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Medicare Part A vs. Medicare Part B

Medicare Part A vs. Medicare Part B | Very Good Coverage

Medicare Part A and Medicare Part B have almost the same enrollment and eligibility requirements. However, they have differences in costs and coverage.

If you’ve been covered by private health insurance most of your life or employer-sponsored health insurance during your working years, you most probably never had a concrete reason to differentiate between various parts of Medicare.

As the mainstay of healthcare insurance for Americans aged 65 and older, Medicare usually has two main parts: Medicare Part and Medicare Part B. While they have almost the same eligibility and enrollment requirements, Medicare Part A and Part B have notable differences in costs and coverage.

Medicare Part A and Part B form what’s widely known as Original Medicare.  Medicare Part A is known as hospital insurance and covers hospital costs. On the other hand, Medicare Part B covers the medical services that you receive including a visit to the doctor, lab tests, preventive services, medical equipment, and so on.

In this article, we’ll compare Medicare Part A and Part B, look at their differences, and how they work.

What is Medicare Part A?

Medicare Part A is essentially a part of Medicare that covers hospital costs. It usually covers most of the services that are offered during your stay in the hospital. It also covers hospice care, skilled nursing care, and limited home healthcare services. It also covers any health service that you may need when hospitalized.

When you apply for Medicare, you’re automatically enrolled in Medicare Part A. This means that you automatically qualify for Medicare Part A if you qualify for Social Security benefits. The main aim of Medicare Part A is to help you regain your health and get back on your feet.

It’s important to note that Medicare Part A is generally free for most people, especially if you worked in the U.S. and paid taxes from your payroll for many years. The idea here is that you’ve paid Medicare tax deductions on your paycheck for many years so you don’t have to pay monthly premiums to be eligible for Medicare Part A.

On the contrary, Medicare Part A isn’t absolutely free. There are hefty deductibles that you’re expected to pay each time you get admitted to a hospital. For example, the deductible for 2021 is $1,484, though you can buy the supplemental Medigap Policy to compensate for this deductible as well as other out-of-pocket costs.

Let’s break it down. If you worked for 40 quarters or at least 10 years while paying all your taxes, you won’t be required to pay monthly premiums for Medicare Part A. If you worked for more than 30 quarters but less than 40 quarters, you may have to pay a premium of about $252 per month. But if you worked for less than 30 quarters, you may have to pay a premium of about $458.

Even though Medicare Part A covers all hospital services for the first two months (60 days) you are in hospital, there are a few exceptions. For example, it won’t cover the costs of a private hospital room. Again, you may be required to pay a Medicare Part A premium if you are a U.S. citizen or a permanent resident but haven’t worked long enough to be eligible for Medicare.

What is Medicare Part B?

Also known as Medical insurance or doctor and outpatient services, Medicare Part B generally covers various services including:

  • Doctor visits
  • Preventive services
  • Ambulance transportation
  • Diagnostic screenings
  • Medical equipment such as wheelchairs
  • Mental health care
  • Chemotherapy
  • Flu shots
  • Physical therapy
  • Self-management therapy
  • Diabetes screenings and many more

You have to keep in mind that this list isn’t exhaustive. Well, Medicare Part B covers a lot more but some rules and conditions apply. For instance, health providers must have a payment agreement with Medicare for certain services and accept to carry out those services when only medically necessary.

Unlike Medicare Part A, you do not automatically get enrolled in Medicare Part B. The idea here is that it generally costs more than Medicare Part A and it involves out-of-pocket costs that you have to pay every time you seek these services. As such, many people prefer to defer signing up for Medicare Part B, especially when they are still employed and have employer-sponsored health insurance that can cover these services.

Again, you can choose to defer signing up for Medicare Part B if you’re covered by your spouse’s health insurance. However, things may get a little complicated iF you don’t have the above-mentioned options and do not sign up for Medicare Part B when you first enrolled for Medicare. The downside is that you may have to pay a much higher Part B premium as long as you’re in the Medicare program.

As far as premiums for Medicare Part B is concerned, you are required to pay a monthly premium of $148.5 for 2021 but this figure can be higher if you have an annual salary of more than $88,000. There’s also a yearly deductible of $203 for 2021, as well as 20% of the bill for a visit to the doctor and other outpatient services.

You have to keep in mind that the deductible will be collected from your monthly Social Security benefit that’s if you have one.

Differences between Medicare Part A and Part B

As we noted earlier, there are some notable differences between Medicare Part A and Part B. In this section, we’ll look at the differences based on costs, coverage, eligibility, and enrollment.

Differences in Coverage

In terms of coverage, Medicare Part A covers inpatient care services while Medicare Part B covers outpatient care services. Let’s go into details.

Medicare Part A

Medicare Part A covers your hospital room, hospital meals, skilled nursing facility care, limited home health care, hospice care, and prescription drugs received while in the hospital.

Medicare Part A - Limits and Considerations

There are a few limits and considerations that apply to Medicare Part A. Let’s highlight them.

Limits

  • You can only access inpatient hospital care for a total limited period of 90 days per benefit period. The idea here is that you should be well and back on your feet within this period. Additional charges may apply for extended periods.
  • You can access skilled nursing care for a total period of 100 days per benefit period.
  • You can access inpatient mental care for a total limited period of 90 days per benefit period.
  • There are also the lifetime reserve days, which is 60 additional days of coverage throughout your lifetime for each type of coverage.

Considerations

The best feature about Medicare Part A is that most hospitals across the country participate in Medicare, so it’s a lot easier to use the coverage anywhere in the country.  

Medicare Part B

Medicare Part B covers everything else that Medicare Part A doesn’t cover. It covers your visit to the doctor, mental health services, some vaccines such as flu shots, annual physical examination, durable medical equipment such as wheelchairs and walkers, physical, occupational, and speech therapy, lab tests, x-rays, diabetic test strips, emergency ambulance transportation, some preventive examinations, tests, and screenings, and many more.

Medicare Part B – Limits and Considerations

Limits

You should keep in mind that Medicare Part B has annual limits on various services such as occupational, physical, and speech therapy.

Considerations

  • You can use Medicare Part B coverage anywhere across the country as long as you are enrolled in the Original Medicare (Part A and B), and the health provider accepts Medicare.
  • Medicare Part B premiums, deductibles, and other cost-sharing expenses are standard throughout the year depending on the services offered but they usually change annually on January 1st.
  • You have the option of selecting your preferred doctor across the country as long as he/she accepts Medicare.

In essence, it’s easy to see that Medicare Part A and Part B cover very different things, so there’s no overlap in coverage.

Services that are Not Covered by Medicare Part A and Part B

You have to keep in mind that Medicare Part A and Part B do not cover the following:

  • Most dental care including dentures
  • Long-term care such as nursing homes
  • Cosmetic surgery
  • Eye exams for prescription glasses
  • Routine foot care
  • Hearing exams and hearing aids
  • Healthcare outside the United States

Differences in Costs

As far as costs are concerned, Medicare Part and Part B have differences in premiums, deductibles, and coinsurance expenses.

Medicare Part A

Premiums – Most people under Medicare get premium-free Part A coverage. This is because they’ve worked throughout their lives and have been paying into the system in the form of Medicare tax deductibles on their salaries.

As such, you have to be aged 65 and above and have retirement benefits from either Social Security or the Railroad Retirement Board. Again, you can get premium-free Part A coverage if you haven’t attained the age of 65 but have been eligible for Social Security or Railroad Retirement Board disability benefits for the last two years.

Deductibles – The Medicare Part A deductible for 2021 is $1,484 for each benefit period.

Coinsurance – The Medicare Part requires you to pay a standard amount as coinsurance for the days you spend in hospital beyond 60 days. This amount is $371 per day for 2021 for days 61-90. You’ll also be required to pay $742 per day for day 91 and beyond. You may also have to cover the entire cost if you’ve exhausted your 60 “lifetime reserve days”.

Medicare Part B

Premiums – Medicare Part B requires you to pay a premium of $148.50 per month for 2021. This amount can be higher depending on your income. For example, you may have to pay a higher premium per month if your income is more than $88,000 per year.

Deductibles – Medicare Part B has a deductible amount of $203 for 2021.

Coinsurance – You’ll be required to settle 20% of the expenses during your visit to the doctor. It’s almost impossible to quote the actual amount because you’ll only know the amount when you receive the bill.

Eligibility

In terms of eligibility, there’s no difference between eligibility requirements for Medicare Part A and Part B. You must be a U.S. citizen or a permanent legal resident for at least five continuous years. You must be aged 65 or older, have a disability, or suffer from Lou Gehrig’s disease or End-Stage Renal disease.

Enrollment

Similarly, there is no difference in enrollment requirements for Medicare Part A and Part B. You’ll be enrolled automatically if:

  • You’ve been receiving Social Security benefits for at least four months before you attain the age of 65.
  • You’ve been receiving disability benefits from the Social Security or Railroad Retirement Board for the last two years.

You have to keep in mind that you may not automatically enroll for Medicare Part A and Part B if you’ve attained the age of 65 but are still working. That being said, you have the choice of enrolling in Medicare Part A if you can receive the benefits without paying premiums and defer Medicare Part B if you have other options of health insurance such as employer-sponsored health insurance or you are covered by your spouse’s health insurance.

You have to keep in mind that your Initial Enrollment Period (this is a limited time period when you can enroll for the Original Medicare when you’re first eligible) lasts for seven months and starts as soon as you turn 65 and/or qualifies for Medicare (based on your age or eligibility as a result of disability).

If you’re wondering how to enroll, you can automatically enroll for Medicare Part A if you’ve been receiving Social Security benefits for at least four months before attaining the age of 65 or if you have been receiving Social Security disability benefits for the last 24 months. On the other hand, you can sign up manually through the U.S. Social Security Administration.

About THE AUTHOR

Greg McKnight

Read more about Greg McKnight

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