There are four parts of Medicare – Part A, Part B, Part C, and Part D. This can be very confusing because Medicare supplement plans, or Medigap plans, share those some letters. Knowing the difference between the Parts of Medicare and Plans of Medicare is important when making decisions about your healthcare.
There is an easy way to remember this. Medicare is a government program. There are many parts of government that work together to make it functional (hopefully!). These include the branches of government, the military, and social programs, among other parts of the government. As the parts of government work together, so the parts of Medicare work together to cover your healthcare needs.
Insurance companies offer healthcare plans. The Medigap plans are also designated by letters A through N.
Medicare Part A
Part A of Medicare covers mostly your inpatient services, including hospital stays. Part A is free for most people if you worked at least 40 quarters in your life. Forty quarters would equal 10 years of working.
Medicare Part A covers inpatient services such as a semi-private room in a hospital, home health care services, hospice care, and even a limited amount of care in a skilled nursing facility. Part A also covers the cost of blood should you require more than 3 pints for a blood transfusion.
Some medical care you receive while a patient at a facility will still fall under Part B of Medicare.
Medicare Part B
Part B of Medicare covers outpatient services, such as office visits with your physician, lab tests, ambulance transport, chemotherapy, and outpatient surgery. It will cover services that are deemed medically necessary. It will also cover dialysis care for people with renal failure. Some of these procedures could take place in a hospital, but if a physician is providing the care they will likely fall under Part B.
Medicare Part C
Which of these parts is not like the other? Well, that would be Part C. It can certainly cause confusion. Medicare Part C doesn’t cover medical benefits, Medicare Part C is just another name for private Medicare insurance. The Balanced Budget Act of 1997 created Part C, which is now referred to as Medicare Advantage. Part C is a replacement plan for the other three parts of Medicare. It combines the coverage of the government’s Medicare program into a plan that is administered by an insurance company instead. Under Part C, or Medicare Advantage, the insurance company makes the determination of your coverage.
Medicare Advantage plans are private health plans run by the insurance companies. You can choose this coverage instead of Medicare. In most cases, under a Medicare Advantage plan, you are limited to which doctors you can visit. If your doctor is out of network, you could be forced to pay the full cost to see them.
Medicare Advantage plans can often have lower premiums than Medigap. However, you’ll pay more copays as you go along so they are not necessarily cheaper over the long term. Before making a decision, check out this great post on Medicare Advantage vs Medicare Supplement.
Medicare Part D
Part D is the prescription drug plan administered by Medicare. Parts A and B require you enroll through the Social Security Administration. Under Part D coverage, you simply choose a drug plan to enroll in with a private insurance company that offers Part D drug plans in your area. When you do so, you are enrolled into Part D of Medicare. You can enroll through the Medicare.gov website or with an independent agent of your choosing. You pay the same price either way.
Part D drug plans are optional. You will be responsible for a monthly premium for the coverage. The premium is paid to the insurance company. In return, they give you significantly lower copays on your prescriptions than you would pay if you had no Part D insurance coverage.
For more in-depth explanation of how the Parts and Plans of Medicare differ yet work together, check out this YouTube video: