days 61 - 90, you'll pay $400/day. For days 91 - 150, you'll pay $800. After 150 days, you'll pay all of the costs.

If you don’t buy Part A when you’re first eligible for Medicare (usually when you turn 65), you might have to pay a penalty.1

Medicare Part B - Medical insurance

Medicare Part B helps pay for:

  • Services from doctors and other healthcare providers
  • Outpatient care
  • Home health care
  • Durable medical equipment (like wheelchairs, walkers, hospital beds, and other equipment)
  • Many preventive services (like screenings, shots or vaccines, and yearly “wellness” visits)

You'll pay a $164.98 monthly premium (or higher depending on your income)2 and a $226 deductible each year for Part B coverage. You’ll also usually pay 20% of the cost for each Part B-covered service or item after you’ve paid your deductible (co-insurance).

If you don’t sign up for Part B when you’re first eligible for Medicare (usually when you turn 65), you might have to pay a penalty.3

Medicare Part C - Medicare Advantage

Medicare Advantage is a Medicare-approved plan from a private company that offers an alternative to Original Medicare for your health and drug coverage. These “bundled” plans include Part A, Part B, and usually Part D. In most cases, you’ll need to use doctors who are in the plan’s network. These plans may have lower out-of-pocket costs and may offer extra benefits that Original Medicare doesn’t cover like vision, hearing, and dental services.

Medicare Part D - Drug coverage

Medicare Part D helps cover the cost of prescription drugs (including many recommended shots or vaccines not covered by Part B). Part D is offered through private companies either as a stand-alone plan, for those enrolled in Original Medicare, or as a set of benefits included with your Medicare Advantage Plan. You should enroll in Part D when you first get Medicare. If you delay enrollment, you may face gaps in coverage and enrollment penalties.4 Monthly premiums vary based on which plan you join and can change each year. You may also have to pay an extra amount each month based on your income.

Help with out-of-pocket costs

Medicare Supplement Insurance (Medigap) is extra insurance you can buy from a private health insurance company to help pay your out-of-pocket costs for Original Medicare. You must have Original Medicare – both Part A (Hospital insurance) and Part B (Medical insurance) – to buy a Medigap policy.

Want to learn more about Medicare?

For more detailed information about Medicare and its provisions, costs, and potential penalties, visit medicare.gov and medicareinteractive.org.

1. If Part A is not purchased upon eligibility for Medicare, usually at age 65, an extra 10% will be added to the monthly premium. The higher premium must be paid each month for twice the number of years an individual could have signed up for Part A but didn’t.
2. This amount is for 2023 and can change each year. The premium is paid each month, even if no Part B-covered services are received.
3. An extra 10% will be paid for each year an individual could have signed up for Part B but didn’t. This penalty is added to the monthly Part B premium. (a higher premium may be paid depending on income.) The penalty must be paid for as long as you have Part B. Generally, a penalty will not be assessed if an individual (or his/her spouse) is still working and has health coverage based on that job. 4. An extra 1% for each month must be paid for an individual who could have signed up for Part D but didn’t. The penalty is added to the monthly premium. The penalty will be assessed each month for as long as an individual has Part D coverage. If an individual has creditable drug coverage or qualifies for Extra Help, this penalty will not apply.

Sources: medicare.gov., medicareinteractive.org.


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