Medicare Part B could help pay the bill if you’re 65 or older and need to see your doctor because it covers preventive and diagnostic services. You’d use Medicare Part A, which covers hospital stays, if you fall ill and need temporary inpatient care. Medicare can help lower your out-of-pocket health care costs, but it doesn’t cover all medical expenses. You can address some of these gaps by applying for a Medicare supplement (Medigap) policy or a Medicare Advantage plan.
Out-of-Pocket Maximums
Original Medicare doesn’t set an out-of-pocket limit on your annual expenses, but some Medigap policies include an out-of-pocket maximum that applies to your Original Medicare coverage. You can also opt for Medicare Advantage in place of Original Medicare, which does limit your out-of-pocket costs. The maximum in-network out-of-pocket costs for most Medicare Advantage plans is $7,550 in 2022.
Drug Coverage
Most Medicare Advantage plans and all Part D plans provide prescription drug coverage. Plans are administered by private insurance companies and can have different coverage, premiums, deductibles, and other features. You can compare Medicare Advantage plans and Part D drug plans with Medicare’s Plan Finder.
An Example of Medicare
You’ll generally pay your deductible first when you receive health care services or supplies from a medical provider or supplier. Then your Medicare coverage kicks in and you’ll just pay a coinsurance percentage or a flat dollar amount after that, depending on the service. You would pay your Part B deductible ($233 in 2022, decreasing to $226 in 2023) then Medicare would pay 80% of the approved amount if you need to get a back brace. You would pay the other 20%. You’d pay $233 (in 2022) plus 20% of $677 ($900 - $233 = $677), which is $135, for a total of $368 if the approved amount for the brace you need is $900.
Types of Medicare
Medicare is broken down into Parts A, B, C, D and Medigap plans. Each part covers a specific range of services and has its own rules regarding premiums, deductibles, enrollment, and late enrollment penalties.
Part A
Medicare Part A is hospital insurance that helps to cover services such as short-term home health care, hospice care, inpatient care in hospitals, and short-term skilled nursing facility care. Premium: Part A does not typically require that you pay a premium as long as you or your spouse made the minimum number of payments toward Medicare taxes while working. Forty quarters of working are required. Deductible: The Part A hospital inpatient deductible is $1,556 in 2022, increasing to $1,600 in 2023. Enrollment periods:
Initial enrollment: This is the seven-month period that starts three months before your 65th birthday month and ends three months after that birthday.Special enrollment: If you don’t enroll during your initial enrollment period because you’re covered by a health plan from an employer, you can enroll any time you’re still covered by the group health plan or during the eight months after your employment or coverage ends, whichever comes first.General enrollment: You can sign up each year during the general enrollment period, which runs from Jan. 1 to March 31, but a late enrollment penalty may apply.Outside a designated enrollment period: You can enroll any time after you become eligible for Medicare if you’re eligible for premium-free Part A and weren’t automatically enrolled. Your Part A coverage will begin six months prior to the date you apply. It will be effective retroactively, but no sooner than the first month you became eligible.
Late enrollment penalty: You’ll be charged a late enrollment fee that can increase your monthly premium by up to 10% for double the number of years that you didn’t enroll if you’re required to pay a premium and don’t enroll when you’re first eligible.
Part B
Medicare Part B is medical insurance that helps cover preventive and diagnostic services, some home health care services, outpatient care, and medical equipment. Premium: The standard Part B premium is $170.10 in 2022, dropping to $164.90 in 2023. You may pay more depending on your income. Deductible: The Part B deductible is $233 in 2022, dropping to $226 in 2023. Enrollment periods:The times when you can sign up for Part B are very similar to the enrollment periods for Part A.
Initial enrollment: This is the seven-month period that starts three months before your 65th birthday month and ends three months after it.Special enrollment: If you don’t enroll during the initial enrollment period because you’re covered by a health plan from an employer, you can enroll any time you’re still covered by the group health plan or during the eight months after your employment or coverage ends, whichever comes first.General enrollment: You can sign up each year during the general enrollment period, which runs from Jan. 1 to March 31, but a late enrollment penalty may apply.
Late enrollment penalty: You may have to pay a permanent late enrollment penalty if you don’t sign up for Part B when you’re first eligible. The penalty is equal to a 10% premium increase for every year you didn’t enroll.
Medicare Advantage or Part C
Medicare Advantage (MA), often referred to as Part C, encompasses Medicare-approved plans provided by private companies. The plans facilitate delivery of Medicare Parts A and B benefits. They often include prescription drug coverage, and they may have extra benefits such as vision, dental, and hearing services. You’re required to have both Medicare Parts A and B to get a Medicare Advantage plan. Premium: Some MA plans have premiums that you must pay in addition to your Part A premium (if any) and Part B premium. Others charge no premium and may help cover all or part of your Part B premiums. Deductible: Deductibles vary between plans. Enrollment period:
Initial enrollment: This is the seven-month period that starts three months before your 65th birthday month and ends three months after it. Special enrollment: You may qualify to enroll in a Medicare Advantage plan if an event happens that leaves you without coverage, such as if you lose other coverage. Open enrollment: You can enroll between Oct. 15 and Dec. 7 each year if you already have Original Medicare (Parts A and B) and would like to enroll in a Medicare Advantage plan. General enrollment: You can enroll during general enrollment from Jan. 1 to March 31 if you have Part A and get Part B for the first time during this period.
Late enrollment penalty: This plan does not have a late enrollment penalty, but it requires that you have Parts A and B to sign up. You could still face a penalty if you miss signing up for Part A (if you’re required to pay for it) or Part B during your initial enrollment or a special enrollment period.
Part D
Medicare Part D is drug coverage provided by private insurance companies. It helps cover the cost of prescription drugs. You must have either Part A or Part B to apply. Premium: Most Part D plans charge a monthly premium. However, your premium, deductible, copayment, or coinsurance will all vary based on the plan you choose. Deductible: Deductibles vary between plans. Enrollment period:
Initial enrollment: This is the seven-month period that starts three months before your 65th birthday month and ends three months after it.Special enrollment: You may qualify to enroll in a Medicare Part D drug plan if an event happens that causes you to lose coverage, such as because you move or leave your job.Open enrollment: You can enroll in a drug plan during Open Enrollment from Oct. 15 to Dec. 7 each year as long as you already have Part A or Part B.After general enrollment: You can enroll in a Medicare drug plan from Apr. 1 to June 30 if you don’t have Part A and enroll in Part B Jan. 1 to Mar. 31 (the general enrollment period).Medicare Advantage open enrollment: From Jan. 1 to Mar. 31 each year, you can enroll in Part D if you drop your MA plan and return to Original Medicare.
Late enrollment penalty: A late enrollment fee penalty may apply if you enroll in Part D any time after your initial enrollment period ends and you don’t have other creditable coverage. The penalty can be permanently added to your premium, and the amount will depend on how long you went without coverage.
Medigap
Medigap, or Medicare supplement insurance, is optional coverage offered by private insurers that can enhance the benefits provided by Original Medicare. There is a range of standardized plan types available that can help cover copays, coinsurance, and deductibles. You must have both Parts A and B to purchase a Medigap plan. Medigap policies are not designed to cover prescription drugs. You need Part D or a MA plan for that. Most also don’t provide hearing, vision, and dental benefits. Premium: Premiums for Medigap policies vary. Deductible: Deductibles vary, depending on the plan. Many plans have no deductible and reduce your Part A and/or B deductible, as well as copays and coinsurance. Enrollment period:
Medigap open enrollment: This period begins the first month you have Part B and are 65 or older. It lasts for six months. Insurers can’t consider your health when deciding whether to offer you a Medigap policy and how much to charge you during this time.Outside Medigap open enrollment: You may be able to buy a plan if you miss your Medigap open enrollment period, as long as an insurer is willing to offer you one.
Late enrollment penalty: There isn’t technically a late enrollment penalty if you don’t buy a plan during Medigap open enrollment, but you could pay a lot more for a Medigap policy or be refused one entirely. Insurers can consider your health and preexisting conditions when pricing and offering you a plan outside of the Medigap open enrollment period.
Original Medicare vs. Medicare Advantage
You have two options when you sign up for Medicare. You can opt for Original Medicare or Medicare Advantage. Original Medicare is Parts A and B, and it’s managed by the federal government. You can see any doctor or go to any hospital in the U.S. that accepts Medicare when you have this coverage. You can also add a separate Medicare drug plan (Part D) and supplemental coverage, such as Medigap, to help limit your out-of-pocket costs. Medicare Advantage (MA) plans are Medicare-approved policies offered by private insurance companies. You receive most of your Parts A and B benefits through an MA policy if you elect one, except for hospice care, which is provided through Original Medicare. About 35 million people enrolled in Original Medicare in 2022, while 29.1 million enrolled in Medicare Advantage.
How To Get Medicare
The route you’ll take to apply for and get Medicare will depend on how you qualify. You’ll automatically apply for Medicare when you apply for disability or retirement benefits from the Social Security Administration or Railroad Retirement Board. You’ll automatically be enrolled in Parts A and B coverage if you’ve received those benefits for at least four months before you turned 65. You can sign up for Medicare online or over the phone with the Social Security Administration or by contacting your local Social Security office if you’re older than 65. Late enrollment penalties may apply if you’ve missed your initial enrollment period and don’t have other health insurance, including prescription drug coverage. You can get Medicare benefits by contacting your local Social Security office (or the Railroad Retirement Board if you or your spouse worked for a railroad) if you’re younger than 65 and have ESRD. Your coverage start date will depend on your treatment plan and when you apply. You’ll automatically get Medicare Parts A and B the month your disability benefits start if you’re younger than 65 and have Amyotrophic Lateral Sclerosis (ALS). Contact your local Social Security office to apply for disability benefits. You can use the Medicare website to shop for plans and compare offerings to find the right fit for you if you’d like to join a Medicare Advantage plan. Make sure the provider or supplier you use “accepts assignment.” This means that it has agreed to honor the Medicare-approved amount for services and items even if it would otherwise charge more. A provider may take Medicare for partial payment, but still not accept assignment, which means it can charge more than what Medicare will pay.
