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The A, B, C, & D of Medicare

Breaking down the basics

Whether your 65th birthday is on the horizon or decades away, understanding the different parts of Medicare is critical, as this government-sponsored program may play a role in your future health care decisions.Medicare can provide comprehensive coverage, if you understand the components, and how they work together.

What's Medicare? Medicare is the federal health insurance program for people who are 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD).

The different parts of Medicare help cover specific services

Part A (Hospital Insurance)In general, Part A covers inpatient hospital care, skilled nursing facility costs, hospice, lab tests, surgery, and some home health care services. One thing to keep in mind is that, while very few beneficiaries must pay Part A premiums out of pocket, annually adjusted standard deductibles still apply.

Many pre-retirees are frequently warned that Medicare will only cover a maximum of 100 days of nursing home care (provided certain conditions are met). Part A is the one with these provisions. Under the current Part A rules, you would pay $0 for days 1-20 of care in a skilled nursing facility (SNF). During days 21-100, a $200 daily coinsurance payment may be required of you.

Knowing the limitations of Part A, some people look for other choices when it comes to managing the costs of extended care

Part B (Medical Insurance) covers physicians’ fees, outpatient hospital care, certain home health services, durable medical equipment, and other services not covered by Medicare Part A.

Part B does come with some costs, however, which are adjusted annually. The premiums vary, according to the Medicare recipient’s income level, but the standard monthly premium amount is $169.40 for 2023, and the current Part B yearly deductible is $226.

Medicare Part A &  Part B (Original Medicare) are the two core components of Medicare coverage. 

Part C (Medicare Advantage plans) Medicare Advantage (MA) plans are also called "Part C" plans,  these are all-in-one, "bundled" plans that work as an alternative to Original Medicare for your health and drug coverage.

These "bundled" plans include Part A, Part B, and usually Part D.  MA plans are offered by private insurance companies approved by Medicare. Most of these plans consist of Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs).  If you are enrolled in a Medicare Advantage plan you'll need to use doctors who are in the plan's network of providers.  Part C / Medicare Advantage plans usually include additional benefits that Original Medicare doesn't cover - like vision, hearing, and dental services.

Part D (prescription drug coverage) Part D  are standalone prescription drug plans that add prescription-drug coverage to Original Medicare.  These plans are offered by private insurance companies approved by Medicare.  every Part D plan has its own list ( a "formulary") of covered medications. 

Here's a brief overview of Medicare's parts and premiums 2023 Medicare Parts & Premiums.

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