Medicare is divided into four main parts: A, B, C, and D. The first two parts, A and B, are sometimes called “Original Medicare.” Part C, also known as “Medicare Advantage” is a private insurance plan that provides similar benefits as Original Medicare. The final piece of Medicare, Part D, is a prescription drug plan.
Part A is the hospital insurance part of Original Medicare. If you enroll in Medicare, you must have Part A. All of the other parts are optional.
The coverage for Part A spans from inpatient hospital care to at-home physical therapy. It also covers blood transfusions after the first 3 pints of blood and inpatient care at a religious, non-medical care facility.
Most people don’t have to pay the Part A premium, which is $426 a month in 2014. The coverage is free if you or your spouse paid Medicare taxes while working, or if you are eligible or receive retirement benefits from Social Security or the Railroad Retirement Board.
When you use Part A, you have to pay a deductible before coverage kicks in. The deductible is $1,216 in 2014. If you use Part A, you will have some co-insurance costs you need to pay before your care is covered.
Part B is the medical insurance part of Original Medicare. It’s optional. When you sign up for Part A, you can reject Part B coverage during the initial enrollment period.
Medicare Part B covers health benefits ranging from yearly wellness exams to preventative services, which include vaccinations and cancer screenings.
The monthly premium for Part B is about $105 in 2014. However, your premium may be higher if your income is above a certain level.
When you use Part B, you have to pay a deductible before coverage kicks in. The deductible, which you have to pay once a year, is $147 in 2014. If you use Part B, you will also have to pay a 20% co-insurance for the cost of your care.
Part C is insurance that covers the same things as Original Medicare, but it is provided by private companies and usually includes additional benefits, such as prescription drug coverage, vision, dental, and wellness programs.
Part D is the Prescription Drug Coverage portion of Medicare. The plans are offered by private insurers and not the federal government. It is an optional add-on.