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What is Original Medicare?

Medicare Made Easy

What is Original Medicare?

Original Medicare Isn’t Free

Most people are surprised to learn that Medicare isn’t free. Medicare is a federal program for which beneficiaries pay taxes while working in exchange for participation when they become eligible. Yet, despite the taxes, you pay over the years Original Medicare (Part A and Part B) comes with cost-sharing. This cost-sharing includes copays, coinsurance, deductibles, and premiums.

Once you meet your deductibles, Original Medicare covers 80% of your health care expenses. Thus, you’re responsible for paying the remaining 20%.

To be eligible for premium-free Part A (inpatient coverage), you or your spouse must work at least 40 quarters (10 years), paying Medicare taxes. Individuals who don’t meet those requirements will be subject to pay at least partial monthly premiums. If you don’t qualify to receive this coverage premium-free or for a reduced premium, you’ll need to pay the full Part A premium each month.

Additionally, having a basic understanding of Part A benefit periods can help save money and time. Although Medicare runs on a calendar year, you’ll need to meet your Part A deductible for each of your stays at a hospital or skilled nursing facility before Medicare pays.

Similar to Part A, the remaining parts of Medicare – Part B (outpatient services), Part C (Medicare Advantage), and Part D (prescription drug coverage) are also not free.

About Original Medicare Part B Premiums

Each year, there is a standard premium that beneficiaries must pay each month to receive coverage from Part B. Yet, Part B premiums are more expensive for higher-income individuals.

Those who make above a certain amount will need to pay an Income-Related Monthly Adjustment Amount (IRMAA) instead of the standard premium. The Social Security Admistinration determines if you’ll need to pay more for Part B based on your modified adjusted gross income (MAGI) from two years prior.

Original Medicare Breakdown

Medicare is the federal health insurance program for people who are 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD). If you or your spouse have worked full time for 10 or more years over a lifetime, you are probably eligible to receive Medicare Part A at no additional charge. If you have to buy Part A, you’ll pay up to $471 each month in 2021.

Part A covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care. What Medicare covers is based upon, Federal and state laws, National coverage decisions made by Medicare about whether something is covered, local coverage decisions made by companies in each state that process claims for Medicare. These companies decide whether something is medically necessary and should be covered in their area.

Medicare Part B is available at a monthly rate set annually by Congress ($148.50 in 2021 for incomes $88000.00 or less for an individual in 2021). Part B covers certain doctors’ services, outpatient care, medical supplies, and preventive services. Some seniors are eligible to receive the medical insurance portion (Part B) free as well, depending on their income and asset levels. For more information, inquire about the Qualified Medicare Beneficiary (QMB), Special Low Income Medicare Beneficiary (SLMB), and Qualifying Individual programs through your county social services office.

Remember, in most cases, if you don’t sign up for Part B when you are first eligible, you will have to pay a late enrollment penalty for as long as you have Part B. Your monthly premium for Part B may go up 10% for each full 12-month period that you could have had Part B, but didn’t sign up for it. Also, you may have to wait until the General Enrollment Period (from January 1 to March 31) to enroll in Part B, and coverage will start July 1 of that year. Usually, you don’t pay a late enrollment penalty if you meet certain conditions that allow you to sign up for Part B during a Special Enrollment Period.

Medicare Part C (Medicare Advantage Plans) is a type of Medicare health plan offered by a private insurance company that contracts with Medicare to provide you with all your Part A and Part B benefits. Medicare Advantage Plans include Health Maintenance Organizations (HMO’s), Preferred Provider Organizations (PPO’s), Private Fee-for-Service Plans (PFFS’s), Special Needs Plans (SNP’s), and Medicare Medical Savings Account Plans (MSA’s). If you’re enrolled in a Medicare Advantage Plan, most Medicare services are covered through the plan and are not paid for under Original Medicare. Most Medicare Advantage Plans have prescription drug coverage included.

Medicare Part D (prescription drug coverage) adds prescription drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private-Fee-for-Service Plans, and Medicare Medical Savings Account Plans. These plans are offered by insurance companies and other private companies approved by Medicare.

Medicare Advantage Plans may also offer prescription drug coverage that follows the same rules as Medicare Prescription Drug Plans. Keep in mind, you may owe a late enrollment penalty if you go without a Medicare Prescription Drug Plan (Part D), or without a Medicare Advantage Plan (Part C) (like an HMO or PPO) or other Medicare health plan that offers Medicare prescription drug coverage, or without creditable prescription drug coverage for any continuous period of 63 days or more after your Initial Enrollment Period is over.

Original Medicare Plan Limitations

By now you have a better understanding of how Medicare isn’t free. We also want to emphasize that Medicare comes with a number of limitations.

Original Medicare Doesn’t Cover Foreign Travel

  • Traveling overseas with Medicare can be tricky, which is why you need to understand your plan entirely. Medicare only covers your medical bills in the United States and five U.S territories: U.S. Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands. However, there are rare exceptions in which Medicare will cover health care in other countries. These include:
  • Traveling on a cruise ship: You can use your Medicare coverage only if the ship is at a U.S. port or within six hours of one.
  • Traveling between Alaska and another state: Medicare will only cover emergencies if you are near Canada and that’s the closest hospital to receive treatment.
  • If you reside near a hospital that’s outside U.S territory: In this case, Medicare will cover your treatment, no matter if it is an emergency situation.

If you plan on traveling soon, check with your plan to see what you’ll need to pay out-of-pocket. Those who enjoy traveling internationally should explore their Medigap options, as most plans include foreign travel emergency costs.

Limited Coverage for Natural/Holistic Treatments

Beneficiaries interested in alternative treatments should know that Medicare doesn’t typically cover this type of care. As a rule of thumb, Medicare only covers treatments deemed medically necessary. When it comes to naturopathic remedies, Medicare only includes limited coverage for acupuncture and chiropractic services. It also doesn’t provide coverage for visits to naturopathic doctors.

Next, learn: How Medicare Works