What Does Medicare Cover in 2024?

Medicare is federal health insurance for people 65 and older and adults with qualifying disabilities. It is not a healthcare system or a healthcare provider. In other words, Medicare is not responsible for care delivery; it helps cover your healthcare costs.

This article will help you better understand Medicare, including the different parts of Medicare, eligibility for Medicare enrollment, and the core services it covers.

Importance of Understanding Medicare Coverage

Fully modernized in 2003 and updated to the Affordable Care Act standards in 2010, today’s Medicare covers beneficiaries (individuals on Medicare) through two options.

The option you choose sets the scene for the delivery of your healthcare. It’s an important decision that shouldn’t be taken lightly.

The first option is Original Medicare, a private fee-for-service system managed by the government. In this system, beneficiaries choose their healthcare providers and make appointments for care with minimal restrictions. The cost of care is split at about 80% by the government and 20% by the beneficiary.

The second option is Medicare Advantage, a private health insurance option. In this system, beneficiaries choose a plan that delivers all Original Medicare benefits and may include additional benefits. The plan determines the cost of care; however, the government sets a maximum out-of-pocket limit that plans cannot exceed.

Core Coverage Provided by Medicare

Both Original Medicare and Medicare Advantage cover major medical services, including:

• Medically necessary services (services or supplies needed to diagnose or treat your medical condition that meets accepted medical practice standards).
• Preventive services (health care to prevent illness, like the flu, or detect it early, when treatment is most likely to work best).
• Clinical research (tests, diagnostics, etc.)
• Ambulance services
• Durable medical equipment
• Mental health
• Limited outpatient prescription drugs
• Inpatient hospital care
• Skilled nursing facility care
• Nursing home care (inpatient care in a skilled nursing facility that’s not long-term care)
• Home health care
• Hospice care

NOTE: You pay nothing for most preventive services through an approved provider.

NEW BENEFIT: If you use a Medicare-approved insulin pump covered as durable medical equipment or you get your insulin through a Medicare Advantage Plan, your cost for a month’s supply of Part B-covered insulin can’t be more than $35, and the Part B deductible doesn’t apply.

Medicare coverage is based on three factors:

• Federal and state laws.
• Medicare makes national coverage decisions about whether something is covered.
• Local coverage decisions are made by companies in each state that process Medicare claims. They decide whether something is medically necessary and should be covered.

Approved Medicare Advantage plans and prescription drug plans may include additional services not covered by the federal Medicare program.

Different Parts of Medicare (A, B, C, and D)

Now that you know what the federal Medicare program covers, let’s focus on how it delivers coverage through its various parts.

Original Medicare has two distinct parts, A and B. Part A is hospital insurance. Part B is medical insurance.

Part C of Medicare is Medicare Advantage, a private health plan option. When you join a Medicare Advantage plan, you agree to receive Part A and Part B benefits through the plan.

The final component is Part D, which provides drug coverage. Medicare Parts A and B do not provide outpatient drug coverage, but many Medicare Advantage plans do. Part D plans are available to anyone with Original Medicare and Medicare Advantage enrollees on plans that do not include Part D benefits.

Medicare Part A Coverage

Medicare Part A pays for inpatient care, including inpatient hospital stays, skilled nursing facility care, home health care services, and hospice care. If you are seen at an emergency room and subsequently admitted to the hospital, it also covers the E.R. visit.

Most people should enroll in Medicare Part A at age 65. If you have worked at least ten years (40 quarters), enrolling as soon as you are eligible is no downside because you receive Part A premium-free.

Medicare Part B Coverage

Medicare Part B covers outpatient care, including doctor’s services, preventive services, lab tests, diagnostic screenings, and durable medical equipment (DME). It also covers mental health services, such as therapy, counseling, and outpatient mental health facility services.

If you are still working at age 65 and have qualifying health insurance through your employer, you may be eligible to delay enrollment in Part B without a penalty.

Medicare Advantage (Part C) Coverage

Medicare Advantage plans cover all Part A and Part B services. Most plans also include prescription drug coverage (Part D) and may include additional services, such as routine dental, vision, and hearing, to name just a few. These extra benefits are just one of the advantages.

Another advantage is an annual maximum out-of-pocket limit (MOOP). The MOOP is a value set by each plan that determines the maximum amount you will pay out of pocket for Part A and B services before that plan begins paying all costs. Original Medicare does not have a MOOP.

Most people qualify for a Medicare Advantage plan at age 65 after enrolling in both Part A and Part B. Plan options are limited to plans available in your local area.

In many cases, you can only use doctors in the plan’s network, and you may need to get approval from your plan before it covers certain drugs or services. Plans may have lower or higher out-of-pocket costs than Original Medicare, and you may also have an additional premium.

Medicare Part D Coverage

Medicare Part D provides drug coverage. It helps you pay for brand-name and generic drugs. Medicare drug plans are sold through private companies approved by Medicare.

You can get Part D coverage in two ways:

1. Medicare drug plans are separate plans that add drug coverage (Part D) to Original Medicare and can also add coverage to some Medicare Advantage health plans that do not include drug coverage.
2. Most Medicare Advantage Plans include Medicare drug coverage. You generally get your Medicare Part A, B, and D through these plans.

Most people qualify for a Part D plan at age 65. However, you must be enrolled in Medicare Part A and/or Part B to enroll in Part D. If you have Part A and/or Part B and do not have other drug coverage (creditable coverage), you should enroll in a Part D plan.

If you don’t get drug coverage when you’re first eligible and don’t have creditable drug coverage through an employer, you may have to pay a lifetime late enrollment penalty if you join later.

Medicare Supplement Insurance Coverage

Although it is not technically part of Medicare, supplemental Medicare insurance is essential for individuals with Original Medicare.

Medicare Supplement Insurance covers the out-of-pocket gaps in Medicare coverage. Ten standardized plans cover some or all of Original Medicare’s deductibles, copayments, and coinsurance costs. The following chart shows what each lettered plan covers:

Also called Medigap plans, these private insurance policies are incompatible with Medicare Advantage plans.

Medicaid Coverage

No discussion about Medicare coverage is complete without including Medicaid, the combined federal and state government program for individuals with limited income. Both Original Medicare and Medicare Advantage work hand-in-hand with Medicaid to deliver quality healthcare to those who can’t afford it.

Within Original Medicare, the Centers for Medicare & Medicare Services has created four Medicare Savings Programs. The most common form of Medicare assistance is the Qualified Medicare Beneficiary (QMB) program. It provides Medicare coverage of Part A and Part B premiums and cost-sharing to low-income Medicare beneficiaries.

Within the Medicare Advantage program, dual-eligible (Medicare and Medicaid) beneficiaries can take advantage of D-SNP plans. These special needs plans combine Medicare and Medicaid services into a single plan that’s easier to manage.

What Medicare Doesn’t Cover

In your journey to understand Medicare-covered services, it’s just as important to understand what it doesn’t cover. Here are the ten top services Medicare does not cover:

1. Routine Dental Care—Medicare doesn’t cover routine dental care, including cleanings and fillings. Dentures, implants, and other types of dental devices aren’t covered either.
2. Hearing Aids—Medicare doesn’t cover hearing aids or fitment exams. However, it might cover an exam if your doctor determines it’s medically necessary (e.g., balance-related).
3. Routine Eye Exams—Medicare does not cover vision checks for prescribing glasses and contact lenses. However, it covers eye exams and tests for people with specific conditions, such as an annual glaucoma exam, a yearly eye exam for diabetic retinopathy, and tests and treatments for age-related macular degeneration.
4. Glasses and Contact Lenses—Medicare does not cover the cost of glasses or contact lenses for most people. If you need cataract surgery and your doctor implants an intraocular lens, it will cover one pair of eyeglasses or one set of contact lenses from a Medicare-approved supplier.
5. Routine Foot Care—Medicare covers podiatry services for foot injuries, including hammer toes, bunions, and heel spurs. It does not cover foot care, such as removing calluses and corns, nail maintenance, or foot cleaning. But, exams and treatment are covered if needed to treat a chronic condition like diabetes.
6. Chiropractic Services—Medicare does not cover most chiropractic services. You can get your chiropractor visits covered for medically necessary spine manipulation, but Medicare does not cover massage therapy.
7. Acupuncture—Medicare covers up to 12 acupuncture visits in 90 days for chronic low back pain. It may cover an additional eight sessions if you show improvement. Medicare won’t cover the eight additional treatments if you aren’t improving.
8. Cosmetic Surgery—Medicare does not cover cosmetic surgery unless medically necessary. It will typically pay for the surgery if required because of an injury or deformity. Common instances include artificial limbs and their replacement parts, artificial eyes, and breast prostheses after a mastectomy.
9. Medical Care Received Outside the U.S. and its Territories—Medicare does not cover health services received in another country. There are circumstances when Medicare will pay, such as if a foreign hospital is closer than the nearest U.S. hospital for a beneficiary injured in the U.S.
10. Personal Care & Long-Term Care—Medicare does not cover the cost of personal care services, including help with bathing, dressing, getting out of bed, shopping, housekeeping, meals delivered to your home, or 24-hour assistance at home. It also does not cover nursing home stays that exceed 100 days.

NOTE: Although Medicare does not cover the services listed above, many Medicare Advantage plans do.

Understanding Medicare Costs

Now that you know what Medicare does and does not cover, it’s important to know what coverage costs. Specifically, Medicare has monthly premiums, deductibles, copayments, and/or coinsurance. And, for high-income earners, there are Income-Related Monthly Adjustment Amounts (IRMAA).

Medicare Part A has several different costs, including:

1. Monthly premiums (most people get Part A premium-free)
2. A benefit period deductible ($1,632 per benefit period)
3. Copayments for care beyond the standard number of inpatient days

NOTE: Medicare Part A covers most hospice care expenses with minimal out-of-pocket costs.

Before moving on to Part B costs, let’s dig into what a benefit period deductible is and what you need to know.

A benefit period is a method used in Original Medicare to measure a beneficiary’s use of hospital and skilled nursing facility (SNF) services. With each new benefit period, the beneficiary pays a new benefit period deductible. If a beneficiary has three unrelated inpatient benefit periods in a year, the Part A deductible ($1,632) is paid three times.

A benefit period begins the day you are admitted into a facility for inpatient care.  A benefit period ends when the beneficiary has not received any inpatient hospital care (or skilled care in an SNF) for 60 days in a row for the same medical issue.

Medicare Part B has several different costs, including:

1. Monthly premiums ($174.70)
2. Income Related Adjustment Amounts (a surcharge for high-income earners)
3. Annual deductible ($240 )
4. Twenty percent coinsurance on most services
5. Excess charges (up to 15%) if the provider does not accept Medicare’s standard rates)

The high-income threshold for IRMAA surcharges is $103,000 per year for individuals and $206,000  per year for married couples. Learn more about IRMAA here.

Excess charges are another gotcha with Medicare. Here’s what you need to know.

Medicare has a fee schedule agreement for doctors called Medicare assignment. When a doctor accepts Medicare assignment they agree to the amount Medicare pays for a service as payment in full. However, not all doctors approved by Medicare accept Medicare assignment.

Medicare excess charges occur when a non-participating provider charges more than Medicare’s approved amount. These excess charges cannot exceed 15% of the Medicare-approved amount.

Conclusion

Medicare is not a one-size-fits-all system. From its humble Part A and B beginnings in 1965, Medicare has morphed into a complex offering of public and private coverage. The more you know about each type of coverage, the easier it will be for you to make the best decision for your care.