Medicare is a health insurance program offered by the federal government. Part A pays for care received in hospitals, hospice centers and skilled nursing facilities (SNFs). Part B covers other medical services, such as doctor visits, home health care and preventive care. Durable medical equipment, such as infusion pumps, nebulizers and suction pumps, also falls under Part B.
Before you become eligible for Medicare, it’s important to understand the enrollment guidelines and the out-of-pocket costs associated with each type of service. Use this Medicare 101 guide to choose a Medicare plan that meets your needs.
Who Is Eligible for Medicare?
Generally, Medicare eligibility begins when you turn 65. However, there are a few exceptions for individuals with serious illnesses. You may be eligible earlier if you have amyotrophic lateral sclerosis (Lou Gehrig’s disease), end-stage renal disease or a qualifying disability.
Original Medicare vs. Medicare Advantage
When you sign up, you have the option of enrolling in Original Medicare or Medicare Advantage. Original Medicare bundles Part A and Part B together, but it doesn’t include prescription drug coverage. If you choose this option, you can use any provider in the United States as long as they accept Medicare benefits. In most cases, you don’t need a referral to see a specialist.
Medicare Advantage, also known as Medicare Part C, bundles Part A and Part B with prescription benefits. This type of coverage comes from a private insurance company instead of the federal government, so you typically have to receive care from providers in your network. If you enroll in an HMO plan, you’ll also need a referral every time you want to see a specialist.
Medicare Part D
Since Original Medicare doesn’t come with prescription drug benefits, you can purchase Part D if you want help paying for your medications. Part D plans are offered by private insurance companies, so the monthly premium varies based on which insurer you choose. Pharmaceutical companies change their prices regularly, so your copays may increase or decrease at any time.
Medicare Supplement Insurance
Original Medicare has deductibles, copays and coinsurance. Some beneficiaries find it difficult to meet these cost-sharing requirements, so private insurers also offer Medicare Supplement Insurance to fill in the gap between what Medicare pays and what you’re supposed to pay. Depending on which plan you purchase, your Medigap plan may cover the following costs:
- Part A coinsurance
- Part B coinsurance or copays
- Blood transfusions
- Coinsurance or copays for Part A hospice care
- SNF coinsurance
- Part A and/or Part B deductible
- Part B excess charges
- Medical expenses incurred overseas
Medicare Out-of-Pocket Costs
Most people pay nothing for their Medicare Part A coverage. For 2024, the Part B premium is at least $174.70 per month, depending on how much you earned when you were working. You also need to be aware of the following out-of-pocket costs:
- Part A deductible: $1,632 per benefit period
- Part B deductible: $240
- Part A coinsurance: $0 for days 0-60; $408 per day for days 61-90; $816 per day for days 91-150; you pay all costs after day 150
- Part B coinsurance: Typically, 20% of the cost of each Medicare-covered service
- SNF stay: $0 for days 1-20; $204 per day for days 21-100; you pay all costs for day 101 and beyond
- Durable medical equipment: 20% of the Medicare-approved amount
- Home health: $0 for covered services
If you sign up for Medicare Advantage, you’ll have to pay a monthly premium for your plan. This premium is in addition to the standard Part B premium. However, some insurance companies charge $0 per month for their Medicare Advantage Plans. Part D and Medigap also come with separate premiums.
Medicare 101: Tips for Choosing a Plan
1. Compare Multiple Plans
Before enrolling in Medicare, compare multiple plans to find one that offers the right balance between coverage and affordability. The Medicare Plan Comparison Tool allows you to search for Medicare Advantage, Medicare Part D, and Medicare Supplement Insurance plan options available in your area. You can view each plan’s monthly premium, drug costs, and health benefits.
2. Review Your Budget
If you take several medications or if you need healthcare more often than other people your age, it’s important to choose a comprehensive plan. Sometimes, it makes sense to pay slightly more monthly money for better coverage. To determine if a more expensive plan is right for you, calculate how much you’d spend out of pocket with each plan.
3. Contact Your Local State Health Insurance Assistance Program
Each state has a program to help residents choose a Medicare plan. If you’re unsure which plan is right for you, contact your state’s program to speak with a trained Medicare counselor.
4. Think About Your Future Medical Needs
When you pick a health insurance plan, it’s important to think about your future medical needs. You may be healthy now, but there’s a chance you’ll need extensive medical care when you get older. For example, if you have a family history of heart disease, you may need to visit the doctor more frequently or take medications to prevent heart attacks. You’ll need a plan that covers these services with the lowest possible out-of-pocket costs.
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