+ What is Medicare?
Medicare is a federal health insurance program, which pays for a number of health care expenses. The Centers for Medicare and Medicaid Services (CMS) administers the program as part of the U.S. Department of Health and Human Services (HHS). Beneficiaries of Medicare are usually senior citizens who are age 65 and older. Adults with certain approved medical conditions (an example being Lou Gehrig’s disease) or qualifying permanent disabilities may also be eligible for Medicare benefits.
Medicare is an entitlement program. Generally, U.S. citizens aged 65 and older earn the right to enroll in Medicare by working and paying taxes for the minimum required period. This is not always the case though, as you may still be eligible to enroll, but with a higher cost.
Overall, there are four parts to the Medicare program. The two portions that make up Original Medicare are known as Parts A and B. There is also Medicare Advantage, known as Part C, which is private health insurance. Finally, Part D is the portion that offers coverage for prescription drugs. These plans are broken down below.
+ What are the different parts of Medicare?
Medicare Part A
Part A is the hospital insurance portion of Original Medicare. This covers inpatient hospital care, limited time in a skilled nursing facility, limited home health care services, as well as hospice care. In general, Medicare Part A beneficiaries don’t have to pay a monthly premium in order to receive coverage under Part A of Original Medicare. This is known as the “premium-free” portion of Part A. Usually, if you have worked a minimum of 10 years (40 quarters) and you have paid Medicare taxes during the time that you worked, you will be eligible for the premium-free portion of Part A. If this is not the case, then you pay a monthly premium.
Part A generally does not cover the full amount of your hospital bill, meaning you will responsible for a share of that cost. There is a deductible before the benefits associated with Medicare begin. After that, Medicare pays 100% of your costs for up to 60 days in a hospital or up to 20 days in a skilled nursing facility. After these time periods, benefits will cover some of the costs, for a total of 90 hospital days and 100 skilled nursing facility days. There are 60 “lifetime reserve” days for days you are in a hospital longer than 90 days in a row. You only receive a total of 60 reserve days for your lifetime.
Medicare Part B
Part B is the medical insurance portion of Original Medicare. The benefits of Part B cover certain non-hospital medical expenses like doctors’ office visits, X-rays, diabetic supplies, and outpatient care. For Part B coverage, you pay a monthly premium; the premium can be higher for people with high incomes. Medicaid helps cover Medicare Part B premiums for those with low-income beneficiaries.
Beneficiaries of Part B are generally responsible for part of their health care costs. There is a deductible to pay each year before Part B benefits kick in, and then you will typically pay 20% of the bill when visiting a participating Medicare doctor. The full cost of many lab tests or services that would be requested by your doctor will be paid with Medicare.
Medicare Part C
Part C, commonly known as Medicare Advantage, will typically include every type of Medicare coverage in one health plan. Part C is offered by private insurance companies that provide Medicare benefit packages through a contract with CMS. These plans are an alternative to Original Medicare, but to enroll in the alternatives, you must have Original Medicare (both Part A and B). You may have to continue to pay the Part B premium if you have Medicare Advantage.
Although Medicare Advantage has to include all benefits of Original Medicare (both Part A and B) besides hospice care, these plans may include different additional benefits. Often, Medicare Advantage plans will have a prescription coverage known as Medicare Advantage Prescription Drug plans. These plans may have a lower deductible, while still allowing you to pay a small share of remaining costs. Medicare Advantage plans can cover health care services that are not covered by Original Medicare, like eye exams or hearing aids, or even care received while traveling abroad.
Medicare Part D
Part D is the optional prescription drug coverage plan. It is available as a stand-alone plan through private insurance companies, with a monthly fee that is different based on the insurer. The costs of your prescriptions will be shared according to the plans details. Costs may include a deductible, co-pays, or co-insurance.
+ Medicare Supplement (Medigap)
Medicare Supplement plans work with Original Medicare (Part A and Part B), and can help pay for certain costs that Original Medicare doesn’t cover, such as co-payments, co-insurance, and deductibles. These plans don’t provide stand-alone coverage; you need to remain enrolled in Part A and Part B for your hospital and medical coverage. If you need prescription drug coverage, you’ll need to enroll in a Medicare Prescription Drug Plan.
Original Medicare (Part A and Part B) Eligibility
To be eligible for Medicare Part A and Part B, you must be a U.S. citizen or a permanent legal resident for at least five continuous years. You must also meet at least one of the following criteria for Medicare eligibility:
-Be age 65 or older and eligible for Social Security: You may be automatically enrolled into Medicare Part A (hospital insurance) when you reach age 65 and become eligible for Social Security; but if you want Medicare Part B (medical insurance), you have to enroll in it. Further, if you are already getting benefits from Social Security or the Railroad Retirement Board (RRB), you will automatically get Part A and Part B starting the first day of the month you turn 65. (If your birthday is on the first day of the month, your Part A and Part B coverage starts the first day of the prior month.) But, if you’re not receiving retirement benefits from Social Security or the Railroad Retirement Board (for instance, because you’re still working), you must sign up for Medicare Part B when you meet the age requirement, as your enrollment isn’t automatic.
-Be permanently disabled and receive disability benefits for at least two years: You automatically get Part A and Part B after you get disability benefits from Social Security for 24 months or certain disability benefits from the Railroad Retirement Board (RRB) for 24 months.
-Have end-stage renal disease (ESRD), which is permanent kidney failure that requires dialysis treatment or a kidney transplant: You need to sign up for Medicare, as your enrollment isn’t automatic.
-Have Lou Gehrig’s disease (Amyotrophic Lateral Sclerosis, or ALS): You automatically get Part A and Part B the month your disability benefits begin.
You don’t have to pay a premium for Medicare Part A if you or your spouse paid Medicare taxes while working for at least 10 years (or 40 quarters). You will have to pay the Part B premium each month. This amount may vary depending on when you enrolled and your level of income (individuals with a higher income may have to pay more for their Part B premium).
Penalty: If you don’t sign up for Medicare Part B when you first become eligible, a penalty may apply.
Medicare Supplement (Medigap) Eligibility
The best time to buy a Medigap policy is during your 6-month Medigap open enrollment period, because you can buy any Medigap policy sold in your state, even if you have health problems. This period automatically starts the month you’re 65 and enrolled in Medicare Part B. After this enrollment period, you may not be able to buy a Medigap policy. If you’re able to buy one, it may cost more.
If you enroll in a Medicare Supplement plan outside of your Medigap open enrollment period, the private insurance company may “underwrite” the plan. That means you may be subject to a physical, and the insurance company can refuse to sell you the plan or they can adjust your premium based on your health status.
Medicare Part C Eligibility
Medicare Part C (also called Medicare Advantage) is an alternative to Medicare Part A and Part B. It is available through private insurers that are approved by Medicare. To be eligible for Medicare Part C, you must already be enrolled in Medicare Part A and Part B. Medicare Part C is generally no available to those with end-stage renal disease (some exceptions apply).
With Medicare Part C coverage, you won’t need a Medicare Supplement plan (Medigap), because Medicare Advantage plans typically cover more than Original Medicare (Part A and Part B).
The Medicare Advantage plan (Part C) Initial Coverage Election Period is generally the same as the Initial Enrollment Period for Medicare Part A and Part B (the seven-month period that starts 3 months before the month you turn 65, includes the month you turn 65, and ends 3 months after the month you turn 65). You can also sign up during the Annual Election Period (AEP) from October 15 to December 7 for coverage effective January 1 of the following year. If you qualify, you can also enroll during a Special Election Period (SEP).
If you have Medicare Part C you must continue making your Part B premiums even if you enroll in a Medicare Advantage plan. Monthly rates and coverage varies depending on your choice of plan.
Penalty: Medicare Part C is optional, and there is no penalty for not signing up.
Medicare Part D Eligibility
Medicare Part D covers prescription drugs and, like Medicare Part C, is available through private insurers that are approved by Medicare. To be eligible to enroll in a Medicare prescription drug plan (PDP), you must have Medicare Part A and/or Part B and you must live in the service area for the prescription drug plan in which you want to enroll.
+ Medicare and You (Handbook)
The Centers for Medicare and Medicaid Services (CMS) has put together this handbook to keep you informed: Medicare and You-Handbook from CMS