Medicare isn’t like other health insurance. You don’t get all the coverage you need under just one singular plan. Instead, there are several parts of Medicare that work together to give you comprehensive medical coverage.
There are four parts of Medicare. You won’t necessarily need to enroll in all four parts, but you should be aware of what each of them offers so you can decide which parts you want to enroll in.
The four parts of Medicare include:
- Part A: Inpatient hospital coverage
- Part B: Outpatient medical coverage
- Part C: Medicare Advantage, an alternative to Parts A and B
- Part D: Prescription drug coverage.
Medicare Part A
Medicare Part A is also referred to as hospital insurance or inpatient insurance. It covers expenses you have when staying at a hospital or skilled nursing facility. It also offers some home health care and hospice care benefits.
Let’s talk about each of those in greater detail:
- Inpatient hospital care: This includes all the care you receive after being admitted into a hospital by a physician. Medicare covers up to 90 days of each benefit period at a general hospital. In addition, you’ll have 60 lifetime reserve days if your stay extends past the 90-day mark. Part A also covered up to 190 lifetime days in a Medicare-approved psychiatric hospital.
- Skilled nursing facility care: Part A covers your room, board, and certain services provided to you in a skilled nursing facility. This includes some medications, tube feedings, and wound care. It covers up to 100 days each benefit period. To qualify for a stay in a skilled nursing facility, you must have spent at least three consecutive days in the hospital within 30 days of your admission to a skilled nursing facility. A physician must also certify that you need skilled nursing or therapy services.
- Home health care: Though home health care is normally covered by Part B, Part A coverage applies if you have spent at least three consecutive days as a hospital inpatient within 14 days of receiving home health care. Part A covers up to 100 days of daily care and an unlimited amount of intermittent care.
- Hospice care: Part A covers hospice care if your provider certifies that it is necessary.
Most Medicare beneficiaries do not pay a premium for Part A. Part A is premium-free for people who have paid taxes for at least ten years or 40 quarters. If you have not met that qualification but are married to someone who has, you are also eligible to receive premium-free Part A.
Those who have not met the minimum requirements can purchase Part A. The premium is based on how many quarters you paid taxes, and the amount usually changes each year.
Medicare Part B
Medicare Part B is also called medical insurance or outpatient insurance. It covers a variety of services, all aimed at improving or preventing health conditions.
- Provider services: Part B covers all medically necessary treatment.
- Durable medical equipment (DME): Part B covers equipment that serves a medical purpose, is able to withstand repeated use, and is appropriate for home use. This could include things like oxygen tanks, walkers, mobile beds, etc.
- Home health services: As we mentioned earlier, Part B covers home health services unless you’ve met the requirements for it to be covered by Part A.
- Ambulance services: Emergency transportation by ambulance. Limited coverage for non-emergency transit is also available, but only when there is no safe alternative and it is medically necessary.
- Preventive services: Part B covers outpatient physical, speech, and occupational therapy as long as they are administered by a Medicare-approved therapist. Part B also includes a long list of screenings, counseling, and vaccines.
- Lab tests and x-rays: Part B covers all lab tests and diagnostic images.
- Chiropractic care: Chiropractic care is limited and only covered when it is necessary to fix the subluxation of the spine.
- Certain prescription drugs: Some drugs like immunosuppressants and select anti-cancer, antiemetic, dialysis, and other drugs typically administered by a physician via injection fall under Part B coverage.
Part B has a monthly premium. Most beneficiaries pay the standard premium, which is set and updated by the Centers for Medicare and Medicaid Services each year. Those who earn higher incomes may pay more, and those with limited incomes can apply for financial assistance.
In addition to the monthly premium, Part B has an annual deductible and cost-sharing requirements. Generally speaking, Part B pays for 80% of the cost of covered services.
Medicare Part C
Medicare Part C, more often referred to as Medicare Advantage, is a private health insurance plan provided by insurance companies that are contracted with the federal government. Each Medicare Advantage plan must offer at least as much coverage as Parts A and B. While you will remain enrolled in Parts A and B, the private insurance carrier will provide your benefits.
Medicare Advantage plans are attractive to many people due to their low premiums and extra benefits. It’s not uncommon for people to find a $0 premium Medicare Advantage plan. That doesn’t mean these plans are free. You’ll still pay the Part B premium plus any cost-sharing amounts outlined by the Medicare Advantage plan.
Part C plans also have extra benefits not available in Original Medicare (Parts A and B). Since private insurance carriers offer these plans, each one can be different. However, these extra benefits are often found in Part C plans:
- Dental benefits
- Vision coverage
- Hearing coverage
- Gym memberships and wellness programs
- Prescription drug coverage
- Transportation services
- Meal delivery after a hospitalization
Before you decide to enroll in Medicare Advantage, it’s important to take a closer look at the types of Medicare Advantage plans available and what rules and regulations surround these plans.
Medicare Part D
Part D is prescription drug coverage. It covers most outpatient prescriptions, like those you’d get at your local pharmacy. Like Part C, Part D is offered through private insurance companies. You can get a stand-alone Part D plan or have it included in your Medicare Advantage plan. Medicare Advantage plans that include Part D coverage are referred to as MAPD plans.
Regardless of how you get Part D, the coverage works the same way. Each plan has a list of covered medications called the drug formulary. If a medication is not on the formulary, you can either request an exception, file an appeal, or pay out-of-pocket.
The drug formulary is organized into tiers. Most Part D plans have four or five tiers. Lower tiers contain generic medications, while those in higher tiers are name-brand and specialty drugs. As you probably guessed, the higher the tier, the higher the cost. Your copay is based on the tier, as well as the annual deductible. CMS sets a standard deductible each year, but plans can choose to use a lower deductible amount.
While drug formularies can vary, CMS requires each Part D plan to cover all drugs in the following categories:
- HIV/AIDS treatment
- Antidepressants
- Antipsychotic medications
- Anticonvulsive treatments for seizure disorders
- Immunosuppressants
- Anti-cancer drugs (unless they’re covered under Part B)
Most vaccines are also covered under Part D. As of 2023, vaccines that fall under Part D coverage must be provided to the beneficiary with no deductible or cost-sharing responsibility.
Medicare Part D is complicated. We’ve already talked about drug formularies and tiers, but there is one more aspect of Part D plans: coverage phases.
Part D plans have four phases of coverage. Your out-of-pocket costs will be determined by which of the coverage phases you’re in when you pick up your prescriptions.
- Phase 1: Deductible Phase
- Phase 2: Initial Coverage Phase
- Phase 3: Coverage Gap or Donut Hole
- Phase 4: Catastrophic Coverage
Not every person will enter all four phases of coverage. As you work with your Medicare advisor, ask about your prescription costs throughout the year. Your advisor will be able to estimate when you’ll enter each phase and how much you should expect to spend on medications throughout the year.
