What Is the Difference Between Medicare Part A and Part B?
- Medicare Part A covers costs for inpatient hospital care, while Part B covers most outpatient and preventive care. Learn more about the costs for Parts A and B, also known as Original Medicare.
Since 1965, the United States has had a federal health insurance program for older adults. The program, known as Medicare, provides coverage without regard for a beneficiary's income or financial resources.
Original Medicare, which is administered by the federal government, consists of Part A and Part B coverage. Each part covers different health care services, so it's important to understand what each one entails.
So, what is the difference between Medicare Part A and Part B? Keep reading to learn more about the services covered under each type of Medicare.
How Are Medicare Part A and Part B Different?
The main difference between Part A vs Part B is the services covered under each plan. Medicare Part A is a form of hospital insurance. It covers inpatient hospital stays, hospice care, skilled nursing care and limited home health services. Medicare Part A may also cover temporary nursing home care.
In contrast, Medicare Part B is medical insurance used to cover doctor visits, medical supplies, preventive care and medical care delivered on an outpatient basis.
Most people don't pay a premium for their Medicare Part A coverage, but premiums are required for beneficiaries who don't have enough work credits to qualify for premium-free Part A.
Because the funds for Medicare come from payroll taxes, a beneficiary typically needs to earn at least 40 credits to receive Part A coverage without having to pay a premium. 40 credits is equivalent to working and paying Medicare taxes for 10 years.
Premium-free Part A is available to adults who are at least 65 years old and meet one of the following requirements:
- The enrollee receives Social Security benefits or retirement benefits provided by the Railroad Retirement Board.
- The enrollee qualifies for Social Security or Railroad Retirement Board benefits but hasn't applied for them yet.
- The enrollee had Medicare-covered government employment or is married to someone who had Medicare-covered government employment.
If you’re not yet age 65, you may qualify for premium-free Part A if:
- You’ve received Social Security or Railroad Retirement Board disability benefits for at least 24 months
- You have End-Stage Renal Disease (ESRD) and meet a few other eligibility requirements
In 2020, the standard premium amount for Medicare Part B is $144.60 per month.
Enrollees with high modified adjusted gross incomes pay more for their Part B coverage. This is called an income-related adjustment amount (IRMAA). Premium amounts are set based on how much income was reported on an enrollee's tax return from two years ago.
For example, premiums for 2020 are based on tax returns from 2018. Monthly premiums range from $202.40 to $491.60 for enrollees who have MAGIs above the limit to qualify for the standard premium.
Original Medicare may cover medications administered in a hospital or nursing facility, and it may cover some drugs purchased on an outpatient basis; however, it doesn't provide comprehensive prescription drug coverage.
Medicare beneficiaries in need of prescription coverage have the option of purchasing a supplemental drug plan known as Medicare Part D. The monthly premium for Medicare Part D depends on the plan provider and level of coverage selected.
Beneficiaries may also be able to get Medicare prescription drug coverage by enrolling in a Medicare Advantage (Medicare Part C) plan that includes prescription drug coverage. Medicare Advantage plans are privately-sold health insurance plans that cover the same benefits as Original Medicare, and most plans also include drug coverage. Some plans may also cover things like routine dental, vision and hearing benefits, as well as other coverage not offered by Original Medicare.
A deductible is the amount of money a beneficiary must pay before his or her Medicare benefits kick in. So what is the difference between Medicare Part A and Part B when it comes to deductibles?
The answer is that the Part A deductible is higher than the deductible for Part B, and it works much differently.
For 2020, the Medicare Part A deductible is $1,408 per benefit period. It's important to understand what a benefit period means when it comes to Medicare Part A.
With Medicare Part A, a benefit period starts on the first day of admission for inpatient care and ends when the enrollee hasn't received inpatient hospital care or inpatient care at a skilled nursing facility for 60 consecutive days.
For example, if a beneficiary is hospitalized on June 1, discharged on June 15 and admitted again on July 10, all inpatient services fall under the same benefit period. If the beneficiary wasn't admitted again until November 1, the second hospital stay would fall under a new benefit period because it had been more than 60 days between admissions. In this example, the beneficiary would have to meet the Part A deductible again before Part A benefits would kick in for this new benefit period.
The Part B deductible is $198 for the year in 2020. Once a beneficiary meets this deductible, their Part B coverage kicks in and they are typically responsible for a 20% coinsurance/copayment for their Part B-covered services for the rest of the year.
Coinsurance and Copayments
Medicare enrollees also pay coinsurance and/or copays for the services they receive under Medicare Part A and Part B.
For Part A, the amount of coinsurance depends on how much care the enrollee receives during a benefit period.
- Enrollees pay no coinsurance for the first 60 days of an inpatient stay.
- For days 61 to 90, the coinsurance amount is $352 per day for 2020.
- If the enrollee remains hospitalized or in a skilled nursing facility for more than 90 days, the coinsurance amount increases to $704 per day up to the maximum number of lifetime reserve days. Each enrollee is limited to 60 reserve days in his or her lifetime. Once these reserve days are exhausted, the enrollee must cover all costs.
For Medicare Part B, enrollees typically pay 20% of the Medicare-approved amount for each service or qualified durable medical equipment device after they meet their annual Part B deductible. If the Medicare-approved amount for a service is $100, for example, the enrollee pays $20.