The ABCs of Medicare Coverage
Medicare is the largest health insurer in the country, covering nearly 51 million Americans. It’s a huge program with lots of moving parts. And the four most important parts follow the alphabet: A, B, C, and D. Here’s what you need to know.
What it covers: Inpatient hospitalization, hospice care, blood products, short-term care in a skilled nursing facility, and some home health services
The details and cost: You are automatically enrolled in Part A when you turn 65 if you’re getting Social Security and paid Medicare payroll taxes while employed. (However, you’ll get your card three months before your birthday.) If you’re not getting Social Security, you have to sign up for Medicare.
If you paid Medicare payroll taxes while working, you’re in luck—no premium for you! Otherwise, you may have to pay up to $426 a month. You also have deductibles, copayments and coinsurance, which vary depending on the service. There is no cap on your annual out-of-pocket costs.
What it covers: All outpatient services, including doctor visits, ambulatory surgery, durable medical equipment, and home health services
The details and cost: Like Part A, you are automatically enrolled at age 65 if you’re getting Social Security. However, you can drop the coverage if you don’t want it. If you don’t take Part B coverage during the first 12 months after you’re eligible and you change your mind later, you may have to pay a penalty to re-enroll.
The Part B premium for 2014 is $104.90, although it might be higher depending on your income. There is also a $147 deductible, and you must pay 20 percent of other services. And no cap is provided for annual out-of-pocket expenses. However, all preventive services are free, even if you haven’t yet met your deductible.
What it covers: Also called Medicare Advantage, this is the managed-care form of Medicare run by private insurance companies. These plans include all the benefits covered under Parts A and B. In addition, most plans cover prescription drugs and other benefits not covered by Medicare, such as vision, dental, and hearing services.
The details and cost: You pay the Part B premium and, in some instance, an additional premium to the managed care plan. Unlike Parts A and B, Medicare Advantage out-of-pocket costs are capped each year.
What it covers: This is the newest part of Medicare, added in 2006. It provides prescription drug coverage and, like Part B, is voluntary. (People in Medicare Advantage typically get their drug coverage through their plan.)
The details and cost: If you’re not in a Medicare Advantage plan, you can sign up for a prescription drug plan and pay a monthly premium, which varies based on the plan. Many also have deductibles and copayments.
Most Medicare Part D drug plans have a coverage gap, called the “donut hole.” Once you and Medicare spend a certain amount on drugs ($2,850 in 2014), you are “in the hole” and pay 47.5 percent of the cost of brand-name drugs and 72 percent of the cost of generic drugs. Once you spend $4,550 out of pocket, you climb out of the gap, and Medicare covers most of your costs for the rest of the year. (Some prescription drug plans and Medicare Advantage plans cover the gap for you.) The good news? This gap is shrinking and will be phased out completely in 2020, thanks to the Affordable Care Act.
Your Rite Aid Pharmacist can answer any questions you may have about Medicare prescription coverage.
“Closing the coverage gap—Medicare prescription drugs are becoming more affordable,” Centers for Medicare & Medicaid Services. www.medicare.gov/Publications/Pubs/pdf/11493.pdf.
“Medicare & you: What’s Important in 2015,” U.S. Department of Health and Human Services. www.medicare.gov/medicare-and-you/medicare-and-you.html.
“Who relies on Medicare? Profile of the Medicare population,” AARP Public Policy Institute. www.aarp.org/health/medicare-insurance/info-06-2012/who-relies-on-medicare-profile-of-the-medicare-population-AARP-ppi-health.html.