If you are turning 65, or about to lose your work insurance, it is crucial to understand Part A and Part B of Medicare. The industry can make Medicare really confusing and hard to understand, but we want to break it down for you so that you can have the knowledge to make the best decisions for your coverage.
What are the Parts of Medicare?
Medicare is made up of 4 parts: Part A, Part B, Part C, and Part D.
Part A, which is your hospital insurance, and Part B, which is your doctor and outpatient insurance, makeup Original Medicare. The other 2 Parts were not added in until more recently.
Part C is when you choose to get your Part A and Part B insurance from a private insurance company instead of the government. Part C is referred to as Medicare Advantage.
Part D is coverage for prescription drugs. Part D plans are only offered by private insurance companies.
While there are 4 Parts of Medicare, Part A and Part B are always going to be the base of your coverage.
What is Medicare Part A?
Like mentioned above, Part A is going to be your hospital insurance. It will also cover very limited skilled nursing services.
Part A has a $1,408 deductible in 2020. Once you pay this, coverage is 100%.
Part A is premium-free for most Medicare beneficiaries. You or your spouse had to have paid Medicare taxes for a certain amount of time while working. You can check your status at Medicare.gov.
If you are already taking Social Security benefits, you will automatically be enrolled in Part A and Part B when you are about to turn 65. If you are not taking Social Security, you can sign up for Medicare through Social Security.
If you do not have another form of health insurance when turning 65, definitely sign up for Medicare Part A. We recommend clients who keep working past 65 still sign-up for Medicare Part A even if they are staying on their work insurance. It is free and might provide you some extra protection if you should have to go to a hospital.
What is Medicare Part B?
Medicare Part B covers your doctor and outpatient services.
Part B has a monthly premium of $144.60 in 2020. Most people are going to pay this out of their Social Security check. If you make a higher income, you could pay more for your Part B. This is referred to as IRMAA.
Part B also has a yearly deductible of $198 in 2020. Once you pay the deductible, Medicare Part B covers 80% of all your bills. You have to pay the remaining 20% coinsurance. There is no limit on this 20%.
To break that down, if you get a $1,000 Medicare Part B charge, you have to pay $200. If you get a $10,000 Medicare Part B charge, you have to pay $2,000. If you get a $100,000 Medicare Part B charge, you have to pay $20,000. While 20% doesn’t seem like much on small bills, it can really add up.
This example assumes all your providers accept Medicare assignments. While most providers do, but you are responsible for excess charges, which could make the out-of-pocket costs even higher.
We recommend that you do not sign up for Medicare Part B until you do not have coverage from work or a spouse’s work anymore since you have to pay for it. If you are already taking Social Security benefits, you will need to opt-out of Medicare Part B. If you are not taking Social Security benefits and don’t want Part B, you do not have to do anything.
Do I have to get a Medicare Supplement with Original Medicare?
While you are not required by law to have a Medicare Supplement, we highly recommend that you do. The biggest reason for this is the uncapped 20% we were talking about above. Medicare Supplements are built to cover this.
If you have a Medicare Supplement, not only is it going to pay this 20%, if you choose the right plan, it will also cover the Part A deductible as well as the excess charges that you would be responsible for.
The Medicare Supplement that we recommend for almost all our clients is the Plan G. It provides the greatest coverage for the best value.
Medicare Supplements are standardized. This means that the Plan G you are offered from one company is the exact same coverage as a Plan G offered by another company. The only difference between these two Plan G’s is the price the insurance company is charging.
You want to make sure you work with an agent who sells for multiple companies to guarantee you get the best rate for your Supplement. Many times, agents only sell for one company, and they will move you to a Supplement Plan that is not common and will not provide as great of coverage. They do this because it is priced more competitively.
You can run your own rate quote for Plan G’s, without having to put in an email or phone number, here. You can also contact Cardinal for help with Original Medicare or a Medicare Supplement. We are an insurance brokerage and licensed to sell Supplements with over 30 companies in all 50 states.