Getting Started With Medicare

Understanding The Basics

Medicare has different parts that help cover specific services.

Parts A & B are the base coverages of the federal insurance program referred to as Original Medicare.

Part A helps cover:

  • Inpatient hospital care
  • Inpatient mental health care
  • Skilled nursing facilities (not custodial or long-term care).
  • Some home health care, beneficiaries must meet certain conditions to get these benefits.
  • Hospice care
  • Some blood transfusions

Part A Premium:

Most people don’t pay a premium for Part A because they or a spouse already paid for it through their FICA payroll taxes while working.

You are entitled to Medicare Part A at no cost if you are a US citizen or permanent resident of the US, and you or your spouse have worked and paid Medicare taxes long enough to meet the eligibility requirement. According to the Centers for Medicare & Medicaid Services, about 99% of Medicare beneficiaries do not have a Part A premium since they have at least 40 quarters or “credits” of Medicare-covered employment.

Individuals who do not meet eligibility requirements may be able to purchase Part A by paying a monthly premium. The full monthly premium in 2023 is $506 a month. Individuals who have at least 30 credits or were married to someone with at least 30 credits may buy into Part A at a reduced monthly premium rate. If you paid Medicare taxes for 30-39 quarters the standard Part A premium is $278 in 2023.

Part A Deductibles/Copayments/Coinsurance:

For 2023, Part A has a deductible of $1,600 for each 60 day benefit period. Beyond 60 days you pay:

  • $400 coinsurance per day of each benefit period days 61-90
  • $800 coinsurance per each “lifetime reserve day” after day 90 for each benefit period (up to 60 days over your lifetime)
  • All costs beyond the lifetime reserve days

If you have a Medicare Supplement Insurance Plan it may cover these costs.

Review the 2023 Medicare costs publication.

Part B helps cover:

  • Doctors’ services
  • Outpatient care
  • Preventive and screening services
  • Some other medical services that Part A doesn’t cover such as some of the services of physical and occupational therapists, and some home health care. Part B helps pay for these covered services and supplies when they are medically necessary.

Part B Premium:

Most people pay a monthly premium for Part B.

Part B was not funded through FICA tax payroll deductions like Part A, instead you pay a premium each month for Part B. The Part B premium can be automatically deducted from your Social Security or Railroad Retirement Benefits. If you are not currently receiving benefits you will receive a bill and can select an alternate payment method.

The base premium for Part B in 2023 is $164.90. Late enrollment penalties and income related adjustment amounts can increase your premiums. If your income is above $97,000 ($194,000 married filing jointly) you may pay an Income Related Monthly Adjustment Amount (IRMAA). Medicare uses the modified adjusted gross income reported on your IRS tax return from 2 years ago. You can reference the monthly adjustment amounts at Medicare.gov – Part B costs.

If you have limited income and resources you can get help paying for Medicare costs from your state if you qualify for one of the Medicare Savings Programs.

Part B Deductibles/Copayments/Coinsurance:

Part B has an annual deductible of $226 in 2023. After that Medicare pays 80% and you are responsible for 20% coinsurance.

The 20% coinsurance amount has no cap or limit which is why many people consider financial protection in the form of Medicare Supplement Insurance (a.k.a. Medigap) or an annual maximum out-of-pocket limit offered through a Medicare Advantage plan (Part C).

There are also many free preventive and screening services covered under Medicare Part B.

Review the 2023 Medicare costs publication.

Medicare Advantage, also known as Part C, is a private insurance alternative to Original Medicare.

  • Medicare Advantage plans must provide the same coverage as Original Medicare Part A and Part B, and usually include Part D prescription drug coverage combined into a single health plan offered through an insurance company.
  • In order to be eligible to join a Medicare Advantage plan you must be enrolled in Medicare Part A and B, have a valid election period, and live in the plan’s service area.
  • Many plans provide additional benefits beyond Original Medicare like dental and vision.
  • Advantage plans have networks like an HMO or PPO so you want to make sure that the doctors and hospitals you want access to accept the plan that you are enrolled in.
  • If you are enrolled in a Medicare Advantage plan you will carry a separate health insurance card for the plan you are enrolled in instead of your Original Medicare card for billing purposes.
  • Plans provide financial protection through an annual out-of-pocket maximum.
  • Medicare Advantage plans are not Medicare Supplement insurance plans and plan cost sharing cannot be covered by a Medicare Supplement plan.

You cannot have Medicare Part A, B, C, & D together. You will either have Original Medicare A & B OR Part C. Part D drug coverage can be obtained either as a stand-alone prescription drug plan in combination with Original Medicare, or built into a Part C Medicare Advantage plan.

For more info see:

Part C Premium:

There is usually a low additional or $0 plan premium, and you must also continue to pay your Part B premium unless it is being covered by a low income subsidy program on your behalf.

Part C Deductibles/Copayments/Coinsurance:

Most Medicare Advantage plan costs are incurred on a “pay as you go” basis.

You pay your portion of the service costs that are outlined in the plan’s documentation in the form of copayments or coinsurance up to an annual out-of-pocket maximum.

  • Copayments are usually a defined dollar amount, whereas coinsurance is a percentage of the bill. For example, you may have copayments for doctor or specialist office visits, lab services, diagnostics, and inpatient hospital stays.
  • The plan will pay all medical costs beyond the annual out-of-pocket maximum, offering financial protection in the form of a stop loss or limit which restarts at the beginning of the year.
  • The out-of-pocket maximum does not include drug coverage costs and limits which fall under Part D.

Part D helps cover:

  • Outpatient prescription drugs
  • Diabetic supplies used for injecting or inhaling insulin

Part D is a government program but coverage is provided through Medicare contracted insurance companies. You enroll individually either in a stand-alone prescription drug plan (PDP) combined with Original Medicare, or included as part of a Medicare Advantage Prescription Drug Plan (MAPD). In order to be eligible to join a PDP you must be enrolled in Medicare Part A and/or Part B, have a valid election period, and live in the plan’s service area.

For more info:

Part D Premium:

Part D coverage has premiums that vary depending on the plan that you enroll in and where you live. Premiums can range from as little as $0 a month if it’s included in a Medicare Advantage plan to over $120 a month at the high end for a stand-alone plan. The average nationwide monthly premium for a stand-alone prescription drug plan is around $30. The 2023 Part D national base beneficiary premium is $32.74 which is used to estimate the Part D late enrollment penalty and the income-related monthly adjustment amounts.

Just like with Medicare Part B, you may pay an Income Related Monthly Adjustment Amount (IRMAA) in addition to your premium. Medicare uses the modified adjusted gross income reported on your IRS tax return from 2 years ago. You can reference the monthly adjustment amounts at Medicare.gov – Monthly premium for drug plans.

You may be assessed a late-enrollment penalty if you do not obtain Part D coverage when you are first eligible. The penalty amount depends on the length of time you do not have Part D coverage and is a permanent additional cost that is added to your ongoing monthly Part D premiums by Medicare.

Drug plan premiums can be automatically deducted from your Social Security or Railroad Retirement Benefits, drafted from a bank account, or direct billed.

If you have limited income and resources, you may qualify for Extra Help which provides assistance with Medicare prescription drug program costs like premiums, deductibles, and coinsurance.

Part D Deductibles/Copayments/Coinsurance:

Premiums are only one cost factor, a more important consideration when selecting any drug plan is making sure that your medications are covered in the formulary (a list of covered drugs) and understanding the copays for those medications. The most cost effective approach is to find the plan that has the lowest cost for the year considering all of the costs including deductibles, premiums, and copayments. By using a plan comparison tool we can help you shop out the right fit for your needs with access to the pharmacies that you prefer to use.

While costs may vary, Medicare drug plans all share the same four stages of coverage:

1. Deductible

  • A plan may or may not have a deductible which is the amount you must pay for prescription medications before the plan begins to pay anything.
  • Low premium plans usually have a $505 deductible which is the standard for 2023, where higher premium plans may have a lower deductible or no deductible.

2. Initial Coverage Stage

  • In this stage the plan pays part and you pay part in the form of copayments or coinsurance.
  • Drugs are tiered 1 through 5 with Tier 1 being the lowest cost generic medications and Tier 5 being the highest cost for specialty medications.
  • Your copays are determined by where your medications are tiered in the plan formulary (the list of covered drugs).

3. Coverage Gap Stage

  • This is also known as the “Donut Hole”.
  • After your total drug costs reach $4,660 for 2023, you may pay a higher cost sharing for the remainder of the year (usually 25% of the full cost) until your costs reach the catastrophic stage which may or may not be reached.

4. Catastrophic Stage

  • This stage provides lower out of pocket costs after your total out-of-pocket costs reach $7,400 for 2023.
  • You usually pay the greater of $4.15 copay for generic medications, $10.35 copay for all other drugs, or 5% coinsurance.

Medicare Supplements help cover the copayments, coinsurance, and deductibles for Medicare Part A & B.

  • Also known as a Medigap policy, a Medicare Supplement is a secondary insurance that provides additional coverage to limit the financial exposures of Medicare Part A & B.
  • One of the biggest financial risks with Original Medicare is the unlimited 20% Part B coinsurance that you are responsible for without a supplement.
  • Medicare supplements are offered through insurance companies and you must apply for coverage individually.
    • Benefits vary by the plan and plans are standardized.
    • The available modernized plans are: Plan A, B, C, D, F, G, K, L, M, N, and high-deductible plans F & G.
  • You can see any doctor in the United States that accepts Medicare since Original Medicare remains your primary insurance. Any services that are covered under Original Medicare are also covered under supplemental insurance.

For more info visit:

Contact us for plan specific info and to compare rates with the top companies in your area.

Medicare Supplement Premiums:

  • Plan premiums will vary depending on your age and by the plan selected. Usually the more comprehensive the coverage, the higher the premium.
  • Generally, the idea with a supplement is that you pay premiums instead of copayments and coinsurance to create predictable and stable healthcare costs in retirement.
  • Check out our quote tool to compare rates.

Medicare Supplement Deductibles/Copayments/Coinsurance:

  • Depending on the plan you select, you may or may not have copayments or coinsurance for services you receive.
  • As part of the MACRA legislation, Medicare beneficiaries that turn 65 after Jan. 1, 2020 cannot enroll into a supplement plan that covers the annual Medicare Part B deductible ($226 in 2023). This effects supplement Plans F and C.