If you or a family member have a 65th birthday on the horizon, there may be thoughts of working less (or not at all), taking bucket-list trips, pursuing a favorite hobby…and Medicare.
Medicare is the federal health insurance program in place for people 65 or older, as well as some younger people with disabilities, and those with End-Stage Renal Disease or ALS. While Medicare offers some great benefits, it can also be confusing. Here, we’ll clarify some of that confusion and provide resources for more detailed information.
Parts of Medicare
Part A: Medicare Part A is hospital insurance. It helps cover the costs of in-patient care in hospitals and skilled-nursing facilities, as well as the costs of hospice care and home health care.
Part B: Medicare Part B is medical insurance. It helps cover the costs of services you receive from physicians and other healthcare providers, outpatient care, durable medical equipment (wheelchairs, walkers, hospital beds, etc.) and many preventive services, such as health screenings, vaccines and annual wellness visits. Together, Part A and Part B are known as Original Medicare.
Part D: Medicare Part D is drug coverage. It helps cover the costs of prescription drugs.
How to get your Medicare coverage: the options
You can get Medicare coverage in one of two ways.
Original Medicare – As noted above, Parts A and B comprise what’s known as Original Medicare. You can use any healthcare provider that takes Medicare. When you receive medical services, you’ll pay a relatively nominal deductible at the beginning of each year. You’ll also usually pay 20% of the cost of the service. You can add a Part D prescription drug plan to your Original Medicare plan.
However, Original Medicare does not pay for the entire cost of covered medical services and supplies. This is where a Medicare supplement insurance policy – often called a Medigap policy, as it covers the gap between what you’re charged and what Medicare pays – comes into play. You purchase this additional insurance from private insurance companies. Policies are standardized, and are lettered (Plan G, Plan N, etc.) in most states. The benefits in each lettered plan are the same regardless of which insurance company sells it.
You can learn more about how Original Medicare works here.
Medicare Advantage – Offered by private insurance companies, Medicare Advantage plans – also called Part C plans – offer an alternative to Original Medicare. They are “bundled” plans that typically include Part A, Part B and Part D. Many offer extra benefits that Original Medicare doesn’t cover, such as vision, hearing and dental services. Each plan has different costs and different rules on how to access services.
While these plans can offer excellent coverage and benefits, depending on an individual’s health history, condition and other factors, they may or may not be the best choice. In addition, most plans require you to use healthcare providers in the plan’s network. You can learn more about how Medicare Advantage works here.
Medicare is not free, whether you choose Original Medicare or a Medicare Advantage plan. That said, most people who choose Original Medicare do not pay for Part A. Part B comes with a monthly premium that is based on income. If you receive Social Security, Railroad Retirement Board or Civil Service Retirement checks, the premium will be deducted automatically from those payments. If you don’t receive any of those payments, you will receive a bill for the Part B premium. Medicare Advantage plans have their own premiums and bill directly for those.
When and how to sign up for Medicare
Signing up for Medicare is different for different people. If you’ve applied for retirement (or disability) benefits from Social Security, that also serves as your application for Medicare, and you’ll be automatically enrolled. If you or your spouse are still working when you turn 65, and you have health insurance from your employer, you can usually wait to sign up for Part B until you (or your spouse) stop working or lose your health insurance.
If you are signing up yourself, you have a few ways to do so:
- Online (at Social Security)
- Call Social Security at 800-772-1213
- Contact your local Social Security office
Medicare has specific dates when you can sign up.
- Initial enrollment period. This is the seven-month period around your 65th birthday: the three months before and after your birthday month, and the month of your birthday. If your birthday occurs on the first day of the month, this period includes the four months before your birthday and the two months after your birthday month.
- General enrollment period. If for any reason you do not sign up for Medicare during the initial enrollment period, you’ll need to wait and do so within Medicare’s general enrollment period. That takes place Jan. 1-March 31 each year. Coverage starts the month after you sign up, and you may be assessed a late penalty.
- Special enrollment period. Medicare has a special enrollment period for events including moving, losing your current coverage, getting Medicaid or getting extra help to pay for prescription drugs.
The Medicare program, process and plethora of special situations and exceptions can be overwhelming. The Medicare website is a primary resource. If you are still confused or have questions, Medicare advisors, brokers and agents may help. These independent agents are licensed to sell Medicare plans on behalf of one or more insurance companies, and generally do not charge the consumer for their services or information. Your employer or current insurance agent can often provide a recommendation on how to identify a knowledgeable professional to assist you.
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