Medicare: An Overview
Medicare are Federal U.S. government-sponsored programs designed to help cover healthcare costs for American citizens. Established in 1965 and funded by taxpayers, these two programs have similar-sounding names, which can trigger confusion about how they work and the coverage they provide.
- Medicare is the primary medical coverage provider for many persons ages 65 and older and for those with a disability; eligibility for Medicare has nothing to do with income level.
- Medicare Part A provides free hospitalization coverage to individuals who are 65 years or older, regardless of income.
- Medicare Part B covers medically necessary services and equipment, including doctor’s office visits, lab work, x-rays, wheelchairs, walkers, and outpatient surgeries.
Part A: Hospitalization Coverage
Medicare Part A provides free hospitalization coverage to individuals who are 65 years or older, regardless of income, as long as they or their spouses worked and paid Medicare taxes for at least 10 years. But take note: while the hospital coverage is free, without any monthly premiums, copays and deductibles for services do apply.
Part B: Medical Insurance
Those eligible for Medicare Part A also qualify for Part B, which covers medically necessary services and equipment, including doctor’s office visits, lab work, x-rays, wheelchairs, walkers, and outpatient surgeries, as well as preventive services like disease screenings and flu shots.
Part B requires monthly premium payments (generally deducted from Social Security or Railroad Retirement payments), as well as yearly deductibles. Individuals who earn in excess of $85,000 per year ($170,000 for a couple) are obligated to pay more for this program.
Individuals are not mandated to sign up for Part B as soon they are eligible if they are still covered by their employer’s insurance. However, it may cost more to join later in life, due to a late-enrollment penalty.
Part C: Supplemental Insurance
Individuals eligible for Medicare Part A and Part B are likewise eligible for Part C, also known as Medicare Advantage, which refers to private insurance plans rather than federal government programs. In addition to providing coverage offered by Parts A and B, Part C also offers vision and dental coverage. In that way, it functions much like the health maintenance organizations (HMOs) and preferred provider organizations (PPOs), through which many people receive medical services during their working years.
Enrolling in Part C may reduce the costs of purchasing services separately. Individuals should carefully evaluate their medical needs because Part C participants generally pay out-of-pocket for the associated services.
It is worth noting that Medicare Supplement Insurance, known as Medigap, may be purchased to help cover expenses such as copayments, coinsurance, and deductibles that are not covered by Parts A and Part B. However, physicians who do not take Medicare also do not accept Medigap.
Part D: Prescription Drug Coverage
Medicare Part D provides prescription drug coverage. Participants pay for Part D plans out-of-pocket, and must pay monthly premiums, yearly deductible, and copayments for certain prescriptions. Those enrolled in Medicare Part C are typically eligible for Part D.
It is important to know the time of year people can switch plans, which is October 15 to December 7, in 2019. Delaying the application will result in a penalty rate once Part D is finally acquired.
2019 Costs at a Glance
Part A premium
Most people don't pay a monthly premium for Part A (sometimes called "premium-free Part A"). If you buy Part A, you'll pay up to $437 each month. If you paid Medicare taxes for less than 30 quarters, the standard Part A premium is $437. If you paid Medicare taxes for 30-39 quarters, the standard Part A premium is $240.
Part A hospital inpatient deductible and coinsurance
- $1,364 deductible for each benefit period
- Days 1-60: $0 coinsurance for each benefit period
- Days 61-90: $341 coinsurance per day of each benefit period
- Days 91 and beyond: $682 coinsurance per each "lifetime reserve day" after day 90 for each benefit period (up to 60 days over your lifetime)
- Beyond lifetime reserve days: all costs
Part B premium
The standard Part B premium amount is $135.50 (or higher depending on your income). However, some people who get Social Security benefits will pay less than this amount ($130 on average).
Part B deductible and coinsurance
$185 per year. After your deductible is met, you typically pay 20% of the Medicare-approved amount for most doctor services (including most doctor services while you're a hospital inpatient), outpatient therapy and durable medical equipment (dme).
Part C premium
The Part C monthly premium varies by plan.
Compare costs for specific Part C plans.
Part D premium
The Part D monthly premium varies by plan (higher-income consumers may pay more).
Compare costs for specific Part D plan