What is Medicare?
Medicare is a health insurance program provided by the federal government for qualifying individuals, including people age 65 and older, those with certain disabilities, and individuals with end-stage renal disease (ESRD).
Some people may confuse Medicaid and Medicare programs. The primary difference is that Medicaid is a needs-based insurance program while Medicare isn’t. Your income isn’t a determining factor for Medicare qualification.
There are monthly premiums for certain parts of Medicare. Additionally, Medicare does have some limitations and regulations on what it’ll cover for health care costs. Read on to learn more about each part of Medicare, what’s covered, and how to enroll.
Medicare Parts
When you become eligible for Medicare, you have choices to make. First, you must decide whether you’ll enroll in Part A and B or Part A only and defer Part B. Most people choose Part A because it is premium-free. If you’re enrolled in a health savings account (HSA), you won’t be able to continue contributing to it if you enroll in Part A. Once your A and B choices are made, you can keep Original Medicare and add a supplement and Part D plan or opt for a Medicare Advantage Plan.
Here’s what each part of Medicare covers and costs:
Medicare Part A
Medicare Part A is considered the hospital insurance portion of Original Medicare. It covers costs associated with hospital stays and limited stays at a nursing home, hospice care, and some costs for home health care.
You don’t have to pay a monthly premium for Medicare Part A if you or your spouse paid qualifying taxes during employment. If you don’t qualify for premium-free Part A, you can pay for it. The premium amount you have to pay varies based on how long you or your spouse worked while paying qualifying Medicare taxes. For instance, if you paid taxes for less than 30 quarters, you’ll pay $499 per month based on 2022 premiums. But if you worked and paid taxes between 30 and 39 quarters, you’ll only pay a $274 monthly premium.
Medicare Part B
Medicare Part B is considered the medical insurance portion of Original Medicare. It covers things like trips to the doctor’s office for a checkup or a sick visit, any outpatient care you might receive, certain medical supplies, and preventive care like an annual wellness visit.
Nearly everyone pays a monthly premium for Medicare Part B. The standard amount for 2022 is $170.10. If your gross income on your tax return is high enough, you’ll be required to pay both the standard monthly premium and an Income Related Monthly Adjustment Amount (IRMAA). You’re also responsible for 20% of the costs of your health services after your annual deductible ($233 in 2022) is met.
Medicare Part C
Medicare Part C, commonly referred to as Medicare Advantage, is offered by private insurance companies approved by Medicare. If you choose a Medicare Advantage Plan as an alternative to Original Medicare, it becomes your primary coverage. Think of Medicare Part C as a “Medicare bundle” because it covers everything that Part A and Part B do. Most Advantage plans include Part D prescription drug coverage. Some Medicare Advantage Plans offer additional coverage for dental and vision and even fitness memberships. For example, Medicare Part C covers in-patient hospital stays, stays in a skilled nursing facility, and home health care like Original Medicare Part A. Part C also covers outpatient care like Medicare Part B does, including doctor visits, lab tests. X-rays, outpatient surgery, and emergency services.
Original Medicare Part A and Part B only cover 80% of the costs of services received. Meanwhile, Medicare Part C plans cover everything Part A and Part B cover but charge a small copayment and coinsurance for services. Most Medicare Advantage plans also have maximum out-of-pocket costs per year, and many come with a $0 monthly premium, which can make these plans more affordable. The costs of Medicare Advantage plans vary since private companies offer them, but you can expect to pay both a monthly premium and a monthly Part B premium, unless the plan is a $0 premium plan. Plan costs can vary depending on whether other benefits like Part D, dental, vision, and hearing are included.
Medicare Part D
Medicare Part D refers to prescription drug coverage, so it’ll help cover the costs of medications prescribed for your health condition. Individual Medicare drug plans use a formulary developed by a pharmacy and therapeutics committee composed of pharmacists and physicians to regulate which medications they’ll cover. The United States Centers for Medicare and Medicaid (CMS) must approve the formulary. Part D plans are required to offer two medications in all categories necessary to treat your health condition. In most cases, if a name-brand medication isn’t covered, a generic will be.
Medicare Part D does have costs associated with it. The costs vary based on which type of plan you choose. In general, you can expect to pay a monthly premium ― this can be deducted directly from your Social Security if you choose ― and a yearly deductible. The deductible can’t be more than $480 in 2022. You’ll pay a copayment or coinsurance percentage for each drug after your deductible is met. If you have low income and resources, you may be able to get help with Part D costs through Extra Help.
Medigap
Medigap insurance is commonly known as Medicare Supplemental Insurance. As the name implies, it’s used as supplemental insurance to cover health care costs that Original Medicare does not. You can only purchase Medigap insurance if you’re enrolled in Original Medicare. It cannot be used with a Medicare Advantage Plan. Medigap insurance is offered through private insurance companies approved by Medicare.
You pay a monthly premium for Medigap as well as your regular monthly Part B Medicare premium. Your Medigap premium is paid directly to the private insurance company you got your Medigap policy through while the Part B premium is paid to Social Security.
Medigap insurance can help cover your deductible costs, copayments, and coinsurance under Original Medicare. For people newly eligible for Medicare on or after January 1, 2020, Medigap insurance can no longer cover the Part B deductible. If you were eligible for Medicare before January 1, 2020, you may be able to purchase Plan C or F, which will cover the Medicare Part B deductible cost. If you already have a Plan C or F, you can keep it. Medigap insurance can’t be used to cover the costs of certain health expenses, including long-term care, vision care, and eyeglass, dental care, hearing aids, or private-duty nursing care.
What isn't Covered by Medicare?
Original Medicare doesn’t cover certain health services and costs, including:
Long-term care
Dental care (with some exceptions)
Vision exams needed to prescribe glasses
Dentures
Cosmetic surgery
Acupuncture
Hearing aids and related exams
Routine foot care
How Do I Enroll in Medicare?
There are a few different ways to enroll in Medicare. Some people are enrolled in Medicare automatically, and others will have to sign up on their own. Everyone should check with Social Security three months before their expected start date to ensure everything is in order.
You’ll be enrolled automatically in Medicare if you:
Are already receiving Social Security benefits (at least four months prior to start)
Receive U.S. Railroad Retirement Board (RRB) benefits (at least four months prior to start)
Are under the age of 65 but have a social security disability for 24 months
Have amyotrophic lateral sclerosis (ALS or Lou Gehrig’s disease or ESRD
You’ll have to enroll in Medicare on your own if you:
Are about to turn 65
Are already 65 but not receiving Social Security benefits
There are also some individual circumstances that may change the timing of your enrollment. For instance, if you have employer-sponsored insurance, you may be able to wait to apply for Medicare Part B instead of being required to apply when you turn 65.
Medicare enrollment periods
The Initial Enrollment Period (IEP) for Medicare is a seven-month period beginning three months before you turn 65, the month in which you turn 65, and three months after you turn 65. For example, if you turn 65 on June 14, your IEP is from March 1 through September 30.
If you don’t sign up during your initial enrollment period, and you aren’t covered by an employer health plan or are volunteering overseas for at least 12 months, you’ll begin accruing Part B late enrollment penalties. You’ll only be able to enroll during the General Enrollment Period (GEP). The GEP runs from January 1 through March 31 each year, with coverage starting July 1st.
Medicare Advantage plans cannot start before your Part B start date, so if you don’t enroll in Part B by the end of your IEP, you’ll have to wait until the GEP for Medicare Advantage enrollment also. If you enroll in Part B during the GEP, you can join a Medicare Advantage Plan or a Medicare Drug Plan (Part D) between April 1 and June 30. Your Medigap open enrollment period starts the first month you have Part B and lasts for six months.
When does Medicare coverage start?
Your Medicare coverage start date depends on when you enroll. Remember, during the IEP, you can enroll three months before you turn 65, the month you turn 65, and three months after you turn 65.
For example:
When You EnrollWhen Coverage StartsExample: Turning 65 on May 10The three months before you turn 65The first day of the month you turn 65May 1The month you turn 65The first day of the month after you turn 65June 1The month after you turn 65Two months after you sign upAugust 1Two or three months after you turn 65Three months after you sign up
October 1 (if you enroll in July)
November 1 (if you enroll in August)
If you enroll during your IEP, you can coordinate your ancillary coverage, that is, Medigap and Medicare Part D or Medicare Advantage to start the same day as your Medicare Part A and B coverage.
If you enroll during a Special Enrollment Period, coverage generally starts the month after your sign-up.
When you’re ready to apply for Medicare, you can fill out an online application through the Social Security website or in-person at your local Social Security office.
This article was originally published by Medicareplans.com and republished here with permission.
