Understanding the Four Parts of Medicare

Part A of Medicare is known as the “free” hospital coverage provided by Medicare.
There are typically no premium charges for Part A coverage and most individuals reaching age 65 and beyond are covered by Medicare under this program. So what does Part A cover? Inpatient care in the hospital, Skilled nursing facility, hospice, and home health care. Part A has a benefit period deductible of $1,288 for hospital confinement up to 60 days. After the initial deductible if hospital care and confinement exceeds 60 days then there is a $322 per day deductible up to 90 days. If confinement care goes beyond 90 days in a benefit period then there would be a lifetime reserve (can be used just once) of 60 days which would carry a daily deductible of $644 per day. For any care beyond the lifetime reserve days, Medicare no longer pays any inpatient costs.
The next benefit in Part A Medicare coverage is Skilled Nursing Facility Care.
Medicare currently covers at 100% the cost of Skilled Care in a facility for the first 20 days. Beyond 20 days then Medicare has a daily deductible of $161.00 from the 21st thru the 100th day. For care needed beyond 100 days, Medicare has no coverage available.
Blood. Medicare currently does not cover the first 3 pints of blood needed during a benefit period. After that Medicare covers any additional blood needed at 100%.
Hospice Care. Medicare currently covers all costs associated with hospice. They also have a very limited copayment/coinsurance for outpatient drugs and inpatient respite care needs. Medicare will cover hospice both as a facility confinement and at home.

Part B of Medicare (monthly premium charge)
This covers the medical expenses in or out of a hospital for physicians services, medical and surgical services, physical and speech therapy, diagnostic tests and durable medical equipment.
Medicare has a $166 annual deductible (not benefit period) for the initial services.
Once the deductible has been satisfied Medicare generally pays 80% of the approved services and amount.
Blood. If provided outside of a hospital confinement Medicare would cover 80% of the cost of blood after the initial 3 pints have been administered and the $166 annual deductible had been met.
Clinical Lab services that are charged for tests and diagnostic services are generally covered at 100% after the annual deductible of $166 is met.
Home health care. Is generally covered at 100% of the medically necessary and approved service and amount after the annual deductible of $166.
Durable medical equipment. The annual part B deductible applies here and once met Medicare generally pays 80% of the approved amount.

Part C of Medicare known as Medicare Advantage:
Medicare Advantage by its name is a fairly new addition to the Medicare offering with it becoming available in 2003. The original concept was developed and implemented back in the 1970’s as an alternative to traditional Medicare and was know as Medicare HMO’s.
Medicare Advantage takes Medicare part A and B and combines both costs and shifts it to a private insurance carrier. A Medicare Advantage insured is no longer covered by Medicare but by the chosen private insurance carrier under an Advantage plan.
For clients with limited income or clients who are traditionally healthy, a Medicare Advantage plan may be better suited for their health care needs. Premium costs are generally less or none at all in comparison to a Medicare and a supplement thus becoming appealing to those on limited or fixed incomes in retirement. Those clients that are healthy and typically don’t access health care much during the calendar year also may benefit from an Advantage plan as again the premiums are reflective in the coverage. If the doctor that they typically use is in the Advantage network it becomes even more advantages to consider an Advantage plan since they wouldn’t have to change doctors.
The disadvantages of an Advantage plan is the fairly high deductibles and or copays which can set a fixed income purchaser back several thousand dollars in a calendar year.
If the client's physician is not in the Advantage network it can increase the cost to the client as then the physician would be considered out of network and there would be higher copays assessed.

Part D Prescription Drug coverage:
Prescription drug coverage is something fairly new to Medicare as it was added in 2006 as a benefit under the Medicare umbrella. With the aging population and prescription drug costs continuing to rise, Congress made available voluntary coverage for prescription drugs. Although Medicare is prohibited from negotiating prices for prescription drugs with the drug companies, many drugs today remain competitively priced.


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