Understand How Medicare Works


by Kim Keller

It would’ve been helpful if we’d had a basic understanding of Medicare from the very beginning.  Instead, we learned all about Medicare the hard way, when our dad’s coverage reached its limit.  And so we thought we’d share with you the essentials of Medicare to help you better navigate the system.

Medicare is a government health-insurance program for people 65 and over, regardless of their income level.

Medicare is broken up into four parts:

  1. Medicare Part A provides coverage for hospitalization, skilled-nursing care and in-home care, and hospice care.  Most people have this coverage automatically when they turn 65, and there is no monthly premium.  There is an exception to this:  If your parent or parent’s spouse didn’t have enough Medicare taxes deducted prior to retirement, then coverage is not automatic and a premium is required.
  2. Medicare Part B provides coverage for doctor visits, out-patient procedures, some medical equipment and supplies.  There is a monthly premium and it is necessary to sign up for this coverage.
  3. Medicare Part C, also known as the Advantage Plan, is Medicare’s version of an HMO or PPO.  These plans are administered through private companies, but are Medicare-approved.  Hospitals and doctors are selected through the particular plan’s network.  There is a monthly premium (usually smaller than Part B) and it is necessary to sign up for this coverage.
  4. Medicare Part D provides prescription drug coverage.  There are various private company plans to choose from.  Sometimes there is a monthly premium and it is necessary to sign up for this coverage.

Here are some important things to know about Medicare:

  • It doesn’t cover long-term care (nursing home care).  The only possible exception is if your parent is signed-up for Medicare Part C, and the HMO or PPO is in a network with a nursing home.  This is worth checking out.
  • It doesn’t usually cover 100% of medical costs.  Therefore, many people purchase gap insurance, which is also referred to as a Medigap policy.  It generally works like this:  If Medicare pays 80% of a medical bill, then the gap insurance would pay the other 20%.  If Medicare covered 20% of the cost, then the gap insurance would pay the other 80%.  But if Medicare doesn’t pay, then Medigap insurance doesn’t pay either.  Note:  Those with Medicare Part C – the Medicare Advantage Plan, cannot use Medigap insurance.
  • It can run out.  Our dad depleted both hospitalization and skilled-nursing care coverage (rehab), bringing our family’s stress level to new heights.
  • The Medicare.gov website let’s you know what’s covered and what’s not covered.
  • Medicare also covers some groups of people under 65, if they have a qualifying disability.


3 Responses to “Understand How Medicare Works”

  1. John Keaney says:

    How do you know (or how are you notified) when a loved one’s Medicare coverage is reaching its limit?

  2. kim says:

    Great question, John. The best way to find out precisely what your coverage limits are is by using Medicare’s coverage calculator, which you can find by clicking on the link mentioned in the story above. You’ll need to indicate the state and the type of service you want to research. For example, to find out the maximum amount of hospitalization coverage, you should select “HOSPITAL CARE (INPATIENT)” from the drop-down menu.

    The Medicare calculator is an essential tool, because you can’t rely on any hospital or rehab facility to notify you about coverage limits — something we found out the hard way. Every facility has a different procedure and timeliness cannot be guaranteed. When our dad entered a nursing home for rehabilitation, the business office made the situation clear to us from day one: between Dad’s Medicare and AARP insurance, he had up to 100 days of coverage. But one of the hospitals Dad was in treated the same situation in a completely different manner. They let us know that Dad’s coverage had expired 16 days after it had already finished, and left us responsible for the extra days. As you can imagine, that was quite a shock.

    The bottom line is, had we known about Medicare’s coverage calculator back then, we would have been a lot more prepared.

    Hope that answers your question. All the best, Kim

  3. Ellen says:

    I’ve been dealing with my mom & dad’s health issues for the last 3 plus years. I’ve learned a lot, but had No idea that Medicare ran out! I’ve done a ton of research into their care, I’ve had a few hospital social workers tell me I don’t need them, I’ve got it under control. Uuugh, it’s so overwhelming, most have no clue what it is like to care for your own loved ones. No one. Has EVER mentioned Medicare running out . Thanks for your information. 🙂 new information to go over.