Last Updated on 18th December 2023
The U.S. government separates Medicare into four different parts. These are Medicare Part A, Medicare Part B, Medicare Part C and Medicare Part D. We will explain these four parts below:
Medicare Part A
Medicare Part A covers medical expenses that are related to your hospital stays. For this reason, Medicare Part A is known as “hospital insurance.” It covers you when you enter the hospital, skilled nursing facilities, nursing homes, critical access hospitals and hospice care. If the facility is a long-term care facility or custodial care, Medicare Part A does not cover the costs. It will, however, cover some of your home health care expenses.
Some people must pay a premium for Medicare Part A, but this will not apply to you if you or your spouse paid Medicare taxes while you were employed. In most cases, you must pay Medicare taxes for 10 years to qualify for premium-free Medicare Part A. Some people obtain Medicare Part A before they turn 65 years of age. In this case, they do not have to pay a premium.
Medicare Part B
Medicare Part B covers medical expenses you incur at medical offices, clinics and laboratories. Specifically, it is coverage for medical services you receive in the process of taking care of your health, and they include the following:
Preventive services are medical services you receive that prevent illnesses from occurring. They are also services that aim to detect illnesses in their earliest stages. Diseases detected in their earliest stages are easier to treat than advanced cases.
Medically Necessary Services
Medically necessary services are those needed to diagnose an illness. After diagnosis, medically necessary services are those that treat the illness. These include durable medical equipment, ambulance services and clinical research.
Medicare Part B also covers several mental health services. For example, it will cover expenses for inpatient stays in a mental health facility, outpatient stays in a mental health facility and partial hospitalization in a mental health facility. In 2024, Medicare Part B will begin covering intensive outpatient program services.
Most people must pay a monthly premium for Medicare Part B coverage. In 2024, this payment will increase to $174.70.
Medicare Part C
Medicare Part C also goes by the name “Medicare Advantage.” It is an option you have if you qualify for Original Medicare. When you choose this option, you still receive your benefits under Medicare Part A and Medicare Part B, but you will receive them with a health insurance plan that comes from a private insurance company. Medicare must approve the insurance company before it may offer Medicare Advantage plans to people, and these insurance companies must follow the rules and regulations of Medicare.
Medicare Advantage plans are called such because they offer you an advantage over Original Medicare. That means that you can have more coverage for your medical services than Original Medicare offers you. For example, Original Medicare does not necessarily cover the costs for wellness programs, dental visits, hearing appointments and vision, but you can receive this coverage on a Medicare Advantage plan. Medicare Advantage also eliminates the need to purchase a Medicare Part D prescription drug plan because Medicare Advantage plans include coverage for prescription drugs.
Medicare sends the money they receive from your status as a Medicare recipient to the insurance company from which you have your Medicare Advantage plan. Although your plan must follow Medicare’s rules, your Medicare Advantage plan is free to set up its own rules for how you receive your services. For example, your plan can require you to only see providers within a network, or they may require that you obtain a referral from your primary care physician before you can see a specialist.
Medicare Part D
Medicare Part D is the prescription drug plan, but you purchase Medicare Part D plans from private insurance companies. As with Medicare Advantage plans, Medicare Part D plans must follow Medicare’s rules. This means that they are required to cover medications that people 65 and over usually take. Included in this list are medications that treat HIV/AIDS and cancer.
Each plan has its own list of medications that it covers, and insurance companies separate these medicines into lists that are called “formularies.” Whether you have a Medicare drug plan or a drug plan with your Medicare Advantage plan, you will be able to read its formulary before you purchase it. If, for example, a particular plan does not cover your medication, you may see if another plan does cover what you need.
Insurance companies further separate medications into tiers with the lowest tier containing the least expensive medications and the highest tier containing the most expensive. For example, tier 1 contains mainly generic medications. Tier 2 has some brand-name medications and some preferred drugs. Tier 3 has brand-name medications along with non-preferred drugs. The specialty tier contains the most expensive prescription drugs.