Medicare supplement plans, prescription drug plans, and Advantage plans all under one roof in easy to understand terms.
What is a Medicare plan?
Medicare is the designated federal health insurance program for those 65 and older with a few exceptions. Most notably people with disabilities and those with End-Stage Renal Disease.
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Most of the time people do not pay a monthly premium for Part A
You typically don’t need to pay a monthly premium for Part A if you or your spouse paid Medicare taxes while working for aat least 40 quarters of Medicare-covered employment. This is sometimes called “premium-free Part A.”
The Medicare Part A inpatient hospital deductible that beneficiaries pay if admitted to the hospital will be $1,600 in 2023, an increase of $44 from $1,556 in 2022. The Part A inpatient hospital deductible covers beneficiaries’ share of costs for the first 60 days of Medicare-covered inpatient hospital care in a benefit period. In 2023, beneficiaries must pay a coinsurance amount of $400 per day for the 61th through 90th day of a hospitalization ($389 in 2022) in a benefit period and $800 per day for lifetime reserve days ($778 in 2022). For beneficiaries in skilled nursing facilities, the daily coinsurance for days 21 through 100 of extended care services in a benefit period will be $200.00 in 2023 ($194.50 in 2022).
Everyone pays a monthly premium for Part B.
Every year the Medicare Part B premium, deductible, and coinsurance rates are updated following the Social Security Act changes. The standard monthly premium for Medicare Part B enrollees will be $164.90 for 2023, which is a decrease of $5.20 from $170.10 in 2022. The annual deductible for all Medicare Part B beneficiaries is $226 in 2023, a decrease of $7 from the annual deductible of $233 in 2022.
How is Original Medicare different from Medicare Advantage, and how do they work?
Original Medicare includes Medicare Part A and Medicare Part B. You pay for services as you get them. When you receive services, you’ll pay a deductible at the start of each calendar year, and you will usually pay 20% of the cost of the Medicare-approved service, called coinsurance. If you want drug coverage, you can add a separate drug plan (Part D).
Original Medicare pays for a lot, but not all, of the cost for covered health care services and supplies. A Medicare Supplement Insurance, otherwise known as a Medigap policy can help pay some of the remaining health care costs, like copayments, coinsurance, and deductibles. Some Medigap policies also cover services that Original Medicare does not cover, such as emergency medical care when you are traveling outside the U.S.
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 as well. Plans may offer additional benefits that Original Medicare does not cover — like hearing, vision, and dental services. Medicare Advantage Plans have yearly contracts with Medicare and must follow Medicare’s coverage rules. The plan must also notify you about any changes before the start of the next enrollment year to avoid any surprises. Each Medicare Advantage plan can charge different out-of-pocket costs. They can also have different rules for how you receive services.
What about Part D? Medicare prescription drug coverages?
Part D Medicare drug coverage helps pay for prescription drugs you need. To get Medicare drug coverage, you must join a Medicare-approved plan that offers drug coverage, which includes Medicare drug plans and Medicare Advantage Plans with drug coverage.
Each plan may vary in cost and specific drugs covered but must give at least a standard level of coverage set by Medicare. Medicare drug coverage does include both generic and brand-name drugs. Plans can vary the list of prescription drugs they cover called a formulary and how they place drugs into different “tiers” on their formulary sheets.
Plans also will have different monthly premiums based on the plans selected. You will also have other costs throughout the year in a Medicare drug plan. How much you pay for each drug depends on which plan you choose.