Understand Medicare Basics - Compass Insurance Advisors
  • Medicare is the United States’ health insurance program for people age 65 and older, have disabilities, or have permanent renal failure. Here is a brief breakdown of the different parts of Medicare and what they cover. Give us a call or schedule a time to talk to one of our advisors if you are feeling overwhelmed. Our advisors can help you understand your Medicare options so you can make the best decision for your situation. 

    Understand Medicare Part ATypically $0 per month 

    Firstly, Medicare Part A covers the cost of inpatient hospital care, skilled nursing facility care, hospice, lab tests, and home health care. Medicare Part A has the following deductible and copayments.


    • $1,408 deductible covers Days 1-60 (per incident) 
    • $352/day, Days 61-90 
    • $682/day, Days 90+ 

    Skilled Nursing Facility

    • $0 copay, Days 1-20 
    • Self-pay, Days 20+ Hospital  

    Understand Medicare Part B – Typically $148.50/month

    Medicare Part B covers outpatient care, medical equipment, preventative care, and doctor’s consultation services. With Medicare Part B, you have a $198 deductible and will pay 20% coinsurance after you have met your deductible.

    • $198/year deductible 
    • 80/20 co-insurance 

    It is important to note that original Medicare has no max out of pocket limits. So if you have a $100,000 medical bill, you will pay the full 20% or around $20,000. For this reason, most people will enroll in a Medicare Supplement or Medicare Advantage plan.

    A large majority of people will pay $148.50 for the Part B premium, but some people, depending on their income will pay more. Your Part B premium is determined by what was filed on your taxes 2 years ago. So if you are applying for coverage in 2021, your 2019 taxes will be used. See the income chart below. 

    Individual Tax ReturnJoint tax returnMarried & separate tax returnYou pay (in 2021)
    $88,000 or less$176,000 or less$88,000 or less$148.50
    above $88,000 up to $111,000above $176,000 up to $222,000not applicable$207.90
    above $111,000 up to $138,000above $222,000 up to $276,000not applicable$297.00
    above $138,000 up to $165,000above $276,000 up to $330,000not applicable$386.10
    above $165,000 and less than $500,000above to $330,000 up to $750,000above $88,000 and less than $412,000$475.20
    above $500,000$750,000 and above$412,000 and above$504.90
    Medicare Part B Income Chart

    Understand Medicare Part CStarting at $0/month

    Medicare Part C is known as Medicare Advantage. Advantage plans combine original Medicare under one plan, and will often include Part D and other benefits. This means that Medicare Advantage plans cover not only your hospital and doctor plans, but will often also include prescription drugs, vision, and basic dental.

    For a complete overview of what Medicare Advantage covers and how it differs from Medicare Supplements, read our complete guide here, or schedule a time to talk to one of our advisors.

    Part D Prescription Coverage – Typically around $30/month

    Medicare Part D covers your prescription drug costs. Even if you don’t take prescriptions now it is still important to enroll, because there is a penalty for not signing up when you are first eligible.  You may owe a late enrollment penalty if at any time after your Initial Enrollment Period is over, there’s a period of 63 or more days in a row when you don’t have Medicare drug coverage or other creditable prescription drug coverage.

    Medicare calculates the penalty by multiplying 1% of the “national base beneficiary premium” ($33.06 in 2021) times the number of full, uncovered months you didn’t have Part D or creditable coverage. The monthly premium is rounded to the nearest $0.10 and added to your monthly Part D premium. This can be a significant amount if it adds up over time.

    If you have a Medicare Advantage plan that includes prescription coverage, then you don’t need to purchase a part D plan separately.

    Low income earners can apply for a low income subsidy for prescription drugs. Visit CMS’s page to learn more information about the low income subsidy for prescription drugs, and to see if you qualify.

    Enhancing Your Coverage

    When enrolling in Medicare, you have choices to enhance your plan. You can keep original Medicare, add a Med Supp, or enroll in a Medicare Advantage plan. The most typical options are outlined below.

    1. Original Medicare + prescription (Parts A & B) + D
    2. Original Medicare + Med Supp/Medigap + prescription (Parts A & B) + Med Supp + D
    3. Medicare Advantage (Part C)

    Finally, to learn more about these options and understand your Medicare benefits visit our Medigap vs. Medicare Advantage page.  You can also look at our How to Enroll in Medicare page for more information on how to sign up for Medicare.

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