Whether you are retired or still working, Medicare will likely become part of your life after you turn 65. Here is some important information you need to know about Medicare.
If you are receiving Social Security benefits you will automatically be enrolled in Medicare. You will receive your red, white and blue Medicare card in the mail three months before your 65th birthday.
You are also automatically enrolled in Medicare if you are disabled and have received 24 months of Social Security Disability Insurance benefits.
If you are not receiving Social Security benefits at age 65, you will need to proactively sign up for Medicare. However, depending on your situation you may not need to sign up for Medicare yet.
Most health plans pay secondary to Medicare. So if you are currently covered by a retiree health plan, and individual policy, or a small employer group plan, you must enroll in Medicare when you turn 65. If you don’t, your insurance claims may not be paid. And if you do not sign up for Medicare on time, you will be subject to late enrollment penalties.
The only people who are exempt from enrolling in Medicare at age 65 are workers and spouses who are covered by an employer group plan that covers 20 or more employees. These individuals can delay their enrollment. Click here for information on delaying Medicare.
Enrollment in Medicare is handled by the Social Security Administration. There are three ways to enroll in Original Medicare.
You should contact Social Security within the three months before your 65th birthday. This is your initial enrollment period which runs three months before your 65th birthday and ends three months after your 65th birthday. If you sign up for Medicare within the three months before your 65th birthday, your Medicare coverage will begin on the first day of the month of your birth month.
If you wait until the month you turn 65 or in the three months after, your Medicare enrollment will be delayed and you may have a lapse in coverage.
When you sign up for Medicare through Social Security, you will have what is commonly referred to as original Medicare. Original Medicare is made up of two parts called Part A (Hospital Insurance) and Part B (Medical Insurance).
You do not have to pay a premium for Part A as long as you or your spouse worked and paid into Medicare for at least 10 years or 40 quarters. You can purchase Part A if you paid into Medicare less than 40 quarters. The 2019 monthly premium for those with less than 30 quarters is $437 and with 30 – 39 quarters the monthly premium is $240.
Deductibles and Co-Insurance
Part A does not cover everything at 100%. In 2019 there is a $1,364 deductible per benefit period, not calendar year. The deductible lasts for a period of 60 days. So it is possible to pay that deductible multiple times per year.
Some additional costs associated with Part A in 2019 are:
The standard Part B monthly premium in 2019 is $135.50. The premium is income based so it can be more for those with higher incomes. Click here for information on Medicare Part B Income-Related Monthly Adjustments Amounts (IRMAA). Also, people with lower incomes may be eligible for assistance paying their Part B premium.
Deductibles and Coinsurance
Part B has a calendar year deductible of $185 in 2019. After you have paid the deductible, Medicare pays 80% of Part B services and you will pay the remaining 20%.There is no limit on how much you can pay for Part B services.
So for example if your medical bill is $20,000, you will be responsible for $4,000.
Since you can incur significant medical expenses with Original Medicare Parts A and B alone, and it does not cover prescription drug costs, most people purchase additional private insurance to limit their out of pocket expenses. You generally have two options.
The first option is to keep original Medicare and buy a Medicare Supplement Insurance plan plus a Prescription drug plan.
Medicare supplement insurance plans, also know as Medigap, help pay for health care costs or fill in the gaps, that Original Medicare doesn’t pay, like copayment, coinsurance and deductibles. You are required to have Medicare Parts A and B to buy a Medicare Supplement policy.
Original Medicare allows you to use any doctor, provider or hospital that accepts Medicare. There are no network requirements or restrictions on where you can get treated. A Medicare Supplement will fill in the gaps as long as the service was covered under original Medicare and the provider accepts Medicare.
Medigap insurance is provided by private health insurance companies and must follow Federal and state laws. In most states, there are 10 standardized Medicare supplement insurance plans, labeled “A” through “N.” (These letters are not related to the Medicare Parts A, B, C and D labels.) Each standardized plan with the same letter must offer the same basic benefits, no matter which insurance company sells it. The only difference between Medicare supplement plans with the same letter sold by different insurance companies is usually cost.
Medicare Supplement plans do not include prescription drug coverage. So if you purchase a Supplement you will most likely need to purchase a Part D prescription drug plan.
Medicare Part D is prescription drug coverage. These plans are sold by private insurance companies. They vary in premium, medications covered, pharmacies you can use, and costs of medications.
It sounds confusing but I can help determine the estimated cost to cover your medications with the different insurance companies that offer Part D prescription drug plans. Then we can make an educated decision about which plan to apply for.
The second option is to enroll in a Medicare Advantage plan.
Medicare Advantage plans are also know as Medicare Part C plans. These plans combine the coverage of Parts A and B and usually Part D all into one plan. Choosing this option means you are going to receive your Medicare benefits from a Medicare approved private insurance company instead of Original Medicare. These plans often include benefits not covered by Original Medicare such as routine dental and vision, wellness programs, hearing care, and prescription drug coverage.
You can enroll in a Medicare Advantage plan even if you have been diagnosed with a pre-existing condition, except for End-Stage Renal Disease. Medicare Advantage plans must follow guidelines established by Medicare but the amount you pay in premiums and health care expenses varies from plan to plan so it is necessary to compare plans in order to find the plan most suitable to your needs.
Health Maintenance Organization (HMO) plans only allow you to visit physicians and hospitals that are within the HMO network unless there is an emergency. You are required to get a referral from a primary care doctor in order to see a specialist. However, HMOs can lower costs, making them (in some cases) less expensive than Medicare Parts A and B.
Preferred Provider Organizations (PPOs) allow you to use doctors, hospitals, and specialists within the PPO network. They generally have more providers than an HMO. However, you are permitted to use health providers outside of the network at an additional cost to you without a referral.