The A, B, C, & D of Medicare

Becky Blevins, CFP®, CPWA®, MSFS October 30th, 2023

Understanding the different parts of Medicare is crucial, whether you’re approaching your 65th birthday or it’s still a few decades away. This government-sponsored program may play a significant role in your future healthcare decisions.

Parts A & B: Original Medicare

Original Medicare consists of two components. Part A covers inpatient hospital care, skilled nursing facility costs, hospice, lab tests, surgery, and some home health care services. While most beneficiaries don’t have to pay Part A premiums out of pocket, there are annually adjusted standard deductibles to keep in mind.1,2

Many pre-retirees are often cautioned that Medicare only covers a maximum of 100 days of nursing home care (with certain conditions). Part A provides these provisions. Under the current Part A rules, you won’t have any costs for days 1-20 of care in a skilled nursing facility (SNF). From days 21-100, you may be required to pay a daily coinsurance payment of $204.1,2

Knowing the limitations of Part A, some individuals seek other options when it comes to managing the costs of extended care.

Part B: Coverage for Physicians’ Fees, Outpatient Care, and More

Part B covers physicians’ fees, outpatient hospital care, certain home health services, durable medical equipment, and other services not covered by Medicare Part A.2 However, Part B does come with costs that are adjusted annually. The premiums vary based on the recipient’s income level, but the standard monthly premium amount for 2024 is $174.70, with a yearly deductible of $240.2

Part C: Medicare Advantage Plans

Medicare Advantage (MA) plans, also known as “Medicare Part C,” are often considered an all-in-one alternative to Original Medicare. These plans are offered by private companies approved by the federal government. While MA plans have standardized minimum coverage, the additional protection offered can vary significantly from person to person. This is due to unique provider networks, premiums, copays, coinsurance, and out-of-pocket spending limits. Comparing prices and services offered by different vendors can help you find the right Medicare Advantage plan for your needs.3

Part D: Prescription Drug Plans

While Medicare Advantage plans often include prescription drug coverage, insurers also sell federally standardized Medicare Part D plans as standalone products for those with Medicare Part A and/or Part B. Each Part D plan has its own list (i.e., a “formulary”) of covered medications that can be found on the Medicare website along with their prices, organized by tier.4

Getting Started is an excellent resource to begin your research. It provides answers to frequently asked questions and more information on the different Medicare plans that are available in your area.

We also encourage you to consult with an advisor that can help you navigate complex decisions such as Medicare and ensure that your financial strategy aligns with your unique goals., 2023, 2023, 2023, 2023

Read More By Becky Blevins, CFP®, CPWA®, MSFS

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. Please consult legal or tax professionals for specific information regarding your individual situation. 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. Investment advisory services are offered through Concord Wealth Partners, an SEC Registered Investment Advisor.

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