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Medicare Costs Glossary
Medicare is a federal health insurance program that provides health coverage for individuals 65 and older and those with certain qualifying conditions or disabilities. Original Medicare is comprised of Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance). It helps cover a range of medical expenses, including hospital stays, doctor visits, preventive screenings and more, with the different parts offering specific coverage options. There are also various types of Medicare plans available that provide additional coverage beyond Original Medicare, such as Medicare Advantage Plans (Part C), Medicare Prescription Drug Plans (Part D) and Medigap (Medicare Supplement) policies.
Medicare is not free. Each Part of Medicare has varying premiums, deductibles, and copays or coinsurance associated with the coverage they provide. These amounts do change on an annual basis.
Premium: Most individuals don’t pay a premium for Medicare Part A if they worked at least ten years as an adult and paid Medicare taxes.
Deductible: There is a deductible for certain Medicare Part A services. For example, there is a deductible you will be responsible for paying for each qualifying hospital stay that occurs within a benefit period (60-days).
Get this year’s deductible amount here.
Copays: For Medicare Part A, copay amounts vary based on the type of service and how long you receive care. For example, during a skilled nursing stay, after day 20, you’ll be responsible for paying a daily copay.
Premium: Medicare Part B requires a premium, and most individuals will pay a standard amount. However, the amount you pay may vary based on your gross income from two years prior. Higher earners will pay more than the standard premium amount.
Learn more about income-related monthly adjustment here.
Get this year’s standard premium here.
Deductible: There is an annual deductible for Part B. Note, for those who enrolled prior to January 1, 2020, certain Medigap plans may cover this cost. However, new enrollees are no longer eligible for plans that pay the Part B deductible.
Coinsurance: After you meet the annual Part B deductible, most covered services will cost Medicare beneficiaries 20% of the Medicare-approved amount.
Premium: The premium for a Medicare Advantage (Part C) plan varies by plan, typically ranging from $0 to $200 per month.
Deductible: Medicare Advantage plans generally have a deductible, but it is less common for approved medical services.
Copays and Coinsurance:The copay and coinsurance amounts depend on the specific Part C plan you choose, and they can vary for different services.
Premium: The premium for a Medicare Part D plan varies depending on the plan you choose.
Deductible: The deductible for Part D plans varies, but it cannot exceed a set limit determined by Medicare each year.
Copays and Coinsurance: Copays and coinsurance for prescriptions vary depending on your plan, the medication, and the pharmacy you use.
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Each part of Medicare covers different types of care and services, and it’s important to know what to expect from each one. Below, we’ll walk through some of the most common coverages included in Medicare Parts A through D. Whether you're new to Medicare or reviewing your current coverage, this quick overview can help you understand what’s covered and how each part helps protect your health and finances.
Medicare Part A is mainly known for inpatient hospital coverage. You must be admitted for coverage to begin, Medicare has strict rules about when you are admitted or not. The coverage starts after you have paid a deductible. The deductible is not annual, which means with each hospital discharge you are vulnerable to the deductible again. The coverage is for the hospital facility, nursing services, food, but not the surgeon or like personnel. Medicare Part A also provides coverage for services such as skilled nursing, at-home health care and hospice.
Medicare Part A provides coverage for:
Medicare Part B helps cover the “medical” side of your healthcare, including visits to Medicare-approved doctors and other outpatient services.
The following medically necessary services are covered:
Get the comprehensive guide that dives deeper into Original Medicare Parts A and B, what they cover, and the costs of covered services.
Medicare Part C are plans offered by insurance carriers and not the federal government. Part C constitutes A and B and very often Part D; most commonly called a Medicare Advantage Plan (MA/MAPD). When you have a Part C plan, you continue to pay for your Part B premium. Medicare Part C often provides coverage for hearing, dental, vision and more, which are not covered by Original Medicare Parts A or B.
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Medicare Part D, also known as prescription drug coverage (PDP), is coverage you would receive at a pharmacy like a Walgreens or CVS or at a local pharmacy like Lloyds or Hopkins pharmacy.
Like Part C, part D is offered by insurance companies and not the federal government. You would most often choose a separate Part D plan if you also chose Original Medicare and/or a Medigap. As previously mentioned, when you enroll in Part C, it usually includes coverage for prescriptions so you do not need a separate plan. Moreover, you can only have Part D coverage from one plan, not both.
Original Medicare Part A and Part B does not cover many medical and healthcare services that individuals will find beneficial or necessary. Here is a list of some of the most common limitations:
As you can see, there are many exclusions to what Medicare covers. Additionally, there is no annual out-of-pocket limit on your costs for covered and non-covered services. These are two of the main reasons why individuals will obtain additional coverage to fill the gaps in Original Medicare.
Managing healthcare costs is a big concern for many Medicare beneficiaries. That’s why understanding your options for added coverage is so important. Because Original Medicare comes with significant out-of-pocket costs in the form of deductibles, coinsurance and copays, many individuals decide to enroll in an additional Medicare-approved plan to help manage out-of-pocket costs. The most common types of coverage that Medicare beneficiaries will enroll in include Medicare Advantage plans or Part D prescription plans and a Medigap (Medicare Supplement) plan. These plans not only help reduce your financial risk from high healthcare costs, but they may also provide additional coverage for services not covered by original Medicare.
If you decide to enroll in additional Medicare coverage, such as a Medicare Advantage plan or a Medigap plan, it’s important to compare your options carefully. Medigap plans work alongside Original Medicare and help cover costs like deductibles and coinsurance. Medicare Advantage plans, on the other hand, are all-in-one alternatives that combine hospital, medical, and often prescription drug coverage into a single plan.
Taking the time to understand the differences can help you feel more confident in your Medicare choices.
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Benefits of Working with a Medicare Broker
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It’s a great way to get clear, unbiased information to help you make Medicare decisions.
Does Medicare cover 100% of my medical expenses?
No, Medicare typically covers a portion of your medical costs. You'll still be responsible for premiums, deductibles, copayments, and coinsurance, unless you have additional coverage like a Medigap or Part C plan.
How can I avoid late enrollment penalties?
Enroll in Medicare Part A and/or Part B when you’re first eligible or confirm your employer based plan is creditable to avoid penalties.
Is there a cap on Medicare out-of-pocket costs?
Original Medicare (Parts A & B) does not have a cap, meaning your costs can add up until bankruptcy. However, Part C includes an annual out-of-pocket maximum to help protect against high costs. There isn’t an official cap on Medigap plans but the way the plans work there is an inferred cap.
How do I know if a service is covered by Medicare?
Medicare provides coverage for medically necessary services and certain preventive care. You can check coverage details at Medicare.gov, speak with a licensed health insurance agent that represents Part C, D, and Medigap plans, or you can ask your provider to submit a pre-determination.
Choosing the right Medicare coverage can feel overwhelming, but you don’t have to figure it out alone. At Twin City Underwriters, we’ve helped people navigate Medicare for over 50 years. Our team takes the time to understand your needs and provides guidance so you can make confident, informed choices.
We’re here to guide you every step of the way.
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