When a Medicare beneficiary makes the transition to full Medicare along with supplemental medical and prescription drug coverage, they are deciding between two approaches…Original Medicare or Medicare Advantage.
Today, we will explain Original Medicare in detail. Original Medicare incorporates Part A (hospital) & Part B (medical/outpatient).
* Medicare Part B premium is based on income
PART A & PART B
The core coverage provided by Medicare is Part A (hospital) and Part B (medical/outpatient).
In general, Part A covers (allows):
Inpatient hospital care
Skilled nursing facility care
Nursing home care (in certain situations)
Hospice care
Home health services
Part A does not have a monthly premium, as long as the Medicare beneficiary or spouse (who is age 62+) has 40 or more quarters paid into the Medicare system.
Part B covers medically necessary services and preventive services on an outpatient basis. This includes, but is not limited to…
Visits to a primary care doctor or specialist
Medical treatments and tests
Laboratory testing
Durable medical equipment (DME)
Outpatient surgery
Outpatient prescription drugs (in limited situations)
Mental health services
Ambulance services
Part B has a monthly premium based on a beneficiary’s income from two years prior. Medicare communicates directly with the Internal Revenue Service annually to determine each individual’s Part B monthly premium. If income exceeds certain amounts, a Part B premium will be higher, as well as any Part D premiums, which we’ll discuss later. The high income excess premium is called an Income Related Monthly Adjustment Amount (IRMAA).
After Medicare does its part, how much do you pay for medical services?
For an inpatient hospital stay, for example, Medicare beneficiaries can expect to pay (in 2024):
Part A (hospital)
– Deductible: $1,632 per benefit period*
– Coinsurance (days 1-60): $0 per day of each benefit period
– Coinsurance (days 61-90): $408 per day of each benefit period
– Coinsurance (60 lifetime reserve days): $816 per day after day 90 of each benefit period
* A benefit period starts when admitted as an inpatient in the hospital and ends 60 days after release from care.
For outpatient services (in 2024):
Part B (medical)
– Deductible: You Pay… $240 per calendar year
– Coverage: You Pay… Generally 20%, after $240 deductible is met
But that was Original Medicare in a vacuum…without any supplemental medical insurance. You might want to consider a Medicare Supplement Plan (or Medigap) to reduce your out-of-pocket exposure. See below…
MEDICARE SUPPLEMENT PLAN (MEDIGAP)
When opting for only Medicare Part A and Part B, Medicare beneficiaries expose themselves to potentially significant out-of-pocket medical costs. A Medicare Supplement Plan (or Medigap) can help reduce those costs. Here is a breakdown of the Medigap plans offered in most states.
PART D PRESCRIPTION DRUG PLAN
Many Medicare beneficiaries take regular prescription medicine on a maintenance basis, so a Part D prescription drug plan may be a beneficial addition. It’s technically optional, however those without Creditable prescription drug coverage elsewhere (i.e. through an employer group health plan, or the VA), will begin to accumulate a Part D late enrollment penalty due upon enrollment. And keep in mind, when the penalty starts, it is assessed for life!
On the coverage side, Part D prescription drug plans can provide a lot of financial relief. The amount paid for prescription drugs in a Part D plan depends on a number of factors, including:
- The current Part D drug phase you are in at the time you purchase the medication
– The drug’s tier on the plan’s formulary list of drugs
– The Pharmacy selected
– Eligibility for Extra Help or Medicaid benefits.
Reference Links
www.medicare.gov
Extra Help
