Medicare 101

By Daniel Petkevich

May 20, 2020

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How Medicare is a lot like putting on layers on a cold day.

Your First Layer: Part A

• Covers - Hospitalization, skilled nursing care, and hospice. Full coverage for the first 60 days in a hospital after a $1,600 deductible (in 2023) is paid. After the 60th day, you pay $400 per day (in 2023). After the 91st day, you pay $800 per day ( in 2023). After the 150th day, you pay all expenses.
• Premium - None, if Social Security tax has been withheld from your paycheck for at least ten years. Otherwise there’s a premium.
• Provided by - The federal government
• When To Enroll - Three months before your 65th birthday up to three months after
• How to Enroll - You’re automatically enrolled if you’re collecting social security. Otherwise go to www.medicare.gov or follow

  this link.

• Employer Coverage & Delaying Enrollment - Most people enroll in Part A even if they’re covered by their or their spouse’s employer. The main reasons people delay enrolling in Part A are if they haven’t paid Social Security taxes for ten years and therefore need to pay a premium for Part A or if they have an HSA account. 

Your Second Layer: Part B

• Covers - Out-Patient care and doctor’s charges in a hospital. Examples of Out-Patient care are a check-up, X-Ray, blood test, or a simple elective procedure. After meeting an annual deductible ($226 in 2023), Part B covers 80% of expenses, and you pay the remaining 20%.
• Premium - If your individual tax return shows income of $97,000 (or $194,000 for a joint tax return), or less, your Part B premium is $164.90 a month in 2023. If your income is higher, your premium will be as well. You can find a chart of Part B premiums as they vary with income at

  www.medicare.gov

  .
• Provided by - The federal government
• When To Enroll - Three months before your 65th birthday up to three months after
• How to Enroll - You’re automatically enrolled if you’re collecting Social Security. Otherwise go to www.medicare.gov or follow

  this link.

• Employer Coverage & Delaying Enrollment - Because everyone pays Part B premium, more people consider delaying enrollment in it if they have sufficient coverage from their or their spouse’s employer. The employer’s HR staff will let you know if you can delay enrollment in Part B. If you delay enrolling in Part B and don’t have sufficient employer coverage, you will face financial penalties in the future. 

A Quick Pause Before Adding More Layers

• Part A Deductible - The Part A deductible resets once you’ve been out of the hospital for 60 days. So if you go to the hospital several times, each time 60 days since the last one, you’ll pay a $1,600 deductible each time. This could add up.
• Part B Coinsurance - After you meet the Part B deductible, you pay 20% of Part B covered care. 20% of a large number can be a large number.
• Excess Charges - Healthcare providers will occasionally charge more than Medicare will reimburse them. The difference is called an “excess charge”, and you pay for all of it.
• Foreign Travel - Original Medicare doesn’t cover healthcare received abroad except for a few limited cases in Canada and Mexico.

More Layers: Medigap, Medicare Advantage, and Prescription Drug Coverage

Medigap Plan (Medicare Supplement)

Medicare Advantage Plans

Choosing Between Medigap and Medicare Advantage

Next Steps