Explain the difference between Medicare Part A and B

Medicare can evoke all kinds of emotions and questions. As a seasoned Medicare specialist, I’ve heard just about everything from “Now I have free health care!” to “How will I pay for my insulin medication?” Knowing the basics and educating yourself will help take some of the fear out of the process.

1. What is Medicare Premium-Free Part A?

People typically don’t pay a monthly premium for Medicare Part A, also commonly referred to as hospital insurance or “no-premium Part A.” This is coverage you got if you or your spouse paid taxes to Medicare for a while while working. Most people get Part A at no premium.

You are eligible for Part A without premium at age 65 if

  1. You are already receiving retirement benefits from Social Security or Railroad Pension Board
  2. You are entitled to social security or railroad benefits, but you have not yet filed for them
  3. You or your spouse had a government job covered by Medicare

You can also benefit from part A without premium if you are below 65 years old if

  1. You received Social Security or Railroad Retirement Board disability benefits for 24 months
  2. You have end-stage renal disease (ESRD) and meet certain requirements

2. What are Medicare Part A premiums?

If you do not qualify for Part A without premium, you can purchase Part A.

People who buy Part A will pay a premium of $274 or $499 each month in 2022 depending on how long they or their spouse worked and paid Medicare taxes. If you choose not to purchase Part A, you can still purchase Part B.

In most cases, if you choose to purchase Part A, you must also have Medicare Part B (medical insurance) or pay monthly premiums for Part A and Part B.

Pro tips: I know it can be overwhelming. Briefly, Part A covers inpatient care in a hospital, care in a skilled nursing facility, nursing home care (inpatient care in a skilled nursing facility that is not custodial or long-term care), palliative care and home health care.

3. What is Medicare Part B?

The main thing you need to know about Medicare Part B is that it will cost you. Some people automatically get Medicare Part B (medical insurance) and some people have to enroll in Part B. If you don’t enroll in Part B when you first qualify, you may have to pay a penalty late registration. If you are unsure whether you will automatically receive Part B or need to register, contact the Social Security Administration and request your Medicare information.

You pay a premium each month for Part B. Your Part B premium will automatically be deducted from your benefit payment if you are receiving benefits from any of these: Social Security, Railroad Retirement Commission or the Office of Personnel Management. If you do not receive these benefits, you will receive a bill from Medicare to pay your premiums for Part B (medical insurance).

4. What does Medicare Part B cover?

Medicare Part B covers medically necessary services. It covers services or supplies necessary to diagnose or treat a medical condition and meet accepted standards of medical practice. Cover also includes preventive services, for example, any doctor’s visit to prevent illness (like the flu) or detect it at an early stage – when treatment is most likely to work best. You pay nothing for most preventive services if you get services from a health care provider who accepts your case.

Pro Tip: For a quick overview, Medicare Part B covers services such as clinical research, ambulance services, durable medical equipment (DME), mental health care, inpatient and outpatient care, partial hospitalization, and limited outpatient prescription drugs.

5. How much will Medicare Part B cost me?

The standard Part B premium amount in 2022 is $170.10. Most people pay the standard amount. If your modified adjusted gross income as shown on your IRS tax return from two years ago is greater than a certain amount (which varies from year to year), you will pay the standard premium amount and one Income-Related Monthly Adjustment Amount (IRMAA). IRMAA is a supplement added to your premium. The Social Security Administration will notify you if you are assessed IRMAA.

In 2022, you pay $233 for your Part B deductible. Once you reach your deductible for the year, you typically pay 20% of the Medicare-approved amount for most medical services (including most medical services while you are hospitalized), outpatient therapy and durable medical equipment (DME).

As you can see, there are many gaps and responsibilities that need to be filled when it comes to health insurance. I have seen the benefits of talking to a health insurance specialist. After going through this with my clients, they have a sense of understanding and feel better able to make informed decisions.

For more on Medicare, check out these other Retirement Awaits articles:

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