For many Americans approaching retirement age, understanding Medicare coverage can feel overwhelming. While Original Medicare (Parts A and B) provides essential health coverage, many wonder if this basic coverage is sufficient for their healthcare needs.
Let’s dive into what Medicare A and B cover, their limitations, and how to determine if you need additional coverage.
What Does Medicare Part A and B Cover?
Original Medicare consists of two main parts: Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance). These two components form the foundation of Medicare coverage, but it’s crucial to understand their benefits and limitations.
Medicare Part A: Hospital Insurance Coverage
Medicare Part A primarily covers inpatient hospital stays, skilled nursing facility care, hospice care, and some home health care services. While many people assume that Medicare Part A covers all hospital costs, this isn’t entirely accurate. Here’s what you need to know:
- Most people don’t pay a monthly premium for Part A if they or their spouse paid Medicare taxes while working.
- There’s a deductible for each benefit period.
- The average cost of hospital stay per day with Medicare can still be significant due to copayments after extended stays.
- After 60 days, beneficiaries must pay coinsurance, which later increases after 90 days.
Medicare Part B: Medical Coverage
Medicare Part B covers certain medical services, such as preventive care. Key coverage areas include:
- Doctor visits and outpatient care
- Medical supplies and equipment
- Preventive services
- Some prescription drugs (typically those administered in a doctor’s office)
- Mental health services
- Ambulance services
- Clinical research studies
Why Would Someone Choose Medicare Parts A and B Only?
There are two main reasons why people may choose to only enroll in Medicare A and B. First, only enrolling in A and B is, by far, the cheapest choice when it comes to monthly Medicare premiums. This is because as long as you’ve paid into Medicare for at least 40 quarters while working, Medicare Part A is completely free.
Though Medicare Part B is not free, the premium remains relatively low each month. If you’re on Social Security, your Part B premium will be automatically taken out of your check each month. Since the cost of Medicare Parts A and B only consists of the Part B premium, it remains the cheapest option in terms of monthly premiums.
Secondly, some people only enroll in Medicare A and B because it’s the easiest choice. If you go this route, you only have to worry about enrolling in Original Medicare rather than other Medicare plan options. This makes Medicare enrollment easier because there are fewer insurance decisions.
Is Medicare Parts A and B Enough Coverage?
Despite this being the easiest option and offering the cheapest monthly premiums, there are several drawbacks. There are gaps in Original Medicare coverage that you should be aware of before deciding whether you’ll need additional coverage for your healthcare needs. Additionally, only enrolling in A and B can create some financial risk and may even impact your eligibility for other healthcare coverage.
Gaps in Original Medicare Medical Insurance
It’s important to understand what Original Medicare doesn’t cover, which includes:
- Prescription Drugs: Neither Medicare A nor B provides comprehensive prescription drug coverage. This gap necessitates additional coverage through Medicare Part D.
- Dental, Vision, and Hearing: Medicare A and B don’t cover routine dental care, eye exams for prescription glasses, or hearing aids. In this case, an ancillary Medicare plan would be required.
- Long-Term Care: This would include most nursing home care or extended home health care.
Financial Risks
Because there are several coverage gaps with Parts A and B, there will be expenses that you are expected to pay out-of-pocket.
For example, if you go to the hospital, you’ll have to pay a deductible. That deductible amount is the full out-of-pocket amount you’ll have to pay for a 60-day hospital stay. However, if you stay longer than 60 days, you’ll be responsible for daily co-pays. These can add up to thousands of dollars very quickly.
Another financial risk associated with enrolling only in Parts A and B is the coinsurance system. Once you meet your yearly Part B deductible, Medicare steps in and pays 80 percent of your medical costs, with you covering the remaining 20 percent. Unfortunately, this 20 percent is unlimited, meaning there is no maximum amount you would pay. This means that you could be responsible for paying thousands of dollars out of your own pocket.
Medigap Eligibility
Another reason why only choosing Medicare A and B is a mistake is because it can impact your Medigap eligibility. When you go on Medicare A and B, you’re given a six-month period of time to buy any Medigap policy offered in your state with no underwriting required. In other words, you could have serious preexisting conditions, but during this six-month period, the insurance company has to approve your policy and take you with no questions asked.
However, if you do not enroll in Medigap during this six-month period, you will have to go through medical underwriting. The insurance company will ask you a list of questions, check all your medications, and see what you are currently being treated for. They might also require a general health statement from your doctor. If you don’t measure up to their qualifications, they can deny you coverage.
If you go with Part A and B only coverage and don’t enroll in a Medigap policy during the first six months of being on Medicare, you may be forever disqualifying yourself from the healthcare coverage you’ll need in the future. If your health isn’t great and you wait to enroll in a policy until after the six-month period, you’ll have to go through the medical underwriting process, and you may have a hard time finding private insurance companies that will cover you.
Part D and Medicare Advantage Enrollment
Finally, if you only enroll in Medicare A and B, you will likely have a harder time enrolling in Part C (Medicare Advantage plan) or Part D (drug plan) coverage later on. Unlike the Medigap eligibility period, you only have a three-month window to enroll in Part D and Medicare Advantage plans. If you fail to enroll in a Medicare Advantage or D plan during the three months following your Medicare enrollment, you will have to wait until the open enrollment period (OEP), which is October 15 through December 7th.
Keep in mind that even if you enroll in a plan during the OEP, your coverage will not begin until January 1st of the next year, leaving you to cover all healthcare costs out of your own pocket during this time.
Is Medicare A and B Enough Coverage for You?
To determine if Medicare A and B provide sufficient coverage for your needs, consider these factors:
- Your Health Status: Do you have chronic conditions requiring regular medication? How frequently do you visit healthcare providers? Do you anticipate any major medical procedures in the future?
- Your Financial Situation: Can you afford potential out-of-pocket costs? Do you have savings set aside for medical emergencies? Would you benefit from more predictable monthly costs?
- Your Additional Healthcare Needs: Do you require regular dental, vision, or hearing care? Do you take multiple prescription medications?
When evaluating whether Medicare A and B provide enough coverage, consider these steps:
- Review your current health needs and medications
- Calculate your potential out-of-pocket costs under Original Medicare
- Compare costs and benefits of supplemental coverage options
- Consider your lifestyle and travel plans
- Consult with a licensed Medicare advisor
Remember that Medicare choices aren’t permanent; you have annual opportunities to modify your coverage during specific enrollment periods.
While Medicare A and B provide essential health coverage, many beneficiaries find that Original Medicare alone doesn’t offer enough protection against potential healthcare costs. Understanding what Medicare covers and what it doesn’t is crucial for making an informed decision about your healthcare coverage.
Consider your personal health needs, financial situation, and risk tolerance when deciding whether to supplement your Original Medicare coverage. For many people, the peace of mind that comes with additional coverage through Medigap, Medicare Advantage plan, or Part D plans is worth the extra cost.
We understand how difficult making the right Medicare decisions can be. To take the next step, watch our full course here or schedule a free one-on-one call with a certified Medicare School Guide who can answer your questions, compare plan options, and even help you enroll. Click here to get started.
FAQ
Is Medicare Parts A and B Enough Coverage?
There are gaps in Original Medicare coverage that you should be aware of before deciding whether you’ll need additional coverage for your healthcare needs. Additionally, only enrolling in A and B can create some financial risk and may even impact your eligibility for other healthcare coverage.
What Basic Services Are Not Covered By Original Medicare?
Original Medicare doesn’t cover prescription drugs (except those administered in a doctor’s office), routine dental care, vision care, or hearing aids.
How Do I Know If I Need More Than Original Medicare?
Consider three main factors: your health status (chronic conditions, frequency of doctor visits), financial situation (ability to handle out-of-pocket costs), and additional healthcare needs (regular dental/vision care, prescription drugs).
Can I Change My Medicare Coverage If I Find Out Parts A and B Aren’t Enough?
Yes. You have annual opportunities to modify your coverage during specific enrollment periods. You can add supplemental coverage through Medigap, switch to a Medicare Advantage plan, or add a standalone Part D plan for prescription drug coverage.