When you are 65 years and older or have a specific disability, you can qualify for Medicare. Medicare is a national health insurance program for America’s citizens, and this program is divided into two parts. Part A covers inpatient care, and Part B covers outpatient services. However, there is much more to understand about Medicare than these two parts. Medicare can be a confusing subject to many, which is why you should get to know the facts about Medicare before it’s your time to enroll.
Enroll in Medicare on time
There is a specific time to enroll in Medicare if you are not receiving Social Security benefits before your 65th birthday. If you take out Social Security benefits four months before your 65th birthday month, you will be automatically enrolled in Medicare Part A and Part B. However, if you are not receiving Social Security benefits, you must enroll in Medicare during your Initial Enrollment Period (IEP).
The IEP is different for everyone because it is based on the individual’s 65th birthday. The IEP is seven months long, and it is the specific time to enroll in Part A and Part B. Your IEP begins three months before your 65th birthday and ends three months after your birthday month. For example, if you turn 65 on August 8, your IEP starts on May 1 and ends on November 30.
If you fail to enroll in Medicare Part A and Part B during your IEP and do not have creditable coverage from a large employer, you will be charged a lifelong late enrollment penalty. Therefore, it would be beneficial to mark your IEP dates on a calendar to help remind yourself when it’s your time to enroll in Medicare.
You can’t forget a Part D plan
As mentioned, Medicare Part A covers inpatient care, and Part B is outpatient coverage. These parts do not cover prescription medications, so you would want to consider purchasing a Part D plan for this type of coverage. Part D plans are sold by private insurance companies and not the government like Medicare.
A Part D plan is solely coverage for your prescription medications. Without a Part D plan, you would pay the total cost of your medicines at the pharmacy. Now, although Part D plans do not come from the federal government, you will also be charged a late enrollment penalty if you fail to enroll in a Part D plan during your Initial Enrollment Period. However, if you are covered by creditable coverage for Part D, you can delay Part D until you lose creditable coverage.
Understand your Medicare costs
Medicare is not free, even if you have paid Medicare taxes your whole life. However, you will get Medicare Part A for $0 whenever you paid FICA payroll taxes for 40 quarters (ten years). If you do not have 40 quarters, but you have between 30 to 39 quarters, your Part A premium in 2021 would be $259 per month. But, if you have less than 30 quarters, you would pay $471 monthly in 2021.
When you are admitted to the hospital, you will pay the Part A deductible for your stay. In 2021, the Part A deductible is $1,484 per benefit period. Once you have met the deductible, you will not have any out-of-pocket expenses for Medicare-approved services for 60 days.
The Part B premium in 2021 is $148.50, and you will pay this monthly regardless of your work history. However, if you are in a high-income bracket, you will likely pay more for Part B and Part D. Social Security will deduct the Part B and Part D premiums from your Social Security check whenever you are receiving Social Security benefits.
There is a deductible you will pay for your Medicare-approved outpatient services, which is $203 in 2021. After you pay the Part B deductible, Part B covers 80% of your Medicare-approved services. You will be responsible for the remaining 20% coinsurance, and there is not an out-of-pocket limit.
Since Part D plans are sold by private insurance companies, the carrier will set your monthly premium. You can find Part D plans as low as $7 and as high as $80+ per month. Every Part D plan also has a deductible you will pay, which is $445 in 2021. You will want to ensure you enroll in a plan that covers your medications and is cost effective.
Become familiar with your options
Since Medicare does not cover all your services in full and leaves you with out-of-pocket expenses, many seniors purchase either a Medicare Supplement or Medicare Advantage plan to help with those out-of-pocket costs. These plans are sold by private insurance companies or Medicare brokers and are 100% optional.
A Medicare Supplement, also known as a Medigap plan, works alongside Medicare. If Medicare pays for a service, so will a Medigap plan. These types of plans also do not have service areas. So, you can visit any doctor in the United States and use your Medigap plan if they accept Medicare.
Medicare has gaps, such as deductibles, copayments, coinsurance, and excess charges. Medigap plans are designed to help cover those gaps. There are ten different Medicare Supplements, and they all provide a different amount of coverage. However, each Medigap plan is standardized, meaning the plan is the same no matter the carrier selling the plan. The only difference between carriers is the Medigap premium.
If you purchase a Medicare Advantage plan (Part C), your Part A, Part B, and Part D benefits would come from the carrier you bought the plan from. The insurance carrier will set the plan’s cost-sharing amounts for services and service areas. These types of plans usually have an HMO or PPO network of doctors and pharmacies.
If you purchase an HMO Medicare Advantage plan, you can only receive your healthcare services within the network, which is typically local. If you were to go outside your network for a non-emergency service, you would pay the entire medical bill out-of-pocket.
PPO Medicare Advantage plans are more lenient, as you can go out-of-network for your healthcare. However, when you do go out of network, your charges will be higher than if you received those services in-network.
Medicare Advantage plans typically offer extra benefits, such as dental, vision, and hearing coverage, and sometimes even a gym membership.
There are many misunderstandings with Medicare, which is why you should get to know the facts before you enter your Initial Enrollment Period. Medicare brokers represent multiple insurance companies and have been known to be excellent guides in finding you a cost-effective plan and comparing your options. Reach out to an established Medicare broker today or visit Medicare.gov for more information.