Medicare is a federal health insurance program created in 1965, the same year I was born!
Its beneficiaries are people 65 years of age or older, certain younger people with disabilities, and people with End-Stage Renal Disease (ESRD). The Centers for Medicare and Medicaid Services (CMS) is in charge of Medicare, which is a division of the U.S. Department of Health and Human Services (HHS).
As you become eligible for Medicare, its coverage plays an important role for your medical cost, but it doesn't cover 100% of your bills, and you'll get to decide on how to cover those coverage gaps.
Medicare, similar to Social Security, is an entitlement program. As a U.S. citizen, you earn the right to enroll in Medicare by working and paying your taxes for at least 40 quarters. You might be able to enroll in Medicare even though you didn't work 40 quarters, but you might have to pay more.
How Will I Enroll?
If you are receiving Social Security benefits once you reach 65, you will automatically be enrolled in Original Medicare (Parts A and B), but you'll have the right to disenroll in Part B. Part A covers hospital costs and Part B covers doctor visits. Original Medicare is the traditional fee-for-service program offered by the federal government.
You can also enroll in a Medicare Advantage Plan offered by private insurance companies contracted by Medicare. If you want Prescription Drug Coverage (Part D), you must enroll it yourself. Although Part D enrollment is “optional” we recommend that you get it, because if you don't have creditable coverage, the penalties can be quite high.
If you're not receiving Social Security benefits, you may need to enroll through the Social Security Administration website. Typically, there is a 7-month window around your 65th birthday (3 months before you turn 65, the month of your birthday, and another 3 months after) for you to enroll, to avoid permanent penalties. If you want coverage from a Medicare Advantage Plan or Medicare Supplement Plan (Medigap), that 7-month window will also apply.
The open enrollment period for Medicare Supplement plans is different. It's 6 months from the date of your Part B enrollment.
How Will You Receive Coverage?
Medicare has four parts: Part A, Part B, Part C, and Part D. Each part covers different services:
Medicare Part A
Part A, known as hospital insurance, covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care. You don't have to pay a monthly premium for Part A because if you have worked for 10 years (40 quarters) and have paid sufficient Medicare taxes, you'll be eligible for premium-free Part A. If not, then you must pay monthly premiums for Part A.
Medicare Part B
Part B, covers certain doctors' services, outpatient care, some medical supplies, preventive services, and range of services such as x-rays, diagnostic tests, and renal dialysis. Unlike Part A, Part B requires a premium. In 2019, the standard premium was $135.50 per month. However, if you are a high income earner, you might pay more due to IRMAA. The higher your income is, the higher your premium is. Social Security sets the standards on the cost of Part B and can change yearly.
If you are low income, you might qualify for medicaid, which can cover the Part B premium along with other help, such as help pay for medications.
Medicare Part C
Part C, also called Medicare Advantage, is a health plan offered by private health insurance companies. Although it technically doesn't replace Parts A and B, it replaces how you use those benefits. If you opt for Part C or Medicare Advantage, you'll put your Original Medicare card away and won't use it while you're on the Medicare Advantage Program. You'll be subject to the rules of the private insurance company, while limiting your maximum out-of-pocket expenses for medical care, and potentially getting additional benefits not covered by Original Medicare.
The cost of Medicare Advantage plans varies by the carrier, the plan selected, and county of residence. As I mentioned before, Medicare Advantage is an alternative to Original Medicare (Parts A and B). But before you can get it, you must be enrolled in both Parts A and B.
Some Medicare Advantage plans have low or even no monthly premiums, but take note that you still have to pay for Part B. The advantage of Part C is that it may include benefits that Original Medicare doesn't cover, like routine vision, hearing, dental care, and also prescription drugs (Part D) and it also has an annual out-of-pocket cap on medical care (not prescription drugs).
Medicare Part D
Original Medicare doesn't come with Part D. You'll need to enroll in a stand-alone Medicare Prescription Drug plan to get coverage, or obtain a Medicare Advantage Plan that includes it. Most states have dozens of drug plans to choose from, the best way to find out which plan suits you is by contacting your Medicare Insurance Agent, or by using the Medicare.gov plan finder.
A Medicare Supplement Plan (Medigap) is an additional health insurance policy that you purchase to help the out-of-pocket cost of Original Medicare (Parts A and B). So, you must have Original Medicare to purchase a Medigap policy. There are currently 10 different standardized Medicare Supplement Plans offered, each providing different combinations to help with the Medicare costs. Take note that Plan C and Plan F will no longer be available starting January 1, 2020.
I don't recommend the non-standardized Supplement plans such as the Innovative and “Extra” plans. You can find out why by reading my article or watching my video The Downside of Innovative Plan F.
Not Covered by Medicare
Even though Medicare has a wide range of coverage, not everything is covered. Here's a list of expenses that Medicare doesn't cover:
Not Included in Original Medicare (not a comprehensive list)
What is Medicaid?
People can confuse Medicare and Medicaid. Medicaid is simply a federal and state government-funded program that covers low-income people, while Medicare coverage doesn't depend on your income level. Medicaid also covers nursing home care and personal care services, but Medicare doesn't. Medicaid recipients must be U.S. citizens or qualified non-citizens, and may include low-income adults, their children, disability status, or pregnancy.
Individuals who have Original Medicare received a red, white, and blue Medicare card. If you choose to obtain a Medicare Advantage Plan, you will still have the Original Medicare card but you won't use it for services.
Understanding your Medicare coverage is very important. Who you get them from and how you get your benefits may affect where you get your care and your out-of-pocket costs. Our friendly, licensed insurance agents are here to help you find the plan that matches your needs. Best yet we explain the options available and everything you need to know. Help is just a phone call away. Call us today at (866) 445-6683 or drop us a message HERE for a free consultation.