Medicare: What’s Covered and What’s Not

Medicare - What's Covered and What's Not

Medicare can be confusing. There are a number of pieces to the Medicare puzzle, and understanding how they fit together and where the gaps are is important to knowing where Medicare coverage begins and ends. For the official U.S. Government perspective on Medicare, visit the Medicare Options Compare website . Remember that Medicare is a financial tool and should be used with your own common sense to determine things you may also want above and beyond Medicare.

Pieces of the Medicare Puzzle

Medicare comes in four parts, with variations, and can be supplemented with other health insurance options purchased privately or from an employer retirement plan. The four parts of Medicare have evolved over time, and names have changed, too. They are now known as Part A (Hospitalization), Part B (Medical), Part C (Medicare Advantage), and Part D (Prescription). The other popularly known piece of the puzzle is Medigap, which is private insurance that supplements the other parts.

Part A: Hospitalization

If you end up in the hospital, you're likely to have significant medical bills. Medicare Part A, hospitalization insurance, is intended to help you reduce your liability for those charges that occur when you are in a hospital, a skilled nursing facility, or hospice, along with some home health care expenses.

• Premium: Varies based on your eligibility. Can range from nothing to several thousand dollars depending on whether you've worked the minimum 10 years to qualify.
• Out of pocket: You must pay an annual deductible that is close to $1000 for the first 60 days of hospitalization. For 61-90 days in the hospital, you must pay about $250 a day. For 91-150 days in the hospital, you're on the hook for about $500 a day. Go over 150 days and you pay it all.
• Providers: Anyone who takes Medicare Hospitalization.

Part B: Medical (Doctor)

Unpredictable medical expenses can make your financial life a mess. Medicare Part B, Medical Insurance, is intended to balance out the financial ups and downs to help you stay financially sound in the face of medical needs, including outpatient services, doctor visits, and some home health care. It specifically does not include vision, dental, routine foot care, hearing aids, and routine doctor visits.

• Premium: about $100 a month or more
• Out of pocket: You pay 20% of the total allowable charges, Medicare picks up 80%.
• Providers: Anyone who takes Medicare Medical.

Part A + B Supplement: Medigap

The Medigap supplement reduces the difference between what is paid by Medicare and what is charged by the healthcare providers. This can really make a difference once you look at the out of pocket costs of Medicare Part A and Medicare Part B. Since it is purchased from private insurers, the quality of the insurance company should be foremost.

• Premium: Varies. For a 65+ in excellent health, insurers in my county are charging from $60 to $250 a month per person.
• Out of Pocket: Varies
• Providers: Anyone who takes Medicare Hospital & Medical

Part C: Medicare Advantage from a private insurer

When managed care was introduced for Medicare recipients, many insurers entered the market only to withdraw after a few years, leaving their policyholders unable to get coverage at the same rates. While this market has settled down, there is still a slight risk that this might happen again. Medicare Advantage Policies cover parts of A (hospitalization), B (medical), and D (prescription) and may cover other things, such as vision or dental. These are purchased from a private insurer and feature a "network" of authorized medical providers, much like an HMO or PPO, that restrict which providers you may see in order to be covered.

• Premium: Varies, perhaps slightly more than A+B+D together
• Out of pocket: Varies
• Providers: Restricted to a network of providers. Utilization outside of network may result in higher costs or denial of coverage.

Part D: Prescription

Anyone who is taking significant prescriptions or who may take significant prescriptions may want this coverage. While the premium may exceed the cost of prescriptions while healthy, you may find that it works well if you need medication due to an illness. This is a particularly tricky one to figure out the point at which you break-even on the premiums due to the complex nature of the way it pays for medication.

• Premium: Varies, less than $100 a month
• Out of Pocket: Varies. An example, after a deductible near $250 a year, you pay 25% until you've paid over $500, and then you pay about another $1500 before you get benefits again: where you pay 5% of prescriptions. Confusing? Yes!
• Providers: Most pharmacies

Your Medicare Mileage will vary...

It may take some work to figure out the best Medicare options for you and your spouse. There are a few other things to keep in mind before jumping in:

• Get a good insurer - if you're selecting Medigap or Medicare Advantage, you'll be working with a private insurer - and there is variance in satisfaction.
• Make sure you play by the rules - ask first, don't assume, make sure it is necessary or covered when possible.
• Know when to appeal - to the insurer, to the government.
• Never miss a payment - if you do, you may not be able to get back into the plan, and if you can you may have to wait or pay a higher rate.

What is and is not payable under the plan is always changing - new items are added regularly, and things that you might have had last year may no longer be covered. You should check with your provider to determine what they believe is covered - and hold them to it. If in doubt about coverage of specific items, check with the Medicare Coverage website.