Medicare Explained
written by Mike Ballew October 24, 2018

We invite you to join us as we explain Medicare in plain, simple English. No detours for special cases, no seldom-used exceptions. This is Medicare explained.

Who Qualifies for Medicare?

You qualify for Medicare if you are 65 years of age or older and you have been a U.S. citizen or permanent legal resident for at least 5 consecutive years and you or your spouse has worked and paid Medicare taxes for at least 10 years.

Medicare Part A

Medicare part A covers hospitalization. It includes in-patient care in a regular hospital, psychiatric hospital, skilled nursing facility, hospice, or in-home care for the homebound. If you qualify for Medicare, you receive Medicare Part A free of charge.

Medicare Part B

Medicare Part B provides outpatient medical coverage. This includes medical equipment, visits to your doctor, and ambulance services. The premiums are $175 per month. If your annual income exceeds $103,000 ($206,000 for couples), you will have to pay more for Medicare Part B.

Medicare Part D

Medicare Part D is drug coverage. This includes prescription medications and vaccines. Medicare Part D costs $48 per month.

Out-of-Pocket Expenses

Medicare Parts A, B, and D are health insurance for retirees. Unfortunately, they don’t cover everything. There are limitations, exclusions, deductibles, and co-pays. The potential exists for significant out-of-pocket expenses.

You need insurance to limit your exposure to Medicare out-of-pocket expenses. There are two forms of this type of insurance, both offered by private insurance companies. One is called Medicare Part C and the other Medicare Supplemental Insurance. You can’t get Medicare Part C and Medicare Supplemental Insurance at the same time, you can only have one or the other.

Medicare Part C (Medicare Advantage)

Medicare Part C essentially replaces Medicare parts A and B. Besides having less in terms of limitations, exclusions, deductibles, and co-pays, Medicare Part C provides you with vision and dental coverage; Medicare parts A and B do not. When you have Medicare Part C, you still have to pay the Medicare Part B premium. Medicare Part C costs vary but typically is about $200 per month.

Medicare Supplemental Insurance (Medigap)

Medicare Supplemental Insurance reduces your out-of-pocket expenses. Just like Medicare Part C, you must have Medicare Parts A and B in order to get Medicare Supplemental Insurance, and you still have to pay for Medicare Part B.

There are 10 Medigap plans with different costs and varying degrees of coverage. Please note that Medigap plans A, B, and D are not Medicare Supplemental Insurance for Medicare parts A, B, and D.

Medigap plans:

  • Medigap Plan A
  • Medigap Plan B
  • Medigap Plan C
  • Medigap Plan D
  • Medigap Plan F
  • Medigap Plan G
  • Medigap Plan K
  • Medigap Plan L
  • Medigap Plan M
  • Medigap Plan N

The site maintains an updated table that indicates what each Medigap plan covers. Medigap Plan G, which costs about $300 per month, is the most popular.

The Bottom Line

The table below indicates anticipated costs for one retiree on Medicare:

Medicare Explained

You could trim a hundred dollars by swapping Medicare Part C for Medigap Plan G. That would get you down to $380, but this is just for one person. Couples will pay anywhere between $760 to $960 per month.

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Eggstack founder, Financial Planning Association member, engineer, and software developer.