Whether your 65th birthday is on the horizon or decades away, understanding the different parts of Medicare is critical. Here's a brief review of the different parts of Medicare that may help you to determine what plans will meet your health care needs.
Part A (Hospital Insurance):
- Covers inpatient hospital care, skilled nursing facility costs, hospice services, lab tests, surgeries, and some home health care services. While very few beneficiaries must pay Part A premiums out of pocket, annually adjusted deductibles apply.1,2
- Will pay for a maximum of 100 days of nursing home care, provided certain conditions are met. Under current Part A rules, a beneficiary would pay $0 for days 1–20 of care in a skilled nursing facility. During days 21–100, a $176 daily coinsurance payment may be required.1,2 Since Medicare does not pay for long-term care, it is important to develop a plan to manage 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 that are not covered by Part A.3 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 (for a married couple making less than $182,000) is $170.10 per person for 2022.
Part C (Advantage Plans):
- If the costs of Medicare provide challenging and you are willing to forgo some flexibility as to choosing providers, Medicare Part C may be attractive. These all-in-one alternatives to Original Medicare (Parts A & B) are offered by private companies approved by the federal government.
- Although these plans come with standardized minimum coverage, the amount of additional protection can drastically differ from one person to the next. This is due to unique provider networks, premiums, copays, coinsurance, and out-of-pocket spending limits. Comparing prices and services offered by different vendors may be the best way to find a Medicare Advantage plan that works for you.3
Part D (Prescription Drug Plans):
- While Medicare Advantage plans often offer prescription drug coverage, insurers also sell federally standardized Medicare Part D plans as a standalone product to those with Part A and/or Part B. Every Part D plan has its own formulary, or list, of covered medications. Visit Medicare.gov to explore the formulary and prices of approved drugs for your Part D plan, organized by tier.4
Medicare Supplemental Insurance (Medigap):
- Extra insurance you can buy from a private company that helps pay your share of costs (such as your 20% coinsurance) in Original Medicare (Parts A & B). Policies are standardized, and in most states named by letters, like Plan G or Plan K. The benefits in each lettered plan are the same, no matter which insurance company sells it.
Medicare.gov is a great place to start all your research. There, you’ll find answers to your most common questions and more information on the different Medicare plans offered in your area.
Stephen is a Principal and Director of Wealth Transfer at Rappaport Reiches Capital Management. With 15 years of experience as an estate planning attorney with the Chicago firm of Neal, Gerber & Eisenberg, Stephen brings unparalleled financial and estate planning experience to RRCM’s advisory services. Stephen provides clients with impartial objective advice in the areas of estate planning, risk management and charitable giving. Please connect with Stephen below.