Medicare Parts A & B
Last updated October 2018
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 $85,000 ($170,000 for married couples). This is called the Income Related Monthly Adjustment Amount or IRMAA. Please click here for the 2018 IRMAA income chart.
Upon turning 65, one must enroll in Medicare Part A in most cases, but Part B is optional. Some people may have other insurance coverage that will continue to be their primary coverage (e.g., certain 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.
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. Contracted providers are responsible for submitting your claim to Medicare and will wait to bill you until they have received correspondence from Medicare regarding your claim. A Medicare Supplement (also called MediGap) is a popular solution for filling in the gaps of Medicare (deductibles and coinsurance).