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Medicare Plans Coverage: All You Need to Know

Updated: Oct 13

Medicare was first launched in 1965 and is a federal healthcare insurance program initially offered to people aged 65+. In 1972, this program was revised to include people with long-term disabilities and kidney failure but is below the 65-year threshold.

Currently, Medicare has more than 44 million beneficiaries, which roughly translates to 15% of the U.S. population. It plays a key role in the nation’s health security and has helped pay for many people’s home healthcare, physician visits, hospice care, etc.

It’s no surprise that Medicare is expected to grow at a rate of 7.6% annually between 2019-2028. It is also projected to have the highest enrollment growth.

If you’re new to Medicare, here’s everything you need to know!


What Do Medicare Plans Cover?

Before you enroll in healthcare plans, it’s important that you understand what is covered and what you’ll pay for. Since Medicare has different coverage options, choosing the plan which will give you the best coverage can be overwhelming.

There are 5 main plans, and we’ve broken them down for you:


Medicare Part A

Medicare part A is mainly hospital insurance, and it covers most inpatient costs. You, however, have to be officially admitted to a healthcare facility, as ordered and signed by a doctor. Some of the covered services include; blood transfusions, wheelchairs and walkers, part of home healthcare services, and hospice care.

This plan sometimes offers partial coverage for care in skilled nursing facilities, but qualification is based on your inpatient hospital stay. You have to be formally admitted for 3 consecutive days by the doctor’s orders.


What Are the Costs for Medicare Part A?

Most people get this plan for free, but this is dependent on your income. You won’t have to pay monthly premiums if you or your spouse paid FICA taxes for about 10 years while working.

However, if you didn’t pay any Medicare taxes, you’ll have to pay for deductibles on the services covered under this plan.

If you’re 65+, you are also eligible for the premium-free part A if;

  • You qualify for the Railroad and Social security benefits but haven’t applied for them,

  • You receive retirement benefits from the Railroad Retirement Board (RRB) and social security.

If you’re below 65 years, you’re only eligible if you have ESRD (End-Stage Renal Disease) and have received benefits for at least 2 years.

This plan’s premiums depend on how long you & your spouse paid Medicare taxes while working. The standard Medicare plan A monthly premiums for 2021 are $259 or $471.


Medicare Part B

There are 2 primary services covered under Medicare part B;

  1. Preventive services: this is healthcare administered to prevent certain illnesses or detect them early enough when treatment will be most effective. If your healthcare provider agrees to be paid the amount approved by Medicare directly, you won’t incur any costs.

  2. Necessary medical services: this includes the medical supplies required to treat or diagnose certain medical conditions.

Some of the services covered under this plan include; medical supplies, clinical research, emergency department, and ambulance services, cancer screening, and certain outpatient prescription drugs.

This plan also covers mental health services, including inpatient treatment, outpatient, and partial hospitalization.


What Are the Costs for Medicare Part B?

The standard monthly premium for Medicare part B is $148.50, but you could pay more or less depending on how much you earn. If you receive benefits from the Office of Personnel Management, RRB, and social security, the premiums will automatically be deducted from your payments. Those who don’t receive benefits are sent bills.

If you go to healthcare providers who accept Medicare, most of the services will be covered at no additional cost. You’ll, however, have to pay for the services that aren’t covered by this plan.


Medicare Part C

This plan is also referred to as Medicare advantage and is offered by pre-approved organizations that abide by the set Medicare rules. It covers most services in part A and part B plus extra services, not covered including vision, dental, and hearing. To purchase Medicare part C, you have to be registered to the original Medicare plans.

The 4 main types of Medicare advantage plans include; Medical Savings Account (MSA) Plan, Preferred Provider Organization (PPO), Health Maintenance Organization (HMO), and Private Fee-for-Service (PFFS).


What Are the Costs for Medicare Part C?

The amount of monthly premiums you pay is dependent on the type of plan you enroll for. You, however, have to see healthcare providers within your service area, or you’ll incur extra costs.

Medicare advantage plan usually has lower out-of-pocket costs, and they are dependent on;

  • Whether the plan you’re on charges monthly premiums.

  • Copayments or coinsurance.

  • The type of medical services you need and how often you visit a doctor.

  • Whether you comply with the plan’s regulations, e.g., visiting healthcare providers within your network.

  • Whether the plan you’re on pays for your medical insurance premiums.

For the lowest costs, make sure you visit doctors within your service area and plan’s network.


Medicare Part D

This is a separate cover for prescription drugs that aren’t included in the other plans. Medicare part D is usually optional, but we advise that you enroll in this plan when you’re first eligible so that you don’t incur a late enrollment penalty. Most of the drugs covered in this plan often have to be administered by a healthcare professional, including insulin injections.


How Much Does Medicare Part D Cost?

The costs for this plan are dependent on your preferred pharmacy, the medication you take, and the plan you’re enrolled for. Most of the time, you have to pay monthly premiums and additional costs depending on your income. Sometimes you may even pay deductibles and make copayments.


Medigap

This is a supplemental insurance program that fills the gaps of the other Medicare plans. It’s only sold by private companies and covers other healthcare costs like deductibles, coinsurance, and copayments. Depending on the plan you’re on, Medigap also covers some medical services when you travel outside the U.S.

It’s important to note that Medigap and Medicare’s advantage plans are different. Medigap only supplements your original Medicare policy, while Medicare part D covers more services than the original pans. You also can’t sign up for this plan if you have a Medicare advantage plan.

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