Medicare Parts A & B
The two main parts of Medicare are Part A and Part B (known as Original Medicare). Part A is funded in full from the Medicare taxes you paid while working (or from the Medicare taxes a spouse paid) and primarily covers Hospital claims. While Part B is partially paid from taxes, it is supplemented with a Part B premium and covers a wide range of medical expenses (office visits, lab, x-ray, surgery, therapies, medical equipment and more). The Medicare Part B premium is determined by income; higher income seniors pay more for Part B based upon the extent their income from two years prior exceeds $97,000 and $194,000 for married couples (these are 2023 figures). This is called the Income Related Monthly Adjustment Amount or IRMAA. Please click here for the 2023 IRMAA income chart.
Upon turning 65, one is “encouraged” to enroll in Medicare Part A however there are circumstances where this is not advised. Part B is optional. Some people may have other insurance coverage that can continue to be their primary insurance (e.g., some company group plans or retiree plans). In these cases, it is not always necessary or prudent to enroll in Part B. Review your options carefully as there are penalties for not enrolling in Part B when you become eligible and are without other qualified primary coverage.
Click here to read the 2023 Medicare & You Handbook, the official Medicare guide of the US government.
It is important to check whether your providers are contracted with Medicare. Participating providers have signed an agreement to accept Medicare’s payment determination (known as the Medicare Assignment) and you will be responsible for only the Medicare deductibles and coinsurance amounts. Medicare contracted providers who are “Non-Participating” can charge up to 15% more than assignment (called excess charges). Providers who have “opted out” of Medicare can not bill Medicare and Medicare won’t pay for services except for emergencies. A Medicare Supplement (also called MediGap) is a popular solution for filling in the gaps of Medicare (deductibles, coinsurance and excess charges).