The magic age of 65
You may be close, or you may know someone who is close to 65. It’s time . . . you’ve heard about it. Yes, it’s time to figure out this whole Medicare thing.
But where do you even begin?
Today, let’s back up and learn some basics to make this journey a little better.
Is it Medicare or Medicaid?
If you have not thought about Medicare much, here’s a quick vocabulary breakdown.
Medicare – this is what we are going to talk about in this post
- Is a Federal health insurance program.
- It provides health coverage if you are 65 and older.
- It also provides health coverage if you are under 65 with certain disabilities.
- It is the primary medical coverage provider for many adults 65 and older.
- Eligibility has nothing to do with income.
- What does it cost? It depends on the coverage you choose.
- Like “regular” health insurance it can have premiums, deductibles, co-insurance or co-pays.
Medicaid – as a note
- This is joint Federal and State government programs. It is governed by States.
- Each state creates a program but there are federal guidelines which list mandatory benefits and optional benefits.
- It Supports: low-income people, people with disabilities, elderly, etc.
- What does it cost? It depends on your income and your state’s rules.
- It can have premiums, deductibles, co-insurance or co-pays.
When is Medicare sign-up?
Do I really need to sign up for Medicare?
- The most likely answer: Yes, you do!
- The exception: if you’re already receiving Social Security benefits, you will automatically be enrolled in Parts A and B (which we discuss next) the month you turn 65.
- And . . . YOU have to be proactive !
- Medicare doesn’t notify you unless you are already getting Social Security or Railroad Retirement Board benefits.
- * IMPORTANT* If you are late to enroll, you may have penalties !
When do I sign up?
- Enrollment begins 3 months before your 65th birthday and continues for 3 months after that birthday.
- This is called your Initial Enrollment Period (IEP)
- You officially become eligible at 65. BUT . . . delaying enrollment can result in penalties.
Medicare 4 parts
If you talk to people who are on Medicare, you may hear phrases “Part A”, “Part “B”, etc. Medicare has different options and you need to make choices when you sign up.
- There’s Part A and B
- with additional coverage for A & B called Medigap.
- There’s the alternative to Part A and B called C which you purchase through private insurance companies.
- And then there’s Part D for prescription medication coverage.
What is Part A and Part B?
Let’s start with Plans A and B. These benefits are directly from the government and are also called “original Medicare“.
Part A – Hospital Insurance (usually free)
Hospital stays, skilled nursing facilities, etc.
- No Premiums if you reached the age of 65 and are entitled to Social Security benefits.
- Annual deductible for 2022: $1,556.
- After you meet the deductible, Medicare will pay for almost all hospital charges first 60 days.
- Medicare pays for 90 days of hospital care per “spell of illness” (no limit on number of spells) + an additional lifetime reserve of 60 days.
- After 60 days of hospital care, you will pay more for days 61-90 and then can tap in to the 60-day lifetime reserve.
- See this article: “spell of illness” begins when the patient is admitted to a hospital or other covered facility, and ends when the patient has gone 60 days without being readmitted to a hospital or other facility.
Part B – Medical Insurance
Physician Fees (office visits, ambulance, diagnostic tests, etc.)
- You must pay monthly premiums
- 2022 cost: $170.10/month unless you are in the “higher income” range.
- The cost is adjusted annually.
- Annual deductible
- 2022: $233.
- Once deductible met: you pay 20% for reasonable charges.
Medigap (Medicare Supplement) from private Insurance Company for more coverage
- Medicare doesn’t cover everything, so you can purchase “Medigap” insurance from a private insurer if you want additional coverage.
- You must have Medicare Part A and Part B.
- You can’t be denied a Medigap policy if you apply within 6 months of enrolling in Medicare Part B.
- This is a policy to supplement your Part A and Part B (original Medicare benefits).
- Key words: supplement Part A and B
- This is NOT Part C – Medicare Advantage Plan (see the next section on Part C).
- Generally, Medigap policies are labeled: A,B,C,D,F,G,K,L,M,N.
- Each of the 10 packages covers the same across all insurance companies.
- BUT the premiums can vary!
- But there are twists and turns depending on what state you live in. For example, some states may not authorize all the plans.
- Medigap does not cover prescription drugs since there is now a Medicare drug program.
- Want help: go to this Medicare site and start a search.
Part C – Medicare Advantage
This is an alternative that serves in place of the original Medicare (Plan A and B). IT IS NOT REQUIRED.
Private insurance companies
- These plans are purchased through private health insurance companies.
- You must be enrolled in Parts A and B and pay the Part B premium.
- This Plan C will then cover all the services you’d receive under Medicare Part A and B (they must offer the same benefits as Part A and Part B) and may offer extra coverage like vision, dental, or drug coverage.
- You can’t have a Medigap policy if you have this.
- This is also referred to as “Medicare Advantage”.
Then there’s Part D – Prescription drug coverage
Why would you think about Part D?
- You sign up for Part A and B which do NOT have drug coverage.
- You sign up for Part C with a private insurance company, but drug coverage is not included.
Premiums depend on your income
- Plans differ not only in premiums, but also deductibles and the drugs they cover, etc.
- Costs vary based on your plan and where you live.