Medicare 101: What Your Employees Should Know

One of the best ways to support your employees as they plan for retirement is to understand what Medicare covers and what they can expect to pay for Medicare Part A, Part B, and Medicare Advantage. The transition from employer coverage to Medicare can bring many changes, but you can help your employees.

Your employees should know these basics about what Medicare covers and what it costs.

Medicare covers health care services in four categories: Parts A, B, C, and D. Depending on an employee’s situation, they may opt into Medicare coverage through a combination of some or all of these parts. Each combination comes with its own unique costs, coverage, and benefits.

What Does Medicare Part A Cover?

Medicare Part A is considered hospital insurance. In general, Medicare Part A covers the following services:

  • Hospital care
  • Skilled nursing facility care
  • Nursing home care (not including custodial care)
  • Hospice
  • Home health services

How Much Does Medicare Part A Cost?

Part A includes a monthly premium—however, most people do not have to pay this. Employees are eligible for “premium-free” Part A if they or their spouse paid Medicare taxes while working for at least 10 years (40 quarters). If they do not qualify for premium-free Part A, the monthly premium can range from $252-$458.

There are additional costs your employees or retirees can expect to pay for various types of care—for example, if they go into the hospital or require skilled nursing. The cost of Part A depends on the number of days surrounding a treatment:

  • $1,408 deductible for each benefit period
  • Day 1-60: $0 coinsurance for each benefit period
  • Days 61-90: $352 coinsurance per day of each benefit period
  • Days 91+: $704 coinsurance per each “lifetime reserve day” (up to 60 days)
  • Beyond lifetime reserve days: All costs

What Does Medicare Part B Cover?

Medicare Part B generally covers two types of medical services: medically-necessary and preventative care. All of the following are examples of services covered by Medicare Part B:

  • Clinical research
  • Annual exams and preventative screenings
  • Ambulance services
  • Durable medical equipment
  • Mental health care
  • Partial hospitalization
  • Getting a second opinion before surgery
  • Limited outpatient prescription drugs

How Much Does Medicare Part B Cost?

Medicare Part B has a standard annual deductible ($198 in 2020) and a monthly premium (starting at $144.60).

After the deductible is met, beneficiaries typically pay 20 percent of the cost of services and Medicare covers the rest. When budgeting for their Part B expenses, your employees should note that there is no cap on the 20 percent that they will be responsible for paying. This can differ from the cost model that workers may be used to paying with employer health insurance.

What is Medicare Part C?

Medicare Part C, also called Medicare Advantage, combines Medicare Part A, Part B, and typically Part D into one plan.

Medicare Advantage plans are offered by private insurance companies. Once your employees or retirees enroll in Medicare, they can choose to purchase a Part C plan that combines Part A, Part B, and usually Part D. Often, the same carriers that offer employer group coverage also offer Medicare options, so your employees may be able to keep the same carrier in retirement.

What do Medicare Advantage Plans Cover?

Every Medicare Advantage plan must provide the same basic coverage as Medicare Parts A and B, but many plans also feature extra benefits—such as vision, dental, and hearing. Some plans, referred to as Medicare Advantage Prescription Drug (MAPD) plans, even include prescription coverage.

Many individuals find Medicare Advantage plans appealing because all of their benefits are consolidated in a single package. Further, these plans often feature an out-of-pocket maximum, which caps the amount beneficiaries can pay each year.

How Much Does a Medicare Advantage Plan Cost?     

Just like when buying a car, the amount an employee can pay for a Medicare Advantage plan varies based on the plan selected and its features. With many plan options available, employees can select a plan the cost and coverage that works best for them. Plans can include costs such as:

  • Monthly premiums
  • Copays and/or coinsurance payments
  • Annual deductibles
  • Out-of-pocket maximums

During a set time of year (Medicare Annual Enrollment), insurance companies are allowed to make updates to their Medicare Advantage plans, meaning costs and benefits can change.

What Does a Medicare Supplement Cover?

Medicare Supplement plans, also known as Medigap, are also sold by private insurance companies. Medicare Supplements are designed to be paired with Medicare Part A and Part B to “fill in the gaps” that Medicare does not cover, like copays, coinsurance, and deductibles.

If individuals choose to purchase a Supplement, their coverage from both Medicare and the Supplement work together. In other words, Medicare covers its share of approved covered health care costs and then sends the remaining balance to the Supplement insurance company. Supplement plans usually cover the cost of care provided by any doctor, hospital, or facility that accepts Medicare.

It’s important to note that a Supplement plan only supplements other benefits—meaning a beneficiary must already receive Part A, Part B, and Part D benefits through another source. If they do not enroll in these other important coverage areas, they could incur penalties.

Because Medicare Supplements do not offer Part D benefits, your employees will also need to enroll in a stand-alone prescription drug plan or another form of creditable drug coverage.

How Much do Medicare Supplements Cost?

Many health insurance companies sell Medicare Supplements. However, each plan can vary in levels of coverage and cost.

Medicare Supplements’ plan benefits and costs can also change each year, but unlike Medicare Advantage plans, these changes are not tied to Medicare Annual Enrollment. Rather, these changes are unique to individual plans and insurance companies. While most Supplement enrollees do not receive bills for health care expenses, some pay a monthly premium.

What Does Medicare Part D Cover?

Medicare Part D is prescription drug coverage available to anyone with Medicare Part A and/or Part B. Part D plans are offered by private insurance companies, same as Medicare Part C.

Medicare Advantage Prescription Drug (MAPD) plans include Part D coverage. If your employee chooses a Supplement plan when they enroll in Medicare, they will also need to enroll in a stand-alone MAPD plan or another form of creditable drug coverage.

Creditable drug coverage is coverage that is equal or greater than Medicare’s minimum standards. If your company offers creditable drug coverage to employees, workers may keep those benefits even after they enroll in Medicare.

How Much Does Medicare Part D Cost?

Insurance companies, in conjunction with the government, set prices for Part D plans and medications. Most Part D plans include:

  • A monthly premium
  • An annual deductible
  • An out-of-pocket maximum
  • A prescription drug formulary
  • Coverage phases: initial coverage phase, coverage gap (the “donut hole”, and catastrophic coverage phase

Drug costs will vary based on the medications prescribed to a beneficiary and the plan they choose. Like Medicare Advantage and Supplement plans, insurers are free to change drug plan benefits and prices.

Individuals above a certain income level will also pay a Part D surcharge on top of their plan’s monthly premium.

Questions About What Medicare Covers for Your Employees?

If your employees are reaching Medicare eligibility—even if they don’t plan to retire—let RetireMEDiQ be their trusted resource for health coverage choices.

Whether they have questions about Medicare Part B costs, what Medicare Advantage plan to choose, or when to enroll in Medicare Part A, our expert advisors are ready to help. They can contact us by calling 1-866-407-5180 or by emailing



Would love your thoughts, please comment.x