Free Guide to Medicare Coverage Information

Understanding Medicare and Its Four Main Parts

Medicare is a federal health insurance program for people age 65 and older, certain younger people with disabilities, and people with end-stage renal disease (ESRD). The program serves over 66 million Americans, making it one of the largest health insurance systems in the United States. Rather than a single insurance plan, Medicare consists of four distinct coverage options, each paying for different healthcare services.

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Part A covers inpatient hospital care, skilled nursing facility care, hospice care, and some home health services. When someone stays overnight in a hospital, Part A pays for the facility, meals, nursing care, and other hospital services and supplies. Most people do not pay a monthly premium for Part A because they or their spouse paid payroll taxes while working. In 2024, people with Part A are responsible for a $1,632 deductible per hospital stay, meaning they pay this amount out of pocket before Part A begins covering costs.

Part B covers doctor visits, outpatient care, medical equipment, and preventive services like cancer screenings and vaccinations. Unlike Part A, nearly everyone pays a monthly premium for Part B. The standard Part B premium in 2024 is $174.70 per month, though some higher-income earners pay more. Part B also requires a $240 annual deductible, after which Medicare typically covers 80% of approved services and the patient pays 20%.

Part D covers prescription drugs through private insurance companies approved by Medicare. Part D is optional but recommended, as people who do not enroll when first becoming Medicare-eligible may face penalties if they join later. Monthly Part D premiums vary by plan, ranging from roughly $7 to $100 per month depending on which drugs a plan covers and which insurance company offers it.

Part C, also called Medicare Advantage, is an alternative to Original Medicare (Parts A and B). Private insurance companies approved by Medicare offer Part C plans, which must cover everything Part A and B cover but often include additional benefits like dental or vision care. Part C plans typically have lower or zero monthly premiums than Original Medicare but may have higher out-of-pocket costs when receiving care.

Practical takeaway: Learning the differences between Medicare's four parts helps clarify what services are covered under each option and what costs to expect.

Coverage Details: What Medicare Pays For and What It Does Not

Medicare covers a wide range of medical services, but coverage has specific limits. Understanding what is and is not covered prevents unexpected out-of-pocket expenses and helps people plan for their healthcare needs.

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Original Medicare (Parts A and B) covers hospital stays, doctor visits, laboratory tests, imaging like X-rays and MRIs, surgery, emergency room visits, mental health services, and preventive care. Preventive services include annual wellness visits, screenings for cancer and heart disease, diabetes testing, vaccinations, and counseling services. Medicare covers these preventive services at no cost when provided by a Medicare-approved provider. For example, a colonoscopy to screen for colorectal cancer is covered in full with no copayment or coinsurance when performed by an in-network provider.

Medicare does not cover dental care, vision care, hearing aids, or long-term care (such as extended nursing home or assisted living). These services account for significant expenses for many seniors. Routine eye exams and eyeglasses are not covered, nor are dentures or routine dental cleanings. However, some Medicare Advantage plans (Part C) offer supplemental coverage for dental and vision services, though these plans vary widely in what they cover.

Coverage limitations exist for certain services even when they are covered. For example, Original Medicare covers physical therapy, but only for a specific medical reason such as recovery from surgery or stroke. It does not cover fitness classes or gym memberships, even if recommended for general wellness. Similarly, Medicare covers home health services when a doctor orders them for a homebound patient recovering from an illness or injury, but not for general housekeeping or personal care assistance.

Medication coverage through Part D has a coverage gap, sometimes called the "donut hole." In 2024, once a person and their plan together spend $5,850 on covered drugs, they enter the donut hole and pay more out of pocket until they reach the catastrophic coverage threshold of $7,050. At that point, Part D catastrophic coverage begins, and the person pays a small copayment or coinsurance on each prescription. Drug manufacturers' assistance programs and state programs can help lower costs for people in the donut hole.

Practical takeaway: Review what Medicare covers and does not cover for the specific health conditions and services relevant to your situation, and consider supplemental insurance or Medicare Advantage plans for services Original Medicare does not cover.

Costs: Premiums, Deductibles, and Out-of-Pocket Expenses

Medicare costs include monthly premiums, annual deductibles, and ongoing copayments or coinsurance. These costs vary depending on whether someone has Original Medicare, Medicare Advantage, or both. Understanding the cost structure helps people budget for healthcare and compare plan options.

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Premiums are monthly payments to have coverage. Part A has no premium for most people. Part B's standard premium is $174.70 monthly in 2024, with higher earners paying up to $559.50 per month. Part D premiums vary by plan and range from about $7 to $100 monthly. Medicare Advantage plans also have monthly premiums, often lower than Original Medicare but sometimes zero. These variations mean two people with the same income could have very different monthly costs depending on the plan they choose.

Deductibles are amounts people pay before insurance begins covering costs. Original Medicare Part B has a $240 annual deductible. Part A has a $1,632 deductible per hospital stay (not per year). Someone who is hospitalized twice in one year pays the deductible twice. Part D has an annual deductible that varies by plan, typically ranging from zero to $505 in 2024. Medicare Advantage plans set their own deductibles, so these amounts vary widely.

Copayments and coinsurance are amounts people pay when they use healthcare services. A copayment is a fixed amount, such as $15 for a doctor visit. Coinsurance is a percentage of the approved cost, such as 20%. With Original Medicare Part B, people typically pay 20% coinsurance for doctor services and outpatient care after meeting the deductible. For example, if a doctor visit costs $150 and the patient has met their deductible, they pay $30 (20%) and Medicare pays $120 (80%). Medicare Advantage plans vary in their copayments and coinsurance amounts.

Out-of-pocket maximum limits exist for Medicare Advantage plans but not for Original Medicare. A Medicare Advantage plan's out-of-pocket maximum means that once someone pays that amount in copayments and coinsurance, the plan covers 100% of additional in-network care for the rest of the year. Original Medicare has no annual out-of-pocket maximum, which means costs could theoretically be unlimited. For this reason, many people with Original Medicare purchase Medigap insurance (supplemental coverage) to limit their costs.

Practical takeaway: Calculate total expected annual costs (premiums, deductibles, and expected copayments) for any plan under consideration to make realistic budget comparisons.

Medigap Insurance: Supplemental Coverage for Original Medicare

Medigap is supplemental health insurance sold by private insurance companies that works alongside Original Medicare (Parts A and B). Medigap policies help pay for copayments, coinsurance, and deductibles that Original Medicare does not cover. About 10 million Medicare beneficiaries have Medigap coverage, making it a common choice for those who want more predictable healthcare costs.

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Medigap policies are standardized into 10 different plans, labeled A through N. Each plan covers a specific set of services, and the coverage is identical regardless of which insurance company sells it. For example, Plan G covers Part B coinsurance, Part A deductible, Part B deductible, and other services. Plan N covers similar services but with some differences in copayments. The standardized nature of Medigap plans means comparing plans is straightforward—Plan G from Company A covers the same services as Plan G from Company B, so the main difference is price.

Medigap premiums vary by age, location, and insurance company, and they typically increase with age