Medicare: what do the different types of Medicare cover?
From Part A to Part D, this article takes a deep dive into Medicare and what the healthcare plan covers.
Summary
Medicare is the US government’s health insurance program for people aged 65 and over.
The program is divided into four main parts, each covering different healthcare options.
Those receiving retirement or disability benefits from Social Security are automatically enrolled in Medicare Part A.
While Medicare is generally available to everyone over age 65, if you have bigger healthcare concerns, it's worth speaking to a financial advisor about how you can best manage these costs.
What is Medicare?
Medicare is the US government’s health insurance program and is one of the most popular healthcare programs in the country.
Medicare has evolved over the years and now has four parts, each covering various healthcare areas:
Medicare Part A (hospital coverage)
Medicare Part B (medical coverage)
Medicare Part C (advantage plan)
Medicare Part D (prescription drug coverage)
Each of these Parts is discussed below.
It’s important to remember that when you enroll in Medicare, you do not automatically enroll in each Part. Some options are mandatory, while others are optional.
The program is available to eligible people aged 65 and over. It is also available to those receiving Social Security disability benefits.
While Medicare is generally available to everyone over age 65, if you have bigger healthcare concerns, it's worth speaking to a financial advisor about how you can best manage these costs.
Unbiased can connect you with a financial advisor who can help you develop a financial plan that considers all your healthcare needs. Answer a few questions about your needs, and we’ll find an SEC-regulated financial advisor perfectly suited to them. Get started now.
What is Medicare Part A?
Medicare Part A covers the cost of hospitalization, including inpatient care, short-term stays in nursing facility care, short-term home health services and hospice care.
There are some caveats associated with these, including:
In some cases, such as hospice care, to receive this coverage, you must use a Medicare-approved provider, and your doctor must state you have a life expectancy of six months or less. Medicare does cover at-home hospice care.
For nursing facility care, Medicare does not cover costs after 100 days.
If you go into a hospital, you also need to use one that accepts Medicare, and you must have been admitted as an inpatient due to a doctor’s orders.
Medicare Part A costs nothing for most people as they have paid Medicare taxes for at least 10 years.
If you don’t qualify for premium-free Part A, you will pay either $278 or $505 each month, depending on how long you or your spouse worked and paid Medicare taxes.
What is Medicare Part B?
Medicare Part B covers your doctor visits and any associated tests, including lab tests, home healthcare services, outpatient care, medical equipment, service from doctors and other healthcare providers, and outpatient mental health care.
It also covers many preventative services, such as screenings, vaccines, and yearly wellness visits.
There is a premium associated with Medicare Part B.
In 2023, most people paid $164.90 a month. In 2024, this has risen to $174.70.
The amount you pay is based on your adjusted gross income (AGI) as reported on your IRA tax return from two years ago.
You will pay a higher premium than the average amount mentioned above if your AGI is more than:
$103,000 in 2024 if you file an individual tax return or are married and file separately.
$206,000 in 2024 if you are married and file a joint tax return.
What do Medicare Part A and Part B not cover?
Medicare Parts A and B are often referred to as “original Medicare.”
When people sign up for Medicare, they usually opt into Parts A and B together. This is the most common and popular Medicare option.
While original Medicare does cover an extensive range of healthcare options, some areas are not covered by the plan.
These include:
Long-term care: If you need long-term care, you will have to pay for this out of your own pocket or use your long-term care insurance.
Dental, eye and ear care: Visits to your dentist, ophthalmologist, or otolaryngologist for ear care will not be covered by Medicare.
International healthcare: You need to be in the US to use Medicare services. If you receive healthcare outside of the US, you will need to pay for it.
What is Medicare Part C?
Known as Medicare Advantage, Part C is a Medicare-approved plan from a private company that offers an alternative to original Medicare for your health and drug coverage.
These plans include Part A, Part B, and usually Part D.
On top of this, Medicare Advantage, or Medicare Part C, can include additional health benefits not included in Parts A, B or D, such as dental or eye care.
If you opt into Medicare Part C, however, you may be subject to a limited number of doctors who accept the plan.
You will pay a monthly premium for Medicare Part C.
The amount of these premiums varies based on which plan you join and can change each year. Medicare Part C plans generally cost between $0 and approximately $200.
As Part C is closely linked to Medicare Part B, you must keep paying your Part B premium to keep your Part C plan.
What is Medicare Part D?
Medicare Part D covers the cost of prescription drugs.
The plan mainly covers prescription drugs taken at home, not administered by a professional in a medical setting; however, it does include recommended shots or vaccines.
Medicare Part D plans can specify the drugs they cover. As private insurance companies offer Part D plans, what is covered will vary by provider.
Medicare Part D is often included in most Medicare Advantage plans. Alternatively, if you have “original Medicare,” you can add on Part D.
You will pay a monthly premium for Medicare Part D.
The amount of these premiums varies based on which plan you join and can change each year. In 2024, the premiums can be up to $195.10 per month.
Part D also has spending thresholds. If you hit these thresholds, you will have to start paying for your prescription drugs.
Get expert financial advice
Looking after your health can be a big financial undertaking, as hospital bills and medication costs can quickly add up.
Having the right healthcare plan is essential for both keeping costs down and budgeting appropriately.
If you need help managing your healthcare costs, especially as you get closer to retirement, it's important to seek expert advice.
A good place to start is Unbiased.
Here, you can get matched with an independent SEC-regulated financial advisor who can ensure you’re getting the most out of your current financial plan and are on course to achieving your retirement goals.
Senior Content Writer
Rachel is a Senior Content Writer at Unbiased. She has nearly a decade of experience writing and producing content across a range of different sectors.