A Simple Guide to Medicare (2021)

A guide to Medicare can help you to better understand how Medicare coverage works. Medicare is designed to provide full or supplemental health coverage for those over the age of 65, including hospital stays, surgery, prescriptions, and other medical care. Medicare uses an established “fee for service” model to pay for care. You may want to consider Medicare Advantage and Medicare Supplement plans as well to get all of the coverage you need.

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Chris Tepedino is a feature writer that has written extensively about home, life, and car insurance for numerous websites. He has a college degree in communication from the University of Tennessee and has experience reporting, researching investigative pieces, and crafting detailed, data-driven features. His works have been featured on CB Blog Nation, Flow Words, Healing Law, WIBW Kansas, and C...

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Laura Walker graduated college with a BS in Criminal Justice with a minor in Political Science. She married her husband and began working in the family insurance business in 2005. She became a licensed agent and wrote P&C business focusing on personal lines insurance for 10 years. Laura serviced existing business and wrote new business. She now uses her insurance background to help educate...

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Reviewed by Laura Walker
Former Licensed Agent Laura Walker

UPDATED: Jul 16, 2021

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Medicare is a federally sponsored health insurance plan for seniors. It is designed to provide full or supplemental health coverage for those over the age of 65, including hospital stays,surgery, prescriptions and other medical care.

And while there were rumors that the Affordable Care Act (ACA) will eliminate Medicare, the facts are that the ACA acted to breathe new life into this federal benefit.

This guide to Medicare will cover the basics, including the parts of Medicare and what out-of pocket costs are involved.

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What does Medicare cover?

Let’s break down the coverages that are available through Medicare and what each one means. Medicare is divided into several parts, each covering a different need.

Guide to Medicare and Preventive Services

Under the ACA, seniors are provided with one or more free preventive doctor visits each year. These visits are for screening and determining your current state of health. The idea is that seniors can enjoy longer, more enjoyable lives if they are able to identify and receive treatment for some conditions before they become a medical emergency. Wellness exams, cancer screening and other preventive tests are an important part of healthcare reform.

Medicare Part A

Medicare Part A is hospital insurance. If a senior or other covered person must stay in a hospital, Medicare Part A pays for the costs. By default, this plan allows up to 60 days of hospitalization, but another 60 days of “lifetime” hospitalization can be tapped into for longer stays. Part A benefits can be applied to Inpatient services, nursing facilities, home health, and
hospice services.

Medicare Part B

This part of Medicare is also called Supplementary Medical Insurance, or SMI.

Medicare Part B is an enrolled, user participatory insurance plan. Members pay premiums on the plan, as well as copays or coinsurance for treatment provided. Medicare Part B is generally thought of as the part that pays for doctor visits, but this portion of Medicare also does quite a bit more.

SMI covers laboratory testing, medical equipment, vaccinations, medical supplies and equipment, ambulance services, and therapy services, among other things, including blood which is not covered Medicare Part A.

Medicare Part C (Medicare Advantage)

Medicare Advantage plans are known as Part C. The combine the coverage of Parts A & B in a plan offered by a private health insurance company. There are a lot of Medicare Advantage plans to choose from.

Many of these plans include added perks like fitness memberships. Copays and deductibles vary. A Medicare Advantage plan may have an extra monthly premium.

Medicare Part D (Prescription Drug)

Medicare Part D  is the prescroption drug coverage provided by Medicare. This can also be purchased through a Medicare Advantage plan, or as a standalone plan from a Medicare provider.

Part D separates drugs into tiers, each with a copay amount. Some plans have a deductible, while others do no.

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What out of pocket expenses are there with Medicare?

Medicare doesn’t cover everything. Most of the out-of-pocket expenses are in the form of deductibles and copays or coinsurance amounts.

Medicare Deductibles

Medicare, like other health insurance, includes deductibles that the patient must pay before the insurance becomes effective. In some cases, the deductible portion of your visit may be paid by another insurance contract, such as medigap.

In other cases, the deductibles are paid directly through the Medicare program. Under Part B, the deductible is usually a single, flat fee that is determined when you enroll in the program. This deductible must be paid before Part B services will be available to you.

Medicare CoPays and Coinsurance

Medicare uses an established “fee for service” model to pay for care. In some cases, the hospital might get paid less than the care that was performed, in other cases they may receive more than the service would cost.

Statistically, the two balance out and hospitals are able to continue providing care for Medicare patients.

The 3 factors involved in determining “reasonable charge” are: 1) The physician’s actual charge for the procedure, 2) The customary charge for the service (if different than the actual charge), and 3) local prevailing charge.

Under Medicare, reasonable charges must remain within these limits with payment being the lesser of the three.

Guide to Medicare Supplement Insurance

Otherwise known as MediGap, Medicare supplement plans are plans that can be purchased to fill in some of the gaps left by Medicare.

Medicare supplement plans are standardized, and in most states follow a letter-coded system. A few states have different standards. Take a look at the table below to see what the letter-coded plans cover.

CoveragePlan APlan BPlan CPlan DPlan FPlan GPlan KPlan LPlan MPlan N
Part A coinsurance and hospital costs up to an additional 365 days after Medicare benefits are used upYesYesYesYesYesYesYesYesYesYes
Part B coinsurance or copaymentYesYesYesYesYesYes50%75%YesYes
Blood (first 3 pints)YesYesYesYesYesYes50%75%YesYes
Part A hospice care coinsurance or copaymentNoYesYesYesYesYes50%75%YesYes
Skilled nursing facility care coinsuranceNoNoYesYesYesYes50%75%YesYes
Part A deductibleNoYesYesYesYesYes50%75%50%Yes
Part B deductibleNoNoYesNoYesNoNoNoNoNo
Part B excess chargeNoNoNoNoYesYesNoNoNoNo
Foreign travel exchange (up to plan limits)NoNo80%80%80%80%NoNo80%80%
Out-of-pocket limit in 2020N/AN/AN/AN/AN/AN/A$5,880$2,940N/AN/A
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Each plan has its own cost that is set out by the insurance company. Becuase these rates can vary, it’s always a good idea to shop around.

How do I enroll in Medicare?

The government website for Medicare offers a clear guide to Medicare enrollment, with steps to follow when you are nearing your date of elgiility for Medicare.

From there, you may want to consider options like an Advantage plan or a Supplement plan to provide all of the coverage you need. If you have a specific health concern, you might also want to look into a Special Needs Plan (SNP). Your Medicare Advantage provider can offer a guide to Medicare and chronic conditions.

Make sure you are aware of which Medicare enrollment deadlines apply to your situation.

You can buy Medicare insurance options like Advantage plans online, but will be subject to the providers eligibility requirements as well.

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Guide to Medicare: The Bottom Line

Medicare doesn’t have to be confusing, and neither does shopping for coverage. Once you have decided whether you want Original Medicare or Medicare Advantage, and if you’d like help with out-of-pocket costs from a Medicare supplement plan, all that’s left is comparing rates.

We can help you find affordable Medicare insurance right now. Compare Medicare quotes here when you enter your ZIP code below,

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