Learn About Medicare and Medi-Cal Coverage Options

Understanding Medicare: What It Is and How It Works

Medicare is a federal health insurance program that primarily serves people age 65 and older. The program began in 1965 and today covers more than 67 million people. While Medicare is most commonly known as insurance for seniors, it also covers some younger people with disabilities and those with end-stage renal disease (ESRD).

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The program is divided into different parts, each covering different types of care. Medicare Part A covers hospital care, including inpatient hospital stays, skilled nursing facility care, hospice care, and some home health services. Most people do not pay a monthly premium for Part A because they or their spouse paid Medicare taxes while working. Part B covers outpatient services like doctor visits, preventive care, and certain medical equipment. Part B requires a monthly premium that varies based on income.

Medicare Part D provides prescription drug coverage through private insurance companies approved by Medicare. This part helps cover the costs of medications. Part C, also called Medicare Advantage, is an alternative to Original Medicare (Parts A and B). With Part C, a private insurance company approved by Medicare provides all Part A and B coverage, and most Part C plans also include Part D drug coverage.

Understanding which parts of Medicare apply to you matters because each part has different costs and covers different services. For example, Original Medicare (Parts A and B) has deductibles and coinsurance amounts that can add up. Medicare Advantage plans may have lower out-of-pocket costs for some services but may require using doctors within a specific network.

According to Medicare data, approximately 8.5 million beneficiaries are enrolled in Medicare Advantage plans, while others remain in Original Medicare. This range of options reflects different healthcare needs and spending patterns among beneficiaries.

Practical Takeaway: This guide covers what each Medicare part covers so you can understand the differences between Original Medicare and Medicare Advantage before making decisions about your coverage.

Medicare Costs: Premiums, Deductibles, and Out-of-Pocket Expenses

Medicare involves several types of costs that beneficiaries need to understand. These include premiums (monthly payments), deductibles (amounts you pay before insurance starts covering services), coinsurance (a percentage of costs you share with Medicare), and copayments (fixed dollar amounts for specific services).

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For Part A, most people pay no monthly premium, but there is an inpatient hospital deductible. In 2024, the Part A deductible is $1,632 for each benefit period. A benefit period starts when you enter the hospital and ends when you have been out of the hospital for 60 consecutive days. If you return to the hospital after that 60-day period, a new benefit period begins and a new deductible applies.

Part B has a monthly premium that increases based on income. For 2024, the standard Part B premium is $164.90 per month for most beneficiaries, but those with higher incomes pay more. Part B also has an annual deductible of $240 in 2024. After you meet the deductible, you typically pay 20% coinsurance for most services.

Part D prescription drug costs vary by plan and by the medications you take. Every Part D plan has a monthly premium, an annual deductible, copayments for different drugs, and a coverage gap sometimes called the "donut hole." In 2024, once you and your plan have spent $5,030 on covered drugs, you enter the coverage gap where you pay a higher percentage of drug costs until your out-of-pocket spending reaches $8,000, after which catastrophic coverage begins.

Medicare Advantage plans have different cost structures. They often have lower or no deductibles than Original Medicare, but may have higher copayments for doctor visits and may limit which providers you can use. According to the Kaiser Family Foundation, the average beneficiary in a Medicare Advantage plan pays about $3,000 to $4,000 annually out-of-pocket for medical services.

Income-related monthly adjustment amounts (IRMAA) affect what higher-income beneficiaries pay. If your modified adjusted gross income exceeds certain thresholds, you pay higher premiums for Parts B and D. For 2024, these thresholds start at $103,000 for single filers and $206,000 for married couples filing jointly.

Practical Takeaway: Knowing about premiums, deductibles, and coinsurance helps you estimate your yearly healthcare costs and compare different Medicare plan options based on what you actually spend on healthcare.

Medi-Cal Coverage: California's Medicaid Program for Low-Income Residents

Medi-Cal is California's Medicaid program, which provides health coverage to low-income individuals and families. Unlike Medicare, which is based primarily on age, Medi-Cal is based on income and other factors. The program covers both adults and children and includes California residents who are U.S. citizens, permanent residents, or other specified immigration statuses.

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Medi-Cal has expanded significantly over the years. In 2014, California expanded coverage to adults earning up to 138% of the federal poverty level. For 2024, this means adults earning up to approximately $18,754 annually for an individual or $38,639 for a family of four may be considered based on income. In January 2024, California further expanded Medi-Cal to cover some undocumented immigrants age 50 and older, regardless of immigration status, if they meet income requirements.

Medi-Cal covers a broad range of services including doctor visits, hospital care, prescription medications, mental health services, dental care, vision care, and emergency services. The scope of covered services is more extensive than some private insurance plans. For example, Medi-Cal covers dental care for both children and adults, while many private plans do not cover dental services.

There are different categories of Medi-Cal coverage based on your situation. These include coverage for children, pregnant and postpartum people, senior citizens, people with disabilities, and other groups. Each category may have different income limits and covered services. For example, children in Medi-Cal may have different copayment amounts than adults.

As of 2023, California had approximately 15 million Medi-Cal beneficiaries, representing about one-third of the state's population. This large enrollment reflects both the state's generous income limits and the state's significant low-income population.

Medi-Cal managed care plans administer coverage for most beneficiaries. These are private health plans that contract with the state to provide Medi-Cal services. About 90% of Medi-Cal beneficiaries are enrolled in managed care plans, while others receive services through fee-for-service Medi-Cal where the state directly pays providers.

Practical Takeaway: This guide explains what Medi-Cal covers, who may be considered based on income and other factors, and how the program's structure works in California.

How Medicare and Medi-Cal Work Together: Dual Coverage

Some people receive both Medicare and Medi-Cal coverage. These individuals are sometimes called "dual eligible" or "Medicare-Medicaid beneficiaries." In California, approximately 1.3 million people have both types of coverage. These are typically people age 65 and older with very low incomes, or younger people who have both disabilities and low incomes.

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When you have both Medicare and Medi-Cal, Medicare is your primary insurance, meaning it pays its portion of covered services first. Medi-Cal acts as secondary insurance and may cover services that Medicare does not cover or may help pay the costs that Medicare leaves for you to pay, such as deductibles and coinsurance.

For example, imagine a dual-eligible person receives a doctor's visit. Medicare Part B would cover 80% of the approved amount after the deductible is met. Medi-Cal may then cover the remaining 20% coinsurance. Additionally, if someone needs prescription medications, Medicare Part D would cover the medication as its primary insurance, and Medi-Cal would assist with any remaining costs or copayments.

There are specialized programs within both Medicare and Medi-Cal designed for dual-eligible individuals. One such program is the Dual Eligible Special Needs Plan (D-SNP), which is a type of Medicare Advantage plan specifically for people with both Medicare and M