Which Parts of Medicare Do I Really Need?
I am turning sixty-five in the next few months and trying to prepare myself for this new transition to Medicare. I still work part-time, but I will not have other insurance when I go on Medicare. I know there are different parts to Medicare, but which ones do I really need?
-Stanley (Grand Rapids, MI)
Thank you for taking the time to write us. Since you will not have any other insurance once you become eligible for Medicare, the first step you may want to take is to sign up for Original Medicare by contacting the Social Security Administration. You can do this as soon as 3 months before your 65th birthday, and your coverage will start on the first of your 65th birth month. E.g., if your birthday is August 20th, your Original Medicare will start August 1st. If your birthday falls on the 1st of the month, Medicare will start a month prior.
Original Medicare consists of two parts- Part A and Part B.
Part A is inpatient hospital coverage, and it covers:
- Semi-private rooms
- General nursing
- Drugs as part of your inpatient treatment
- Other hospital services and supplies as part of your inpatient treatment
Part B will cover outpatient medical services such as:
- Medically necessary services: Services or supplies needed to diagnose or treat your medical condition and that meet accepted standards of medical practice.
- Preventive services: Health care to prevent illness (like the flu) or detect it at an early stage when treatment is most likely to work best.
Now, what will Original Medicare cost for you? Part A is premium-free for most people. But Part B does have a standard monthly premium of $170.10, per person, in 2022.
Both Parts A and B have deductibles, as well as copays, and coinsurances that you will be responsible for as you use the coverage. Keep in mind there is no annual out of pocket limit with Original Medicare. Therefore, if you just take Medicare Part A and B with no additional coverage, you could face significant out of pocket costs. If you choose not to take them at all, you could face penalties later down the road if you change your mind.
Although you paid into Medicare while you were working, that does not mean that Medicare will cover everything. This is a common misconception. In fact, Original Medicare was never intended to be a sole coverage for all your healthcare needs. If you choose to pick up additional coverage, you do have some options to help offset your out-of-pocket medical expenses.
After picking up Original Medicare, most people enroll into either a Medicare Advantage (Part C) plan or a Medicare Supplement (Medigap).
Medicare Advantage plans replace Original Medicare Parts A and B. Even though you will remain enrolled in Part A and B, you will only use the Medicare Advantage insurance when you receive medical care.
Advantage plans operate off a network like an HMO, PFFS or PPO. These plans can cover hospital, medical, and prescription drug coverage (Part D) under one plan. They typically have a lower monthly premium, but you will be responsible for copays, coinsurance, and deductibles that will have an annual cap called a Maximum Out of Pocket. This is a limit on how much you pay for medical services in a year. Some Advantage plans offer benefits for dental and vision, but they vary from plan to plan.
Medicare Supplements work with your Original Medicare Parts A and B to fill in the gaps for what Medicare doesn’t cover. Supplement plans do not have a network, so you may use these plans at any provider throughout the country that accepts Original Medicare. These plans cover hospital and medical services, and you may enroll into a separate stand-alone drug plan if you need prescription coverage (Part D). The Supplements usually have a higher monthly premium, but you may have much less out of pocket expenses with a Supplement.
Regardless of which option you choose, you will still have to pay your Part B premium, which again is $170.10 a month for most people. Parts A, B, and D may have penalties if you don’t enroll in them when you are first eligible. Although you are not required to pick up a Medicare Supplement plan or Medicare Advantage plan, they can help ease your share of healthcare expenses that A and B will not cover. So, going back to your initial question on what you “need,” I’d say it really depends on what’s important to you.
Your Medicare Advisor
For help with Medicare plans – or any questions you may have about Medicare – contact AMAC’s Medicare Advisory Service at 1-855-611-4856 or request a quote below!