Breaking Down the Parts of Medicare
Submitted by JMB Financial Managers on November 14th, 2023
Medicare is the federal health insurance program for everyone age 65 and older in the United States. Generally, the different parts of Medicare exist to cover specific healthcare services. Most beneficiaries choose to receive their Parts A and B benefits through Original Medicare, the traditional fee-for-service program offered directly through the federal government. It is sometimes called Traditional Medicare or Fee-for-Service (FFS) Medicare. Under Original Medicare, the government pays directly for the health care services you receive. You can see any doctor and hospital that takes Medicare anywhere in the country.
In Medicare Parts A and B:
You go directly to the doctor or hospital when you need care. You do not need to get prior permission/authorization from Medicare or your primary care doctor.
There are limits on the amounts that doctors and hospitals can charge for your care.
You typically pay coinsurance for each service you receive.
You are responsible for a monthly premium for Medicare Part B. You may also pay a premium for Medicare Part A if you did not participate in the Social Security and Medicare Systems for a sufficient amount of time. (i.e., pay payroll taxes)
In Medicare Part D:
You receive a prescription drug plan offered by private insurance companies that are Medicare-approved.
Generally, you will pay 25% of the cost of prescription drugs, and Medicare Part D will pay the remaining 75%.
You are responsible for a monthly premium for Medicare Part D.
Note: There are a number of government programs that may help reduce your health care and prescription drug costs if you meet the eligibility requirements.
Wait, What Happened to Part C?
Unless you choose otherwise, you will have Original Medicare (i.e., Parts A and B) when you enroll at age 65. Instead of Original Medicare, you can decide to get your Medicare benefits from a Medicare Advantage Plan, commonly referred to as Medicare Part C. A Medicare Advantage Plan closely resembles an HMO health insurance plan and must provide all Part A and Part B services covered by Original Medicare, but they can do so with different rules, costs, and restrictions that can affect how and when you receive care. Remember, you still have Medicare if you enroll in a Medicare Advantage Plan. This means that you must still pay your monthly Part B premium (and your Part A premium if you have one). Most Medicare Advantage Plans include Part D Medicare prescription drug coverage.
Medicare Supplement Plans
You may also choose to purchase private medical insurance, a policy referred to as a Medicare Supplement Plan, which closely resembles a PPO health plan. Medicare Supplement Plans help you pay for the out-of-pocket costs associated with Original Medicare and sometimes additional services. Many plans include Part D Medicare prescription drug coverage. Like a Medicare Advantage Plan, you still have Medicare if you enroll in a Medicare Supplement Plan. This means that you must still pay your monthly Part B premium (and your Part A premium if you have one).
So Many Choices!
It is important to understand your Medicare coverage choices and to pick your coverage carefully. How you choose to get your benefits and who you get them from can affect your out-of-pocket costs and where you can get your care. For instance, with Original Medicare and a Medicare Supplement plan, you are covered to go to nearly all doctors, hospitals, and labs in the United States. On the other hand, Medicare Advantage Plans typically have network restrictions, meaning that you will likely be more limited in your choice of doctors and hospitals. However, Medicare Advantage Plans can also provide additional benefits that Original Medicare does not cover, such as routine vision or dental care.
We Are Here to Help
At JMB Financial Managers, we are here to support you if you need help or advice about choosing Medicare or other insurance plan. Contact us today for a complementary consultation!
© Medicare Rights Center. Used with permission.
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.
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About the Author
Jack Brkich III, is the president and founder of JMB Financial Managers. A CERTIFIED FINANCIAL PLANNER TM, Jack is a trusted advisor and resource for business owners, individuals, and families. His advice about wealth creation and preservation techniques have appeared in publications including The Los Angeles Times, NASDAQ, Investopedia, and The Wall Street Journal. To learn more visit https://www.jmbfinmgrs.com/.
