Medicare Parts A & B
Medicare Parts A & B make up what is considered “Original Medicare.”
Most people don’t have to pay a premium for Part A. They’ve already paid into the system in the form of the Medicare tax deductions in their paycheck if they (or their spouse) worked at least 40 calendar quarters (10 years) in the U.S.
Most people have to pay a premium for Part B.
Medicare Part A helps cover the costs of inpatient care in the hospital, short-term skilled nursing facilities, home health care, and hospice care.
Medicare Part B helps pay for doctor visits and outpatient care. This includes, for example, wellness visits, preventive care, lab services, diagnostic tests, physical therapy, diabetic screenings, mental healthcare, durable medical equipment, ambulatory surgery center services, ambulance and emergency room services.
Benefit periods apply for Part A. These benefit periods measure the use of inpatient hospital and skilled nursing facility services. Medicare will stop paying for your inpatient-related hospital or skilled nursing facility costs (such as room and board) if you run out of days during your benefit period.
Part B benefits include both a deductible and coinsurance. The annual Part B deductible is indexed annually; $198 in 2020. For coinsurance, beneficiaries generally pay 20% of the Medicare-approved amount for the covered services utilized. There is no annual out-of-pocket maximum! Medicare pays the remaining 80%.
Most people either add a Medicare Supplement (Medigap) Plan or they opt to enroll in a Medicare Advantage Plan. Both of these options in different ways can serve to limit liability, extend benefit periods, and cover some out of pocket costs (like deductible and coinsurance) associated with Medicare Parts A & B.