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 (ESRD).
The federal Medicare program is made up of four parts.
- Part A is hospital insurance and it's free for most people.
- Part B is medical insurance that has a premium (monthly cost).
- Part C, known as Medicare Advantage, includes Part A and Part B as well as Part D drug coverage.
- Part D is an optional prescription drug plan.
- Medicare Part A helps pay for inpatient care in a hospital or skilled nursing facility (following a hospital stay), some home health care, and hospice care.
- Part A has a deductible and may be premium-free if you or your spouse have paid taxes.
- Medicare Part B helps cover doctor visits, lab tests, and outpatient services. It covers preventative care like health screenings and annual checkups and some medical supplies like wheelchairs and walkers.
- Part B is optional. You must elect Part B and pay a monthly premium, a deductible, and 20% of your costs.
- These are plans offered through private insurance companies. You must live in the plan's service area to enroll. The plans provide Part A (hospital) and Part B (medical) benefits, and most include Part D (prescription drug coverage).
- The plans may offer other benefits like dental, vision, hearing, and fitness, and they put a yearly limit on your total out-of-pocket costs.
- You pay two monthly premiums - one for the plan and one for your Medicare Part B coverage.
- Most Medicare Advantage plans require you to use doctors, specialists, medical facilities, and hospitals in the plan's network.
Prescription drug plan
- Part D is prescription drug coverage offered through private insurance companies.
- You're not automatically enrolled in Part D just because you have Parts A and B.
- Some Part C Medicare Advantage plans already include Part D prescription drug coverage.
- You cannot be enrolled in a Medicare Advantage plan if you are enrolled in a separate Prescription Drug Plan (PDP).
- You can delay Part D enrollment if you're working past age 65 and have health insurance through an employer that includes prescription drug coverage.
Why do many people choose to buy additional coverage?
Unless you qualify for a program to help pay your Medicare costs, you'll have to pay all these costs yourself. As mentioned earlier, there’s a monthly premium for Part B, which is typically deducted from your Social Security check each month. Both Medicare Part A and Part B have deductibles and coinsurance that you must pay. Each year, these costs are reviewed—and often adjusted—by the federal government.
It’s important to remember that Original Medicare (Part A and Part B) does NOT cover most prescription drugs, and you may need additional prescription drug coverage.