Reprinted from Texas Department of Insurance (October 2012)
Medicare is a federal health insurance program that pays most of the health care costs for people who are 65 and older. It also pays for health care for people who are eligible because of a disability or qualifying health condition.
Medicare Part A (hospital coverage) pays for
- in-patient hospital services
- skilled nursing facility care after a hospital stay
- home health care
- hospice care
- all but the first three pints of blood each calendar year.
Medicare Part B (medical coverage) pays for
- medical expenses
- clinical laboratory services
- outpatient hospital treatment
- preventive health services, including exams, lab tests, health screenings, and shots.
In most cases, Medicare pays 80 percent of the cost of approved medical expenses, including doctors’ services, medical equipment, and supplies. Medicare pays some Part B services at a set rate.
Medicare Part D (prescription drug coverage) pays for generic and brand-name prescription drugs. You can get prescription drug coverage either by joining a stand-alone prescription drug plan or by buying a Medicare Advantage plan that includes drug coverage. You probably don’t need Part D coverage if you’re in a group health plan that provides prescription coverage.
Only private insurance companies approved by Medicare may offer Part D coverage.
Most people get Medicare benefits through original Medicare. Original Medicare is sometimes called traditional Medicare or Medicare fee-for-service. You may go to any doctors or hospitals you want, as long as they accept Medicare patients.
Medicare Advantage
Depending on where you live, you may be able to join a Medicare Advantage plan. Medicare Advantage is an alternative to original Medicare. If you join a Medicare Advantage plan, the plan will provide your Medicare parts A and B benefits. If you enroll in a Medicare Advantage plan, you are no longer in original Medicare but are still part of the Medicare program.
Medicare has contracts with insurance companies and managed care plans to offer Medicare Advantage plans in specific geographic areas. Medicare pays the plan a set amount each month, and the plan provides Medicare parts A and B services. Some Medicare Advantage plans require you to go to doctors in their networks.
Your out-of-pocket costs in a Medicare Advantage plan are different from what you would pay in original Medicare. You will continue to pay your monthly Medicare Part B premium, and you must pay any premium the Medicare Advantage plan charges. You will also pay any copayments, deductibles, and coinsurance the plan requires.
Medicare Advantage plans usually have more benefits than original Medicare. For instance, some Medicare Advantage plans may cover dental and vision services. Some Medicare Advantage plans include Medicare Part D. To get prescription drug coverage with original Medicare, you will have to buy a stand-alone prescription plan.
Medicare Advantage plans aren’t right for everyone. Consider your options carefully before joining a Medicare Advantage plan.