All About Medicare
What Is Medicare
Medicare is a federal health insurance program for:
- People who are 65 or older
- People under 65 with certain disabilities
- People with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD)
The different parts of Medicare help cover specific services
Medicare Part A
(Hospital Insurance)
Part A covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care.
Medicare Part B
(Medical Insurance)
Part B covers certain doctors’ services, outpatient care, medical supplies, and preventive services.
Medicare Part D
(Prescription Drug Coverage)
- Part D adds prescription drug coverage to Original Medicare
- Some Medicare Cost Plans
- Some Medicare Private-Fee-for-Service Plans
- Medicare Medical Savings Account Plans
The Four Parts of Medicare
Medicare Part A
(Hospital Insurance)
- Helps cover inpatient hospital care.
- Helps cover skilled nursing facility care, hospice, and skilled home health care.
- Medicare beneficiaries are responsible for a deductible for hospital confinement.
Medicare Part B
(Medical Insurance)
Medicare Part C
(Medicare Advantage Plan)
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Medicare Advantage Plans are a type of Medicare health plan offered by a private insurance company that contracts with Medicare to provide all your Part A and Part B benefits.
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Most Medicare Advantage Plans include prescription drug coverage (Part D).
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Your Medicare services are not paid for by Original Medicare.
Common types of Medicare Advantage Plans:
- Health Maintenance Organization (HMO)
- Preferred Provider Organization (PPO)
- Special Needs Plans (SNP)
- Private Fee-for-Service Plans (PFFS)
Medicare Part D
(Prescription Drug Coverage)
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Part D plan are offered by a private insurance company. Each company that offers a Part D plan (approved by Medicare) MUST give at least a standard level of coverage set by Medicare.
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Helps to cover cost of prescription drugs.
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Part D plans vary year to year including the list of prescription drugs (formulary). Part D plans place drugs into different “tiers” on their formularies.
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With so many moving parts and yearly changes, it is important to have your Part D plan reviewed yearly during the Annual Enrollment period. (October 15th-December 7th).
What Does Medicare Cost?
Premium-Free Part A
You usually don’t pay a monthly premium for Medicare Part A (Hospital Insurance) coverage if you or your spouse paid Medicare taxes for a certain amount of time while working. This is sometimes called “premium-free Part A.”
Most people get premium-free Part A.
You can get premium-free Part A at 65 if:
- You already get retirement benefits from Social Security or the Railroad Retirement Board.
- You’re eligible to get Social Security or Railroad benefits but haven’t filed for them yet.
- You or your spouse had Medicare-covered government employment.
If you’re under 65, you can get premium-free Part A if:
- You got Social Security or Railroad Retirement Board disability benefits for 24 months.
- You have End-Stage Renal Disease (ESRD) and meet certain requirements.
Part A Premiums:
If you don’t qualify for premium-free Part A, you can buy Part A.
If you buy Part A, you’ll pay up to $458 each month. If you paid Medicare taxes for less than 30 quarters, the standard Part A premium is $458. If you paid Medicare taxes for 30-39 quarters, the standard Part A premium is $252.
In most cases, if you choose to buy Part A, you must also:
- Have Medicare Part B (Medical Insurance).
- Pay monthly premiums for both Part A and Part B.
Part B Costs
If you don’t sign up for Part B when you’re first eligible, you may have to pay a late enrollment penalty.
You pay a premium each month for Part B. Your Part B premium will be automatically deducted from your benefit payment if you get benefits from one of these:
- Social Security
- Railroad Retirement Board
- Office of Personnel Management
If you don’t get these benefit payments, you’ll get a bill.
Most people will pay the standard premium amount. If your modified adjusted gross income is above a certain amount, you may pay an Income Related Monthly Adjustment Amount (IRMAA). Medicare uses the modified adjusted gross income reported on your IRS tax return from 2 years ago. This is the most recent tax return information provided to Social Security by the IRS.
The standard Part B premium amount in 2020 is $144.60. Most people pay the standard Part B premium amount. If your modified adjusted gross income as reported on your IRS tax return from 2 years ago is above a certain amount, you’ll pay the standard premium amount and an Income Related Monthly Adjustment Amount (IRMAA). IRMAA is an extra charge added to your premium.
2020 IRMAA Income Brackets and Monthly Payments
| If your yearly income in 2018 (for what you pay in 2020) was | You pay each month (in 2020) | ||
|---|---|---|---|
| File individual tax return | File joint tax return | File married & separate tax return | |
| $87,000 or less | $174,000 or less | $87,000 or less | $144.60 |
| above $87,000 up to $109,000 | above $174,000 up to $218,000 | Not applicable | $202.40 |
| above $109,000 up to $136,000 | above $218,000 up to $272,000 | Not applicable | $289.20 |
| above $136,000 up to $163,000 | above $272,000 up to $326,000 | Not applicable | $376.00 |
| above $163,000 and less than $500,000 | above $326,000 and less than $750,000 | above $87,000 and less than $413,000 | $462.70 |
| $500,000 or above | $750,000 and above | $413,000 and above | $491.60 |
What Is Medigap?
Medigap policies are standardized across insurance companies. The benefits provided under each plan are identical from insurer to insurer. For example, one company’s Plan G or Plan F is the same as another company’s Plan G or Plan F. With that said, the premiums (for the same plans) vary drastically from insurer to insurer.
Medigap is Medicare Supplement Insurance that helps fill “gaps” in Original Medicare and is sold by private companies. Original Medicare pays for much, but not all, of the cost for covered health care services and supplies. A Medicare Supplement Insurance (Medigap) policy can help pay some of the remaining health care costs, like:
- Copayments
- Coinsurance
- Deductibles
Some Medigap policies also cover services that Original Medicare doesn’t cover, like medical care when you travel outside the U.S. If you have Original Medicare and you buy a Medigap policy, Medicare will pay its share of the Medicare-approved amount for covered health care costs. Then, your Medigap policy pays its share.
Medigap policies allow you to choose or keep your doctors and see specialist, without referrals!
A Medigap policy is different from a Medicare Advantage Plan. Those plans are ways to get Medicare benefits, while a Medigap policy only supplements your Original Medicare benefits.
You pay the private insurance company a monthly premium for your Medigap policy in addition to the monthly Part B premium that you pay to Medicare.
Medigap policies generally don’t cover long-term care, vision or dental care, hearing aids, eyeglasses, or private-duty nursing.
Most Medigap plans are standardized (Identical with every company) and are guaranteed renewable even if you have health problems. This means the insurance company can not cancel your Medigap policy as long as you continue to pay the premium.
Here is how to compare Medicare supplement plans:
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