You may have heard Medicare has different “parts” or “plans.” This can be very confusing. This article will help you better understand how the different parts of Medicare work. Original Medicare is made up of two parts; A and B. Parts A and B are administered by the U.S. government. These are the only parts of Medicare that are administered through the government.
- Part A (Hospital Insurance): covers most medically necessary hospital, skilled nursing facility, home health and hospice care. It is free if you have worked and paid Social Security taxes for at least 40 calendar quarters (10 years); you will pay a monthly premium if you have worked and paid taxes for less time.
- Part B (Medical Insurance): covers most medically necessary doctors’ services, preventive care, durable medical equipment, hospital outpatient services, laboratory tests, x-rays, mental health care, and some home health and ambulance services. You pay a monthly premium for this coverage. This premium is generally $104.90 per month (for 2015). This increases if your income is over $85k for an individual or $170k for a couple.
Part C: Refers to Medicare Advantage plans and is not to be confused with your primary Medicare coverage part A and B. Medicare Part C is simply a plan offered by a private insurance companies that replaces your Original Medicare. With a Medicare Advantage plan you receive your Medicare benefits through the plan. The plan replaces your Original Medicare. These plans come in the form of an HMO or PPO plan. You are required to abide by the restrictions of the plan such as only being able to get care from certain doctors and hospitals that are in the same network as the plan.
Part D: is the part of Medicare that provides outpatient prescription drug coverage. Part D is provided by private insurance companies (Cigna, UHC/AARP, Humana). Part D is NOT offered through the government like Original Medicare Part A and B are.
*Some Medicare Advantage plans combine prescription drug coverage. These are referred to as MAPD plans.
Medicare Supplement Plans (aka Medigap): Are plans offered by private insurance companies that work WITH Original Medicare and simply fill in the gaps that are left over by Original Medicare. Because Medigap plans work with Original Medicare you are able to go to any provider anywhere in the country that accepts Medicare. No referrals or networks with Medicare supplement plans. Learn more about the differences between Medicare supplement plans and Medicare Advantage here.
There are a few combination of ways to have a plan that either replaces your Medicare (Medicare Advantage) or works with your Medicare (Medigap) and of Part D. See the chart below for reference.