Understanding "original medicare" and its two parts

Choosing the right Medicare plan for your needs starts with a clear understanding of its foundational elements. Original Medicare is a federal health insurance program for people age 65 or older, some younger people with disabilities, and people with End-Stage Renal Disease (ESRD).

Original Medicare is structured into two primary parts: Part A and Part B. Knowing what each covers and how they work together is essential.

part a: hospital insurance

Part A is often referred to as hospital insurance. Most people do not pay a monthly premium for Part A because they or their spouse paid Medicare taxes through employment for a specified period (typically 40 quarters, or ten years). If you don't meet this requirement, you may be able to buy into Part A.

Part A primarily covers inpatient hospital stays, meaning if you are formally admitted to a hospital. It also covers care in a skilled nursing facility (not long-term care), hospice care, and some home health services. There are specific criteria for coverage, such as needing medically necessary care and receiving services from a Medicare-certified provider.

It's important to understand that while Part A covers the costs associated with your stay, it has deductibles and coinsurance. This means you will pay a certain amount before Medicare starts paying, and then a portion of the costs for longer stays.

part b: medical insurance

Part B is your medical insurance. Unlike Part A, most people pay a monthly premium for Part B. This premium can be deducted directly from your Social Security benefits.

Part B covers a broad range of outpatient services and supplies. This includes doctor's visits (both in-office and telemedicine), outpatient hospital care, physical and occupational therapy, durable medical equipment (like wheelchairs and oxygen), preventive services (such as screenings and vaccines), and certain home health services not covered by Part A.

Similar to Part A, Part B also has a deductible you must meet each year before Medicare begins to pay its share. After your deductible is met, Medicare generally pays 80% of the Medicare-approved amount for most covered services, and you are responsible for the remaining 20% coinsurance. There is no annual out-of-pocket maximum with Original Medicare (Part A and Part B combined).

working together: the gaps in original Medicare

While Part A and Part B provide essential coverage, they do not cover everything. For instance, they generally don't cover prescription drugs (unless administered in an inpatient setting, like during a hospital stay), routine dental care, eye exams for glasses, hearing aids, or private duty nursing. Also, as noted, Original Medicare does not have a limit on your out-of-pocket spending.

Many people choose to add supplemental coverage to Original Medicare to help fill these gaps, manage out-of-pocket costs, or cover prescription drugs. These options include Medicare Supplement Insurance (Medigap) plans, which work alongside Original Medicare, or a Medicare Advantage (Part C) plan, which is an alternative way to receive your Medicare benefits from a private insurance company and typically includes prescription drug coverage.

Understanding the foundational parts of Original Medicare – Part A and Part B – is the first step in making informed decisions about your healthcare coverage as you age. Review your needs regularly and explore the options available to ensure you have comprehensive coverage that supports your well-being.