Parts of Medicare: What are the differences?

Medicare is a federal health insurance program for individuals of age 65 or older, or for those with disability. It is managed by the federal government and is provided by private insurance companies that have contracts with Medicare. There are four Medicare Parts, marked alphabetically from letter A to the letter D. Medicare Part A and Part B make up Original Medicare, Medicare Part C is Medicare Advantage, and Medicare Part D is prescription drug coverage.

Before choosing a Medicare plan, you should be aware of the differences between each of the mentioned parts.

Part A

Medicare Part A is commonly referred to as hospital insurance because mainly it covers inpatient hospital stays. Although, skilled nursing facility care, nursing home care, hospice care, and home health care are also covered under Part A of Medicare. Part A is for most beneficiaries free if they have been working and paying taxes through employment for at least 10 years. For those who haven’t, the monthly premium for Part A in 2023 will be from $274 to $499.

Part B

Medicare Part B is medical insurance, covering medically necessary services and preventive screening services. This includes all outpatient care, clinical research, ambulance services, durable medical equipment, mental health care, preventive services, and limited outpatient prescription drugs. Part B has its monthly premium, which will be $164.90 in 2023. Besides premiums, you are required to pay for coinsurances, copayments, and annual deductibles.

Medicare Advantage – Part C

Medicare Advantage plans are offered by private companies approved by Medicare to manage your coverage for Part A and Part B. These are common in the form of HMOs, PPOs, or PFFS. Medicare Advantage plans must offer at least the same amount of benefits as Original Medicare offers. Additionally, plans may offer some extra benefits, like dental, hearing, vision, or prescription drug coverage. The most common Medicare Advantage plan bundle includes coverage from Original Medicare – Part A and Part B, and prescription drug coverage – Part D. Most expensive Part C plans offer a bundle with Part A, B, D, and DHV coverage (dental, hearing, and vision).

Part D

Part D or Prescription Drug Plans each chooses the prescription drugs they will cover. All plans cover at least two drugs in each of the most commonly prescribed categories. Part D plans cover most antidepressants, antipsychotics, anticonvulsants, antiretrovirals (AIDS treatment), immunosuppressants, and anticancer prescription drugs. You can have either stand-alone Part D coverage or you can take it as a part of the Medicare Advantage plan. You will be required to pay a monthly premium for Part D, which will be $43 in 2023.

Each plan has its list of covered drugs, called a formulary. The drugs are grouped into tiers that determine the cost of prescription drugs and the copayment required. Generic, preferred drugs have the lowest copayment, followed by name-brand, non-preferred, and specialty prescription drugs are the most expensive.

Medicare Supplement (Medigap)

Medicare Supplement plans, also called Medigap plans, exist to cover the costs or a portion of the costs left from Medicare Part A and Part B. Because Medicare pays for a lot, but not all, then kicks in the Medigap plans. These include the deductibles, copayments, coinsurance, and blood needed for medical procedures. Six of the ten available plans offer foreign travel emergency health care coverage. Each plan differs in its cost and coverage. Plans are marked alphabetically from the letter A to the letter N. The most popular Medigap plans are Plan G and Plan N.

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