This CPA needed a Medicare refresher. Do you need a refresher too?
Medicare Part A is considered hospital insurance and covers hospital care, skilled nursing facility care, nursing home care, hospice, and home health services. If you are covered under social security, you can be enrolled in Medicare A at age 65.
Medicare Part B is considered medical insurance and covers medically necessary services or supplies and preventive services. It covers things like clinical research, ambulance services, medical equipment, mental health, second opinions before surgery, and outpatient prescription drugs. Part B does not provide general prescription drug coverage.
Medicare Part C (also known as Medicare Advantage or MA Plans) is a plan that includes Part A and Part B, with most plans also offering Part D.
Medicare Part D is a voluntary prescription drug insurance. While it is voluntary, you will receive late enrollment penalties for not having drug coverage. If you do not select Part D coverage, you have an option to have drug coverage in Part C or other Medicare health plans.
Medigap is a supplemental insurance sold by private companies. You cannot have a Medigap policy unless you also have Part A and Part B. As its name implies, it fills the “gap” and pays for services not covered by Part A and Part B. You also cannot have both Medigap and Part C; you may only have one or the other.
Some things to remember:
- Plan B is the not the same as Part B. Medigap policies offer a Plan B option.
- Original Medicare is considered Part A and Part B. The government (Medicare) provides this coverage.
- The cost of Part B is a fixed, monthly amount based upon your income.
- The cost of Part C varies based upon the plan chosen.
Medicare.gov provides a good starting point in learning more.
Accounting/tax Tip: If you are self-employed and enrolled in Medicare, the cost of your medical insurance may qualify as an above-the-line deduction on your individual tax return. To deduct, your business must have a net profit, and other rules may apply. Check with your tax professional to determine eligibility to deduct. Also, see IRS Publication 535, page 18, for more information.