Understanding Your Original Medicare Benefits
Updated for September, 2021
- Original Medicare has comprehensive benefits for diagnosing, treating, and preventing illness and disease.
- Original Medicare is more flexible than many private insurance plans, allowing you to see any provider that accepts it.
- There is no cap on out-of-pocket spending under Part A and Part B.
- Most people add a Part D prescription drug plan to Original Medicare, and many choose supplemental coverage with Medigap.
When you switch from a group health plan to Original Medicare, it’s important to know exactly how your insurance coverage will change. The good news is that Medicare coverage isn’t really that much different from other insurance plans, once you understand how it works.
The fact is that most seniors love their Medicare coverage. According to a survey conducted by eHealth, 75% of enrollees are happy with their Medicare coverage. This figure jumps to 90% contentment for those survey respondents age 80 and over. If you’re wondering what to expect from Original Medicare, this article will help explain its various nuances.
What is Original Medicare?
Original Medicare is health insurance provided by the federal government. It’s available to seniors age 65 and over, and also to younger people who receive Social Security disability payments.
There are four parts to the Medicare program. Part A is hospital insurance, Part B is outpatient medical insurance, Part C is Medicare Advantage, and Part D is prescription drug coverage. Original Medicare refers to Parts A and B combined.
If you are automatically enrolled in Medicare when you turn 65, you’ll automatically be enrolled in Part A and Part B. You can switch to a Medicare Advantage plan, but Original Medicare is the default option for new enrollees.
Parts of Medicare and What Each Covers:
Part A (Original Medicare)
Covers inpatient care in a hospital or skilled nursing facility
Part B (Original Medicare)
Covers outpatient healthcare services and durable medical equipment
Part C (Private insurance)
Also known as Medicare Advantage, and is an alternative way to get your Original Medicare benefits
Part D (Private insurance)
Prescription drug coverage
What Does Original Medicare Cover?
Original Medicare is actually very comprehensive coverage. In addition to medically necessary services to diagnose and treat illness, injuries, and diseases, Medicare also pays for screening tests and preventive care.
Knowing what the term “medically necessary” entails is the key to understanding your Original Medicare benefits. Specifically, Medicare will pay allowable charges for a health care service if it is:
- Necessary to help your provider diagnose your condition (physical exams, lab tests, and x-rays, for example)
- Necessary to treat your condition (surgical procedures, inpatient hospitalization, physical therapy, chemotherapy, home oxygen, and counseling, for example)
- Medically recommended to prevent illness or disease (vaccinations, cancer screenings, and wellness visits, for example)
Also noteworthy is that in order for a service to be deemed medically necessary, it must also fall within the accepted medical standards of care for your health situation. For example, if you want to get acupuncture to help you manage migraines, Medicare wouldn’t pay for your sessions because acupuncture isn’t an official, medically accepted treatment for migraines.
Original Medicare Benefits at a Glance
If you’re getting Social Security or Railroad Retirement Board benefits, you’ll be automatically enrolled in Original Medicare when you turn 65.
What Doesn’t Original Medicare Cover?
There are a few services that Medicare never covers, such as cosmetic procedures and long-term care. Alternative medicine treatments, such as acupuncture, hypnotherapy, and homeopathy are also not covered.
When it comes to vision, hearing, and dental services, coverage gets more complex, as the service has to meet the “medically necessary” standard in order for Medicare to pay for it.
For example, Medicare doesn’t pay for any routine dental exams, but if you need clearance from a dentist prior to heart surgery, Part B would cover the dental exam.
Medicare doesn’t pay for eye exams, glasses, or contact lenses. However, if you have cataract surgery, Part B will cover one pair of prescription glasses and a postoperative eye exam.
Medicare doesn’t pay for routine hearing exams or hearing aids, but if your doctor orders a hearing test to screen for a neurological disorder, Medicare would likely pay for associated costs.
Prescription drugs aren’t usually covered. As a general rule, if the doctor prescribes medication for you to take at home, Medicare won’t pay for it. However, Medicare does cover prescription drugs you’re given in an inpatient or outpatient setting.
For example: Mary sees her doctor for a bad cough. He diagnoses acute bronchitis and gives her an antibiotic shot and a steroid pill in the office, then sends her home with a prescription for penicillin and cough syrup. Part B will pay for the shot and the steroid, but not the penicillin and cough syrup.
Costs with Original Medicare
Although Medicare offers great insurance coverage, it still doesn’t cover 100% of your healthcare costs, and it isn’t free. While most people get premium-free Part A, everyone pays the Part B premium ($144.60 in 2020).
There are also deductibles for Part A and Part B. The Part A deductible is $1,408 per benefit period, which means you could pay it multiple times a year if you have multiple hospital stays. However, you only pay the Part B deductible once a year.
Part B operates on a fee-for-service model. This means that your doctor gets paid based on the cost of the services he performs. Medicare pays 80% and you pay 20% of allowable charges. You also pay an additional 15% of allowable charges if you use a provider that doesn’t accept Medicare assignment.
Should You Buy a Medigap Plan?
Costs are unpredictable and can add up fast with Original Medicare, which is why purchasing a Medicare Supplement plan (also known as Medigap) can be a wise decision. A Medicare Supplement plan helps cover your out-of-pocket costs under Part A and Part B.
All Medigap plans pay your Part A inpatient and hospice coinsurance, your Part B coinsurance, and your first three pints of blood each year. The more comprehensive plans also pay some or all of your Part A deductible and Part B excess charges. Some even have a foreign travel benefit that pays for emergency care overseas. There is a $50,000 lifetime cap on benefits, however.
These types of plans are particularly helpful if you’re worried about out-of-control healthcare costs in retirement, as it can provide financial peace of mind.
How to Sign up for Original Medicare
If you’re getting Social Security or Railroad Retirement Board benefits, you’ll be automatically enrolled in Original Medicare when you turn 65. Your coverage is effective on the first day of your birthday month.
If you aren’t getting retirement benefits, you need to apply for Part A and Part B. You can sign up online at SSA.gov or in person at your local Social Security office. Your Initial Enrollment Period (IEP) begins three months before your 65th birthday month and lasts for seven months.
Of the roughly 61 million Medicare beneficiaries currently enrolled in the program, nearly 39 million are enrolled in Original Medicare. Compared to other Medicare plans, Original Medicare provides maximum flexibility to get care from any provider you choose. If you combine this coverage with a Medicare Supplement plan, you will have comprehensive health coverage and predictable out-of-pocket costs.