Medicare is a federal program that helps cover some or all of your health care costs. It consists of Parts A, B and D: Part A covers hospital stays; B provides outpatient coverage; while Part D provides prescription drug coverage.
You may be eligible to postpone enrolling in Medicare if your employer or spouse’s employer provides group health coverage; however, penalties will apply if this occurs.
Basics
Medicare is the national health insurance program for Americans 65 or over, individuals under age 65 with disabilities, and people living with end-stage renal disease (ESRD). Medicare can be complex but having an understanding of its basics will help you make informed decisions regarding coverage.
Medicare covers hospital care, physician services and prescription drug coverage at much less of a cost than private health insurance policies. Medicare works similarly to employer-based health plans in terms of monthly premiums and out-of-pocket costs like deductibles and copays.
Part A (hospital insurance), also known as hospitalization insurance, covers stays in hospitals that have been determined medically necessary by your doctor. It covers up to 90 days per benefit period plus 60 lifetime reserve days at general hospitals; up to 190 in psychiatric facilities; as well as skilled nursing facilities, home health visits and hospice care services.
Part B medical insurance covers visits to doctors and specialists; lab tests; screenings; equipment rental; ambulance transportation services and outpatient services such as telehealth visits with nurse practitioners or physical therapists as well as several forms of durable medical equipment and assistive devices.
Part D covers prescription drug costs. Monthly premiums vary by plan; typically though they’re less costly than private health insurance policies. Medicare also negotiates prices with healthcare providers through national programs to lower out-of-pocket costs for you as a patient.
Medicare’s funding comes from multiple sources, including trust funds, payroll tax contributions to Social Security, and the general fund of the federal budget. Over time, spending projections are projected to increase; however, CMS is taking measures to limit that increase.
Medicare differs from Medicaid, which is administered by states and provides low-income individuals with health coverage. Eligibility for Medicaid depends on one’s income while eligibility for Medicare depends solely on age or disability status; individuals eligible for both programs at once are known as dual-eligibles and can reap their benefits simultaneously. To apply for Medicare online through CMS.
Coverage options
Medicare offers various health care coverage options. Most people opt for Original Medicare (comprising Parts A and B), or Medicare Advantage plans managed by private companies which provide additional coverage over what Original Medicare can provide – some even including prescription drug coverage.
Each Medicare Advantage plan comes with its own costs and benefits, so it is wise to spend ample time comparing each one before making your choice. When selecting one plan over another, make sure that its network doctors can access care easily if traveling or spending significant amounts of time away from home each year.
Medicare Advantage plans often require that you use doctors and hospitals that belong to their network in order to get full coverage, failing which you could incur additional out-of-pocket expenses. You should also make sure the plan you select offers a comprehensive set of benefits such as dental, vision and hearing services.
Medicare Part D, the prescription drug plan, can be purchased either separately or as part of a Medicare Advantage plan. When enrolling in one that includes Part D coverage automatically, however.
Initial enrollment period for Medicare Part B runs from October 15 through December 7. Failure to sign up during your seven-month initial enrollment period could incur penalties — the longer it takes you sign up, the steeper its penalty will be.
Supplementary coverage, commonly referred to as Medigap, can help cover out-of-pocket expenses. There are 10 distinct Medigap policies with their own costs and benefits; all policies with identical letters have identical benefits; premiums may differ between insurers however. HealthMarkets can help you compare Medicare quotes online so you can select plans best suited for both your budget and healthcare needs.
Enrollment
Medicare enrollment can be an arduous process. Beneficiaries have several opportunities to sign up — during their Initial Enrollment Period, General Enrollment Period and Special Enrollment Periods. Individuals should try enroll as soon as they become eligible in order to avoid late enrollment penalties and penalties associated with late sign ups.
Your Medicare enrollment period begins three months before your 65th birthday and continues through three months after. In this seven-month window, you can enroll in Parts A and B, join a Medicare Advantage Plan or add Part D prescription drug coverage.
As soon as they turn 65, individuals already receiving benefits through Social Security will automatically enroll in Medicare Parts A and B. If not already receiving them, however, you must fill out and submit Medicare enrollment forms (CMS-18F-5 and CMS-40B) directly to Social Security or your state’s health insurance marketplace.
If you miss your initial enrollment period and do not qualify for a Special Enrollment Period, another opportunity to enroll would be during the annual General Enrollment Period that runs annually from January 1 through March 31. Signing up during this time would begin the month following.
Some individuals who miss their Initial Enrollment Period may still qualify to enroll during an eight-month Special Enrollment Period after losing employer or union health care coverage based on current employment (yours or a family member’s). COBRA, retiree health benefits or any other forms of job-based coverage don’t qualify; only SEP offers this opportunity.
An annual fall open enrollment period allows Medicare recipients to adjust their plans during this time, from Oct 15th through Dec 7th. You can switch plans, drop or add Medicare Advantage plans, add or drop prescription drug coverage or change plans altogether. When making changes such as adding or dropping Medicare Advantage plans you must inform Social Security. Medicare Advantage plans must provide certain basic benefits like vision, hearing, dental coverage. They also must meet strict quality and safety standards.
Questions
As part of Medicare enrollment or considering changing coverage options, it’s essential that all options available to you be explored thoroughly. With health care being one of the biggest expenses of retirement, make sure that the plan selected best serves your individual needs and preferences.
When enrolling in a Medicare Advantage plan, one of the decisions you must make is which prescription drugs you’ll take and how much each year they will cost. Every Medicare Advantage Plan’s drug list differs; some offer certain drugs without copays depending on its drug-tier level.
To help you narrow down your choices and find a Medicare plan that meets both your budget and healthcare needs, here are the Medicare advantage facts you should be aware of. Tools such as NCOA’s Age Well Planner provide cost estimates as well as insights into whether or not benefits such as Special Needs Plans might apply.
AARP also provides an extensive resource center for those preparing to retire, featuring news on changes and developments within Medicare as well as videos explaining key issues and providing answers to frequently asked questions about it.
The Medicare Cost Estimator can give you an excellent idea of your Medicare premiums and out-of-pocket costs over an entire year, as well as help you compare Medicare Advantage Plans or Supplement plans.
If you still work and have health insurance through an employer, it’s important to learn how your current coverage interacts with Medicare so as to avoid incurring an unexpected late enrollment penalty. Speak with HR or your insurance provider and inquire how it would interact. If changing coverage later on is required, do it during October’s annual open enrollment period or else higher rates could remain for an extended period.
