How Much Do Medicare Parts A, B, C and D Cover?

Health costs are higher than ever, yet so many Americans still fail to understand the basics of their own coverage. This misinformation is seemingly by design with plans becoming increasingly complex. Over half of Americans in a survey admitted to feeling only “somewhat confident” about their ability to choose the right insurance plan that meets their needs.

This is even more complicated for federally funded programs like Medicare. While Medicare is available for senior citizens 65 and over, it’s important for everyone to learn more about the Healthcare Marketplace. Medicare makes insurance for the aging populations more affordable, but it’s also made up of many moving parts. How much do Medicare Parts A, B, C, and D actually cover?

Medicare Part A: Your Hospital Stay

You can think of Part A as your room and board for inpatient procedures. Part A is automatically part of Medicare, and it’s your hospital insurance plan. If you need nursing care or a hospital stay, this will cover your care and board. However, a common misunderstanding is that this Part also covers your doctor’s visits and treatment. In reality, that’s covered under Medicare Part B.

Part A is included in the payroll taxes from when you were employed. That means you won’t have to pay a monthly premium for Part A, but you still need to pay your yearly deductible before coverage kicks in. Finally, it’s important to note that there are limits to this coverage. Part A only pays 80% of Medicare-approved costs for up to 60 days. If your stay is over this amount of time, you’ll need to start paying a larger percentage.

Medicare Part B: Traditional Coverage

Medicare Part B is what mostly resembles “traditional” medical coverage like what you would have had under an employer. This pays for a percentage of your health care including doctor visits, procedures, tests, and more. This is an optional coverage option, and you might choose Part C instead (we’ll talk more about that in the next session) or you might still receive coverage under your employer.

Unlike Part A, Medicare Part B does require a monthly premium which is based on your annual income. Those who made above $85,000 annually or $170,000 for a couple will need to pay higher rates. While most people should consider Medicare Part B, you might opt out if you have other retiree health benefits.

Medicare Part C: Medicare Advantage

You’ve probably heard Medicare Part C referred to as Medicare Advantage. This is an optional choice for private insurance that’s approved by Medicare. The guide What Is Medicare Part C by HealthMarkets delves deeper into how this aspect of the federal program differs from Part B. The advantage of choosing a private plan through Medicare Part C is that you have more options for coverage. These plans usually cover additional treatment like vision and dental care.

Another benefit of Medicare Advantage is having more choice in providers. If you’re already seeing a trusted family doctor, they might be covered under traditional Medicare. Medicare Advantage allows for the regular use of out-of-network providers, so you have more flexibility. This is a good option for individuals with unique medical needs.

Medicare Part D: Drug Coverage

Finally, your prescription drug plan is covered under Part D. This is also an option plan, but it’s recommended if you’re expecting to need prescriptions over the course of the year. Some Part D coverage is included in Medicare Advantage plans, so you’ll need to review your options with your insurance provider if you go that route.

Like Medicare Advantage, Medicare Part D plans are through private insurance companies. You sign up for these plans through the private insurer, and they also include a monthly premium and deductibles. You’ll want to research individual plans to compare the price of covered drugs. These prices change every year, so it’s always worth shopping around for the best deal.

Choosing the Right Coverage

Thanks to Medicare, health insurance has never been more affordable for those who are reaching their golden years. That being said, you still have a lot of important decisions to make about your own health needs. Not every plan is right for every individual.

In addition, Medicare isn’t a band-aid solution to saving for medical costs. As you can see from the breakdown above, Medicare doesn’t offer full coverage for most procedures, and you’ll still face out-of-pocket costs. The best option is to have a plan for retirement that starts early on.