Jeffrey Wade
Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) are available to individuals based on their own earnings or those of a spouse, parent, or child. Medicare Supplement Insurance (Medigap) is extra insurance that helps pay for Original Medicare costs, but it generally does not cover long-term care. Traditional Medicare does not cover long-term care beyond skilled care after hospitalization. Long-term care can be obtained through Medicaid or private insurance, and it can be received at home, in the community, in assisted living facilities, or in nursing homes. Historically, 70-80% of people with traditional policies have seen premium increases over time.
| Characteristics | Values |
|---|---|
| Medicare Part A | Most people get it for free, but some have to pay a premium for this coverage. |
| Medicare Part B | Most beneficiaries pay 25% of the premium, while the government pays the remaining 75%. Higher-income beneficiaries pay a larger percentage of the total cost. |
| Medicare Supplement Insurance (Medigap) | Extra insurance that helps pay your share of costs in Original Medicare. |
| Long-term care | Can be availed through Medicaid or by purchasing private long-term insurance. |
| Medicare premium increase | Individuals with higher incomes pay an additional premium amount for Medicare Part B and prescription drug coverage. |
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What You'll Learn
Medicare Part B monthly premiums
Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) are available to individuals who are either entitled to receive Medicare based on their own earnings or those of a spouse, parent, or child, or who have already been receiving Social Security or RRB benefits at least four months before becoming eligible for Medicare.
Most people get Part A for free, but some have to pay a premium for this coverage. To receive premium-free Part A, the worker must have a specified number of quarters of coverage (QCs) and file an application for Social Security or Railroad Retirement Board (RRB) benefits.
The standard monthly premium for Medicare Part B enrollees was $164.90 in 2023 and will be $174.70 in 2024. The annual deductible for all Medicare Part B beneficiaries was $226 in 2023 and will be $240 in 2024. The increase in the 2024 Part B standard premium and deductible is mainly due to projected increases in healthcare spending and, to a lesser degree, the remedy for the 340B-acquired drug payment policy for the 2018-2022 period under the Hospital Outpatient Prospective Payment System.
Individuals who do not enroll in Part B when first eligible may enroll later, but they will have to pay a late enrollment penalty for as long as they have Part B. If an individual previously refused Part B or terminated their Part B enrollment, they may enroll (or re-enroll) in Part B only during certain enrollment periods.
Individuals who enroll in Part B can also purchase Medicare Supplement Insurance (Medigap) from a private company. Medigap helps pay the enrollee's share of costs in Original Medicare. Most Medigap policies do not cover long-term care, vision, dental, hearing aids, private-duty nursing, or prescription drugs.
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Long-term care costs
Long-term care expenses can be covered through a variety of means, including personal funds, insurance, and government programs. Many older adults pay for long-term care using their personal savings, pensions, retirement funds, or income from investments. Others may rely on family and friends to provide personal care and other services, such as transportation, at no cost. However, as an individual's needs increase, paid services may become necessary.
Medicare, a federal government health insurance program, may cover some long-term care costs. Medicare Part A provides hospital insurance, while Part B covers medical insurance. Medicare Advantage Plans offer another way to obtain Part A and Part B coverage. However, Medicare typically does not cover long-term care expenses such as homemaker services, home health aides, or assisted living costs. It may cover up to 100 days of skilled nursing home care under specific conditions, but it is not designed for long-term financing.
Medicaid, a combined federal and state program, may cover some long-term care costs for individuals with limited income who meet eligibility requirements. These requirements vary by state. Additionally, some states offer the Program of All-Inclusive Care for the Elderly (PACE), a combined Medicare and Medicaid program, enabling eligible individuals to receive care at home instead of moving to a long-term care facility.
Long-term care insurance is another option to consider. Premiums are generally lower when purchased at a younger age and good health. It is important to note that long-term care insurance premiums increase with age. When considering a policy, it is essential to weigh the costs against the potential benefits.
To make informed financial decisions, individuals can utilize tools such as the Cost of Care Survey, which provides median costs for long-term care across different states and settings. These tools help individuals and their families plan for the future and make comparisons between various care options.
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Prescription drug coverage
Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) are available to individuals for free or at a premium cost, depending on their eligibility. To be eligible for premium-free Part A, an individual must be entitled to receive Medicare based on their own earnings or those of a spouse, parent, or child.
Medicare Part D is a separate plan that covers prescription drugs. You must have Part A and/or Part B to join a separate Medicare drug plan. You can also get prescription drug coverage through a Medicare Advantage Plan (Part C) or other Medicare health plan. If you're enrolled in a Medicare Advantage Plan, you'll usually get your drug coverage through that plan.
Medicare Supplement Insurance (Medigap) is extra insurance that can be purchased from a private company to help pay your share of costs in Original Medicare. However, Medigap policies generally do not cover prescription drugs, and if you're under 65, you may not be able to purchase a Medigap policy or may have to pay more.
It's important to note that long-term care services, such as care in a nursing home, are not typically covered by Medicare. You might qualify for long-term care through Medicaid, or you can choose to buy private long-term care insurance.
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Medicare Advantage plans
To be eligible for Medicare Advantage Plans, you must already have Part A and Part B. Most people get Part A for free, but some have to pay a premium. To be eligible for premium-free Part A, you or your spouse/parent/child must have a specified number of quarters of coverage (QCs) and file an application for Social Security or Railroad Retirement Board (RRB) benefits. If you are already receiving Social Security or RRB benefits, you are automatically enrolled in premium-free Part A and Part B. However, you have the choice to refuse Part B coverage.
If you're considering a Medicare Advantage Plan, it's essential to review your options and understand the specific cost information and benefits offered by each plan.
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Supplemental coverage
Medicare Supplement Insurance, also known as Medigap, is extra insurance you can purchase from a private health insurance company to help pay your share of out-of-pocket costs in Original Medicare (Part A and Part B). Generally, you must have Original Medicare before buying a Medigap policy, and you may have to pay a late enrollment penalty if you don't buy it within six months of getting Part A and Part B.
Medigap policies are standardized, and in most states, they are named by letters, like Plan G or Plan K. The benefits offered by each lettered plan are the same, regardless of the insurance company. The only difference between policies with the same letter sold by different companies is the price.
Medigap policies typically do not cover long-term care, such as nursing home care, vision, dental, hearing aids, private-duty nursing, or prescription drugs. If you are under 65, you may not be able to purchase a Medigap policy, or you may have to pay more.
It's important to note that long-term care is not typically covered by Original Medicare. You may qualify for long-term care through Medicaid, or you can choose to purchase private long-term care insurance. Non-medical long-term care services can be received at home, in the community, in an assisted living facility, or in a nursing home.
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Frequently asked questions
Long-term care includes non-medical services at home, in the community, in an assisted living facility, or in a nursing home.
Traditional Medicare does not cover long-term care beyond some skilled care right after hospitalization for an injury or illness.
You might qualify for long-term care through Medicaid, or you can choose to buy private long-term care insurance.
Medicare insurance premiums may increase due to various factors, such as income level and the specific long-term care insurance plan. However, the increase is more likely associated with the long-term care insurance rather than Medicare itself.
If you face a premium increase, you can choose to pay the increase to maintain your benefits, accept reduced benefits at your old premium rate, or explore other coverage options.
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