What is Medicare?
Medicare was created in 1965 as part of Title XVIII (14) of the Social Security Act to provide health insurance for people age 65 and over, as well as younger people on disability. Medicare in general breaks down into 5 main parts:
1. Hospitalization (Part A): Think of this as inpatient services that are done in a hospital setting
2. Outpatient (Part B): Services done at your doctor’s office.
Both part A and B are known as Original Medicare
3. Part D: Prescription coverage
4. Medicare Advantage Plans (Part C): Medicare plans managed by private insurance companies.
5. Part E: Also known as Medigap plans, or plans designed to cover the medical costs of Part A and Part B, also administered by private insurance carriers.
How is Medicare Paid for?
Medicare is paid for through payroll taxes, social security, and policy holders, here’s how it breaks down.
Medicare Part A: Paid through payroll taxes
Medicare Part B: Paid through Social Security
Part C through Part E: Paid for by the policyholder
Typically, by comparison to how Major Medical Insurance has been the past few years,
Medicare has comprehensive coverage with large doctor networks and inexpensive monthly premiums!
If you’re confused, don’t worry! We’ll break down each part to make this transition from your traditional major medical or employer-based plan as simple as possible!
Medicare Part A and Part B, also known as original Medicare breaks down like this:
Part A covers the majority of hospital stays, skilled nursing, hospice and home health care.
Think of Part A as inpatient coverage.
Part B covers the majority of professional services such as doctor office visits, and clinical lab services. Think of Part B as outpatient coverage. Most individuals who qualify for Medicare do not need to pay a monthly premium for Part A! Why? Because you or your spouse have already paid for it through taxes during your working years!
Part B premiums can vary depending on income and tax-filing status. For 2018 the standard premium for Medicare Part B is $134 a month. If you as an individual or as a married couple make over $85,000 a year or $170,000 a year, you could pay as much as $428.60 a month for your Part B coverage. Don’t worry though, you do not need to cut a check for this every month, it just comes right out of your social security!
Again, this is general overview, your situation may be different depending on income status and other factors. If you have questions, please contact us!