What is Medicare Insurance? Understanding Parts A, B, C & D of the Plan

Medicare is a federal health insurance program that helps you pay off the bills for a variety of healthcare situations. It is managed by the Centers for Medicare & Medicaid Services (CMS). Medicare usually is meant for senior citizens aged 65 and older. However, adults with certain approved medical conditions like Lou Gehrig’s disease or other qualifying permanent disabilities specified under the plan, may also become eligible to receive benefits of Medicare even before they are aged 65. Medicare in essence is very similar to the federal social security programs as an entitlement program. Most U.S. citizens become eligible for enrolment in Medicare by working and paying their taxes for a minimum period as set under the eligibility condition of Medicare.

Medicare is a complicated plan to understand and it can get confusing to get a hold of the eligibility and entitlements under the whole plan. To make things easier for people to understand, the program has been broken down into four basic parts: Parts A, B, C & D. All these parts cover different aspects of healthcare expenses ranging from hospital care to doctor visits and prescription drugs. You can get enrolled in one or more parts of Medicare, subject to your eligibility for the same.

Parts A & B are the most common parts and are also called ‘Original Medicare’. These parts cover the majority of services. Medicare Part C, also called Medicare Advantage, is for private health insurance and Part D offers coverage for prescription drugs. People usually have to pay a monthly premium for Medicare which varies based on income.

Here below, we give you an overview of the four parts of Medicare Insurance.

Medicare Part A – Hospital Coverage & Inpatient Services

This is the most basic of all the parts of Medicare Insurance. One automatically gets enrolled in Part A when he/she opts for Medicare. Most people don’t have to pay a monthly premium for coverage under this part of Original Medicare, if they have worked for at least 10 years and paid their Medicare taxes while they worked. For this reason, it is sometimes called ‘Premium-free Part A’. If you don’t fulfil the eligibility for premium free Part A, you have to pay a certain monthly premium.

Part A is basically hospital insurance and covers hospital care, care required in a nursing care facility, home health care services and hospice care. Care in a specialised unit like these might be needed due to stroke, broken bones or other such episodes which require intensive care for the patients to get back on their feet. However, this part is not completely free as you have to pay a deductible before the plan pays off for your treatment. The standard amount of deductible changes every year. However, you can buy a Medigap policy to cover the deductible and out of pocket expenses for this and other Medicare parts.

Medicare Part B – Doctor Visits and Outpatient Services

Part B covers medical expenses for doctor visits, lab tests like blood tests, X-rays, screenings and other outpatient services.

This part of Original Medicare differs from Part A in the aspect that it involves more costs for the patients since the beneficiaries are responsible for a good portion of their healthcare costs. You will have to pay a yearly deductible before the plan starts paying for your medical treatment expenses. The annual deductible is set by the federal government. Also, if you are receiving the Social Security benefits, the annual deductible will be appropriated from your monthly benefits. You also have to pay a monthly premium which depends on your income and will be set by the federal government.

Since this part involves more costs, you might want to defer enrolling for it if you are still working and have insurance through your employer’s insurance. However, you should know that you might have to pay a higher monthly premium if you don’t enrol for Part B when you first opt for Medicare.

Medicare Part C – Medicare Advantage

Medicare Advantage is a health insurance plan which is an ideal alternative for the Original Medicare provided by the federal government. It is a private health insurance plan and includes the coverage provided by all the Medicare plans combined in one plan. However, if you wish to enrol for Part C, you still have to enrol for Original Medicare i.e. Part A & B and pay the required monthly premiums, if applicable.

It is offered by private insurers and is a private health insurance alternative to the federally run original Medicare. You just have to choose a Medicare Advantage Plan with a private insurer. The federal government through Centers for Medicare and Medicaid Services (CMS) requires the private insurers to cover everything that Original Medicare does and some plans even cover services that Original Medicare doesn’t like dental, hearing aids and vision care.

Medicare Advantage plans generally are either health maintenance organizations (HMOs) or preferred provider organizations (PPOs) plans. In HMOs you choose a primary care doctor who provides you care or gives you a referral in case a specialist is needed. PPOs on the other hand, have a network of doctors and facilities and you have the option of choosing among them.

Medicare Part D – Prescription Drugs

Part D is optional and offers coverage for prescription drugs that may be required during your treatment. It has a specific covered list available on medicare.gov which lists all the medicines that are covered under the plan. The list is revised every year and it is important to check if the medicine you require is covered when you opt for the plan.

It is a stand-alone prescription drug plan, provided by private insurance companies. The costs involved with the plan vary among different insurers. These costs include monthly premium, co-payment and coinsurance which is a fixed percentage of total drug cost. You will have to share these expenses depending on the plan you are enrolled in.