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Are you turning 65? Maybe you’ve already enrolled in Medicare and have additional questions? You’ve come to right place. Medicare can be confusing, but it doesn’t have to be. Here’s your guide to help you along the way. Let’s start with the basics.
Medicare is a federal health insurance program for people in the U.S. who are 65 and older that includes younger people with disabilities. Medicare differs from the Medicaid program, which offers health and other services to eligible low-income people of all ages.
You’re entitled to Medicare if you’re at least 65 and a U.S. citizen, or a permanent legal resident for the past five years. Medicare also covers some disabled people under age 65. People who receive Social Security disability insurance usually become eligible for Medicare after a two-year waiting period, although those with end-stage renal disease (permanent kidney failure) and amyotrophic lateral sclerosis (ALS, also known as Lou Gehrig’s disease) can be eligible immediately.
If you’re receiving Social Security benefits when you turn 65, you will be enrolled automatically in Medicare Part A, which covers hospital costs, and Part B, which covers doctor visits. If you want Medicare Part D, which covers prescription drug costs, you’ll need to enroll yourself — that’s not automatic. If you’re not receiving Social Security benefits, you’ll sign up through the Social Security Administration website. You typically should do so in the seven-month window around your 65th birthday (which includes the three months before the month you turn 65, your birthday month, and the three months after your birthday month) to avoid permanent penalties. If you want supplemental coverage (Medigap aka Medicare Supplement or Medicare Advantage), you would sign up during the same seven month enrollment period. The private insurers to provide Medigap and Medicare advantage plans are required to take you, if you sign up during that period. Otherwise, they can turn you down.
If you’re not enrolling for the first time, changes can only be made in a 54 day window. This time period begins October 15 and ends on December 7. This is typically when people change supplements or switch from Medicare Advantage to a Medicare Supplement policy.
If you don’t sign up for Part A (if you have to buy it) and/or Part B when you’re first eligible, and you don’t qualify for a Special Enrollment Period, you may have to wait until the Medicare General Enrollment Period (from January – March 31) to enroll and coverage will start July 1 of that year. In most cases, you’ll have to pay a late enrollment penalty for as long as you have Part B if you sign up during the General Enrollment Period.
You don’t have to pay premiums for Medicare Part A if you or your spouse paid Medicare taxes for at least 10 years. (Medicare taxes are part of the payroll taxes deducted from most working people’s paychecks. You can see if you qualify by checking your Social Security statement, which is available through the Social Security website.) Otherwise, eligible people pay monthly premiums for Part A of up to $437 each month. The other parts of Medicare, which cover things like doctor visits and prescription drugs, require monthly premiums.
Medicare Part A covers inpatient care in a hospital or skilled nursing facility, although not custodial or long-term care. Part A also helps pay for hospice care and some home health care. Medicare Part A has a deductible ($1,364 in 2019) and coinsurance, which means patients pay a portion of the bill. There is no coinsurance for the first 60 days of inpatient hospital care, for example, but patients typically pay $341 per day for the 61st through 90th day of the hospitalization, and more after that.
Medicare Part B covers doctor visits and other medically necessary services and supplies. That includes preventive services or health care to prevent illness, as well as ambulance services, durable medical equipment, mental health coverage and a few types of outpatient prescription drugs. Medicare Part B requires a monthly premium that starts at $135.50 per month. Single people with adjusted gross incomes over $85,000 and married couples with AGIs over $170,000 pay higher premiums. Medicare Part B has a $185 deductible. After that, you typically pay 20% of the Medicare-approved amount for the services and supplies.
If you don’t sign up for Medicare Part B at 65 and later decide you need it, you’ll likely pay a penalty of 10% of the premium for each 12-month period that you delayed. You will pay this penalty for life, basically, since few people drop Medicare Part B once they have it. Claiming ignorance won’t get you excused from this penalty, but you can avoid it if you had health insurance through your job or your spouse’s job when you first became eligible. You must sign up within eight months of when that coverage ends.
Medicare Advantage, also known as Medicare Part C, is a type of health plan offered by private insurance companies that provides the benefits of Parts A and Part B and often Part D (prescription drug coverage) as well. These bundled plans may have additional coverage, such as vision, hearing and dental care. Unlike Original Medicare, Medicare Advantage plans have an annual limit on out-of-pocket costs. Medicare Advantage plans are typically HMOs or PPOs and are available only in certain areas.
Medicare Part D helps cover the cost of prescription drugs. Plans are offered by private insurers and require monthly premium that average about $33 a month. Higher income beneficiaries pay more. As with Part B, there typically is a late penalty premium if you don’t sign up when you are first eligible.
The biggest potential expense that’s not covered is long-term care, also known as custodial care. Medicaid, the federal health program for the poor, pays custodial costs but typically only for low-income people with little savings.Other common expenses that Medicare doesn’t cover include:
• Hearing aids and exams for fitting them.• Eye exams and eyeglasses.• Dentures.• Most dental care.• Medical care overseas.• Cosmetic surgery.• Acupuncture.• Massage therapy.
Medigap, or Medicare supplement insurance, is an additional health insurance policy you can buy from a private insurer to help pay some of the costs not covered by Medicare Part A and Part B, including deductibles, coinsurance and health care if you travel outside the US. Medigap plans don’t cover long-term care, prescription drugs, dental, vision, hearing aids or private nursing care. There are 10 types of Medigap plans available in most states. Plan F is the most comprehensive and the most popular. Premiums depend on gender, ZIP code and tobacco use and for Plan F can range from around $120 per month to over $400. It’s important to know that Plan F is going away and will adjust to Plan G. You must have Medicare Part A and Part B to purchase a Medigap policy. Medigap is not compatible with Medicare Advantage — you would purchase one or the other.