September, 2022
As you get older, you’ll probably start hearing more about Medicare. You might not really know what it’s all about and why it should matter to you. Let’s break it down so that you understand why it’s important and how to go about benefitting from it.
WHAT IS IT?
Medicare is federal health insurance for people 65 or older as well as some younger people with disabilities, and people of any age with End-Stage Renal Disease. Medicare has 2 parts – part A is hospital insurance while part B is medical insurance.
WHY DO YOU NEED IT?
Most people are eligible to obtain health insurance through their employers. Some employers continue to offer some form of insurance to retired employees. Retirees whose employers do not continue to provide coverage for former employees once they turn 65 find themselves compelled to look for other alternatives. This is where Medicare comes in. Without coverage from your company, you'll need Medicare to ensure that you are covered for potential health issues that arise as you age.
AM I AUTOMATICALLY ENROLLED?
Yes, if you are receiving benefits. When you apply for retirement or disability benefits from Social Security, that serves as your application for Medicare and the Social Security Administration will automatically sign you up at age 65 for parts A and B of Medicare. Once you get approved for Social Security, you’ll automatically get Part A coverage (without having to pay a premium for it) once you’re eligible for Medicare.
BUT - if you fail to sign up for Medicare on time, you'll risk a 10% surcharge on your Medicare Part B premiums for each year-long period you go without coverage upon being eligible. (Since Medicare Part A is usually free, a late enrollment penalty doesn't apply for most people.
You can have both Medicare and employer-provided health insurance. In most cases, you will become eligible for Medicare coverage when you turn 65, even if you are still working and enrolled in your employer's health plan.
If you are not eligible for Social Security benefits you can still get Medicare by enrolling manually at www.medicare.gov. You have seven months to sign up for Medicare, starting three months prior to your 65th birthday. If you miss that initial enrollment period, you can also enroll during the annual general enrollment period which runs from January 1-March 31. If you miss both enrollment periods you may face late enrollment penalties.
WHAT IS THE DIFFERENCE BETWEEN PART A AND B IN ORIGINAL MEDICARE?
Part A is Hospital Insurance. Coverage includes:
- Inpatient care in a hospital
- Care at a skilled nursing facility
- Hospice
- Home health care.
Usually, you don’t pay a monthly premium for Part A coverage if you or your spouse paid Medicare taxes while working for a certain amount of time. This is sometimes called premium-free Part A. If you aren’t eligible for premium-free Part A, you may be able to buy Part A.
Part B is considered Medical Insurance. Part B helps cover:
- Services from doctors and other health care providers
- Outpatient care
- Home health care
- Durable medical equipment like wheelchairs, walkers, hospital beds and other equipment you may need once out of the hospital
- Many preventative visits like screening, vaccinations and yearly “well” visits
Most people pay the standard Part B premium amount.
One benefit of Medicare is that you can use any doctor or hospital that takes Medicare, anywhere in the U.S. Plus, to help pay any out-of-pocket costs (like your 20% co-pay) you can also buy supplemental coverage, have coverage from a former employer or union, or have Medicaid.
HOW MANY OTHER PARTS ARE THERE?!
In addition to Parts A and B, there are also Medicare parts C and D.
Part C, or Medicare Advantage, is an “all in one” alternative to Original Medicare. This plan includes parts A and B, and usually part D (more on that in a moment). This plan may have a lower out of pocket cost than Original Medicare but it’s likely you will have to use doctors who are in the plan’s network. Most Medicare Advantage plans offer some extra benefits that the Original Medicare doesn’t cover, for example:
- Vision coverage
- Hearing
- Dental services
- Prescription Drug coverage
Finally, Part D, or Medicare drug coverage, is run by private insurance companies that follow rules set by Medicare, helps cover the cost of prescription drugs. Unlike Part B which only covers certain medications for some health conditions, Part D offers a wider range of prescription coverage. Part D covers many of the recommended shots or vaccines like Shingles, Pneumonia and Covid-19. It does not, however, cover drugs for cometic purposes, or hair growth, weight loss or weight gain drugs, fertility drugs or drugs for sexual or erectile dysfunction.
Note that the election period for Parts C and D is October 15-December 7 of each year.
WHAT IF I DON’T WANT TO SIGN UP FOR MEDICARE? DO I HAVE TO DO IT?
Declining your Medicare Part A and Part B benefits completely is possible, but you are required to withdraw from all of your monthly benefits to do so. This means you can no longer receive Social Security and must repay anything you have already received when you withdraw from the program. You can delay signing up for Medicare if you have a plan through an employer that you want to keep, if you want to keep contributing to a health savings account, or if you have coverage through Veterans Affairs, TRICARE, or CHAMPVA. Just keep in mind that while you can opt out, you may lose other benefits. And, if you decline the coverage when you are first eligible but decide to enroll at a later date, you may have to pay a penalty. Since Part A is premium-free for most people and won’t cost you anything if you elect not to use it, it makes sense to sign up for it even if you don’t plan to use it right away as it helps you not assume the penalty.
Note: If you have limited income and resources, you may qualify for help to pay for some health care and prescription drug costs. For more information on programs that can help pay for your health care costs, visit www.Medicare.gov, or call 1-800-MEDICARE (1-800-633-4227). TTY users can call 1-877-486-2048.