Medicare – A Beginner’s Guide

Medicare is divided into four parts.

Part A – covers hospital costs. There is a deductible ($1100.00) in 2010. The deductible is per benefit period. You can have multiple benefit periods in a year. Part A is usually free of premium as long as you or your partner has worked forty quarters (ten years). There are also copays, $275.00 per day for days 61-90 (2010) and $550.00 days 91 and beyond (2010). Part A also covers things like a skilled nursing facility (copays apply).

Part B – covers medical (doctors). There is a deductible ($155.00) in 2010. This deductible is per year. There’s usually a premium for Part B. It’s 110.50 a month for 2010 unless you earn more than $80,000.00 for a single person, then the premium goes up. After the deductible, Medicare generally pays 80% of the “approved amount,” and you or your supplement should pay 20%. If the physician does not accept “assignment”, you and/or your supplement may be required to pay an additional 15% above the 20% you have already paid.

Part C – Medicare Advantage – Private health plans with annual contract with Medicare. Plans include parts A and B and sometimes D. Pays in lieu of original Medicare. These are offered in various forms such as HMO where you are limited to only network doctors, PPO where you can go in or out of network (at a higher cost) or PFFS (Private Fee for Service) where you can see any doctor or hospital that accepts Medicare, as long as they agree to accept it. Acceptance can be made on a case-by-case basis.

Part D – Prescription Drug Coverage – Plans are offered by private insurance companies. Drugs are divided into “Tiers” and the copays will vary. There is also a “coverage gap” associated with these plans.

Medigap – Private insurance that pays after Medicare. Plans vary and may cover deductibles and copays depending on the plan you choose. Medicare supplements are standardized by the federal government. They have the letters A, B, C, D, F, G, K, L, M & N. Every standardized Medigap policy should provide the same basic benefits regardless of which insurance company sells it. The cost is usually the only difference between Medigap policies of the same letter sold by different insurance companies.

Medicare Supplement – Same as Medigap. Private insurance that pays after Medicare. Plans vary and may cover deductibles and copays depending on the plan you choose. Medicare supplements are standardized by the federal government. They have the letters A, B, C, D, F, G, K, L, M & N. Every standardized Medigap policy should provide the same basic benefits regardless of which insurance company sells it. The cost is usually the only difference between Medigap policies of the same letter sold by different insurance companies.

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Since all this can be very confusing, it is best to consult a professional who specializes in this field.