Let’s get right to it. Medicare is a federal health insurance program for people who are 65 or older and people with certain disabilities or diseases. It is administered by the Centers for Medicare and Medicaid Services (CMS). There are four parts to Medicare (you’ve probably heard of them): Parts A, B, C, and D.
Here’s what each part does:
- Part A, also known as hospital insurance, covers inpatient hospital stays, hospice care, and some home health care. Most people do not pay a premium for Part A coverage because they or a spouse paid Medicare taxes while working.
- Part B, also known as medical insurance, covers doctor visits, outpatient care, and preventive services. Most people pay a premium for Part B coverage. The cost of the premium is based on income.
- Part C, also known as Medicare Advantage, is an alternative way to receive your Medicare benefits. Instead of receiving benefits through Original Medicare, you can choose to receive your benefits through a private insurance plan that contracts with Medicare. Medicare Advantage plans typically include additional benefits such as vision, hearing, and dental coverage. Most people pay a premium for Part C coverage.
- Part D, also known as prescription drug coverage, helps cover the cost of prescription drugs. Most people pay a premium for Part D coverage. The cost of the premium varies depending on the plan you choose.
One thing you may not know about Original Medicare (Parts A and B) is that when enrolled, you may have to pay deductibles and coinsurance for certain services … it’s not all free! In addition, you’ll find certain services that are not covered by Original Medicare, such as long-term care. Medicare beneficiaries also have the option to purchase a Medigap policy, which is a private insurance policy that helps cover out-of-pocket costs under Original Medicare.
Stay informed! It’s important to note that Medicare coverage and costs can change every year and you should review your options during the open enrollment period to ensure that you have the coverage that best suits your needs and budget. Also, if you are approaching your 65th birthday, AARP has a Medicare Enrollment Guide which is extremely helpful.
If you have questions about Medicare or your healthcare coverage situation as part of your retirement plan, call us for a complimentary review of your finances to take the next step towards a secure retirement. You owe it to yourself to know your Medicare basics.