How Original Medicare Works – Part A, Part B, and Part D

What is Original Medicare?

 

Original Medicare is a government-based program run by the Centers for Medicare & Medicaid Services (CMS). You become eligible for the program when you turn 65. There are other situations that may enable you to enroll in Medicare, they include; Disability (If you have been receiving SSDI for 24 months), ESRD (End Stage Renal Disease) and ALS (Lou Gehrig’s Disease). If you are currently receiving Social Security retirement benefits, you will be automatically enrolled in Medicare three months before you turn 65. Medicare will become effective the first day of the month when you turn 65. However, if your birthday happens to fall on January 1, your effective date is December 1 of the preceding year. There will be no premium for Part A provided that you or your spouse, parent or child have 40 quarters of FICA earnings or RRB. If you are currently covered by an employer’s health plan that is credible (which means that it is as good or better than Medicare), you may choose to defer enrollment in Part B until that coverage is no longer in force. You will need to check with your HR department or union representative concerning their policy regarding your enrollment in Part B. Part B enrollment is voluntary as it does involve a premium. Failure to enroll in Part B when you are first eligible may result in a lifelong penalty. In addition to having the required FICA earnings for enrollment in Medicare and age or disability status, you must also be a U.S. resident and be either a U.S. citizen or be an alien who has been lawfully admitted for permanent residence and has been residing in the United States for five continuous years prior to the month of filing an application for Medicare. Medicare is complicated and it has a lot of moving parts. It is wise to seek advice from a licensed and certified advisor when choosing a Medicare insurance plan, as each person’s needs are different.

Original Medicare is a fee-for-service based plan that helps with medical costs, instead of outright paying for them. Medicare will provide an approved amount of aid, while you then pay the rest of the costs. Examples of this would include:

 

  • Part A – Hospital admissions have a deductible for each benefit period, the benefit period ends 60 days after discharge, there could be several benefit periods within a year.
  • Part B – Medicare usually pays 80 % of expenses, and you pay 20%. Each service comes with a cost, but Medicare goes a long way towards making your medical costs much more affordable.

 

Part A and Part B Medicare

 

Medicare Part A and Medicare Part B are called original Medicare due to their coverage of the most basic medical needs. You can go to any doctor, hospital, or other facility that accepts Medicare, and most do.

Part A Medicare includes inpatient care for hospitals, home health services, hospice care, and nursing facilities. Medicare A is automatically applied for when you enroll in the program, it provides basic hospital insurance care. Part A is usually $0 premium as you paid the premium while you were working and paying your FICA. However, while Medicare A does cover nursing care and hospital stays, it doesn’t cover doctors’ fees. But, Medicare A does cover a variety of inpatient costs, including:

 

  • Meals
  • Prescribed Treatment Drugs
  • Inpatient Mental Health Care
  • Nursing Care
  • Therapy (Physical, Speech, Occupational)
  • Medical Social Services
  • Health Aide Services
  • Homemaker Services
  • Transplants (Heart, Lung, Kidney, Pancreas, Intestine, Liver)

 

Medicare Part B is voluntary and carries a premium. The premium can be automatically deducted from your Social Security Retirement benefit. Failure to enroll in Part B when first eligible may result in a lifelong penalty. Part B covers physician costs, including:

 

  • Visits
  • Medical Equipment
  • Outpatient Procedures
  • Rehabilitative Therapy
  • Laboratory Testing
  • X-rays
  • Mental Health Help
  • Ambulances
  • Blood Services

 

Part D Medicare

 

Part D covers prescription drug costs for people on Medicare. These plans enable you to purchase prescription drugs at a discounted price. This part is optional and offered by a number of private companies approved by Medicare. Failure to enroll in a Part D plan when first eligible may result in a lifelong penalty. These plans contain deductibles, formularies, and tier structures. They interact with Initial Coverage level, Coverage Gap and Catastrophic Coverage. It is critical to use a licensed and certified agent to choose the correct Part D plan for you. It is here that the most costly mistakes in Medicare can occur. It is not uncommon to see errors totalling thousands of dollars in a single year, with no ability to change them.