Medicare is a federal health insurance program offered by the Centers for Medicare and Medicaid Services (CMS). Medicare is comprehensive and flexible. This flexibility means that it is often confusing. Reading our ultimate guide below to understand Original Medicare in better detail.
The “Original” in Original Medicare
When you hear people talk about Medicare, they’ll often talk about three things: Original Medicare, Medicare Advantage Plans, and Medicare Supplement Plans. It’s important to understand the different terminology. Original Medicare is called “original” because it’s the basis for Medicare. There are two main parts to Original Medicare: Medicare Parts A and B. These are the parts of Medicare that most people are enrolled in. They cover inpatient/hospital care and outpatient services respectively.
Medicare Supplement Plans and Medicare Advantage Plans are additional coverage options that Medicare beneficiaries can voluntarily enroll into.
Medicare Supplement Plans are private gap policies sold by different insurance companies to decrease out-of-pocket expenses of Original Medicare. These Medicare Supplement Plans, also called Medigap policies, can only be paired with Original Medicare.
Medicare Advantage Plans are completely different from Original Medicare. They are a private alternative to Original Medicare. These are plans offered by private insurers. They often add different bonuses, like dental insurance or prescription drug coverage.
It is important understand that when we are referring to Original Medicare, we are strictly speaking about Medicare Part A and Medicare Part B.
Applying for Original Medicare
There are two ways to enroll into Original Medicare. You are either enrolled automatically when you turn 65, or you apply for Original Medicare through Social Security.
If you are turning 65 and you are already drawing Social Security benefits or benefit from the Railroad Retirement Board, you will be automatically enrolled in both Medicare Part A and Part B. You will receive your Medicare card about 3-4 months prior to your 65th birthday. Although you are automatically enrolled, you can defer this enrollment if you have another form of creditable health insurance, such as an employer group plan through your spouse. Your Medicare enrollment letter will have directions on how to defer your enrollment.
If you are not drawing Social Security or Railroad Retirement Benefits prior to 65, you will have to submit an application for Original Medicare. You can do this application up to 3 months before your 65th birthday. If you plan to continue working past 65, you can also defer your Medicare application as long as you have another form of creditable health insurance. To apply for Medicare, you will want to visit the Social Security website for an online application, which you can easily find using our link www.StartPartB.com.
Medicare Part A
Part A is one of the two parts of Original Medicare. In previous years, everyone was enrolled into this part of Medicare when turning 65 without an application. In recent years, however, the policy was updated and now senior must apply for Medicare Part A themselves.
Part A Coverage:
Medicare Part A is considered your hospital coverage. You can think of this as your “room and board,” which includes:
- Inpatient care
- Skilled Nursing Facility
- Hospice Care
- Some Home Health Care
Part A Cost:
Most people have premium-free Medicare Part A. Essentially, Part A is free as long as you, or your spouse, have worked 40 quarters, which is the equivalent of 10 years. If you have not worked the minimum 40 quarters, your Medicare Part A will have a monthly premium. This premium is dependent on how many quarters you worked.
Although most people will have a $0 premium with Medicare Part A, there are still other costs associated. One large cost is the Medicare Part A deductible. In 2021, the Part A deductible is $1,484 per benefit period. This deductible is NOT annual, and some beneficiaries may pay the deductible more than once per year if there is more than 60 days between hospitalizations.
Medicare Part A also has different coinsurance amounts dependant on service and length of service. For inpatient hospitalizations, your $1,484 deductible covers your for days 1-60. Past day 60, if you have only Original Medicare, you will begin paying a daily copayment. If you are still hospitalized past day 90, your daily copayment will increase. The coinsurance amounts are:
- Days 61-90: $371 per day
- Days 91-150 (60 lifetime reserve days): $742 per day
You will also have coinsurance for rehab stays if you are discharged from the hospital to a skilled nursing facility. The coinsurance amounts for skilled nursing facilities under Medicare Part A are:
- Days 1-20: $0 per day
- Days 21-100: $185.50 per day
Medicare Part B
The second part of Original Medicare is known as Medicare Part B. Unless you are drawing Social Security or Railroad Retirement Benefits prior to age 65, you must submit an application for Medicare Part B.
Part B Coverage:
Where Medicare Part A is your hospital coverage, Medicare Part B is considered your outpatient coverage. These outpatient services can occur both in and outside of the hospital. Part B is broken down into two categories:
- Medically Necessary Services
- Preventive Services
Medicare Part B Cost:
Unlike Medicare Part A, there is no premium-free Medicare Part B. Anyone who applies for Medicare Part B will have a monthly premium. In 2021, the standard premium for Part B is $148.50. This monthly premium, however, can increase based on your most recently available tax return. Social Security will assess your Modified Adjusted Gross Income (MAGI) typically from two years prior, and can increase your premium based on that amount. This premium increase is known as IRMAA.
Aside from the monthly premium, Medicare Part B also has an annual deductible, which in 2021 is $203. Luckily, unlike Medicare Part A, you will only pay this deductible once per calendar year.
As for coinsurance, Original Medicare covers 80% of Medicare Part B charges. This means that without any additional coverage, such as a Medigap plan, you are responsible for 20% of all Medicare Part B charges. There is no limit to this 20%.
Role of Medicare Supplements
As you can imagine, out-of-pocket expenses can begin to add up very quickly with Original Medicare. Between the Part A deductible, and both the Part A and B coinsurance amounts, your bill can sky rocket pretty quickly. Without Original Medicare having an out-of-pocket maximum, costs to beneficiaries can become catastrophic.
Luckily, there are insurance plans designed to cover these costs and limit the amount of out-of-pocket expense you may encounter. Medicare Supplement Plans, also known as Medigap plans, are designed to fill the gaps left behind by Original Medicare. These plans have an affordable monthly premium, and very little out-of-pocket expense for all medical costs covered by Original Medicare.
For example, if you are schedule for an outpatient surgery with only Original Medicare, you will be responsible for the Part B deductible ($203) and 20% of all surgical costs. However, if you have a Medicare Supplement Plan like Plan G, your only out-of-pocket for an outpatient surgery is the Part B deductible of $203 (if you have not already met it that calendar year).
Give us a call at 877-885-3484 and an experienced agent will walk you through all of the Medicare Supplement plan options available to you.
What About the Other Parts of Medicare?
You may have also heard of Medicare Parts C and D. Part C is just another name for Medicare Advantage Plans. Remember, Medicare Advantage Plans are private health insurance plans sold as an alternative to Original Medicare. Part D is a prescription drug coverage plan. This is an optional addition to Original Medicare.
Still Have Medicare Questions?
Although Original Medicare only consists of two parts, it can still be confusing to figure out what services fall under which parts, and what your expenses will truly be. Give us a call at 877-885-3484 and a licensed and experienced agent will walk you through everything you need to know about enrolling in Medicare.