When you turn 65 years old, the federal government expects you to enroll yourself in Medicare on time and to be completely aware of your Medicare benefits. Unfortunately, it’s not that easy for everyone. There are many different Medicare parts, plans, costs, and enrollment periods. The thought of Medicare begins to look like a never-ending maze for some, which is why it’s recommended to become familiar with Medicare ahead of time. If you do not have the motivation to begin researching Medicare, here are the five reasons why you should learn about Medicare.
1) To know your coverage
Medicare is federal health insurance for seniors 65 years and older and others who qualify due to having a disability. Medicare covers inpatient and outpatient services that are deemed medically necessary by a physician. Inpatient coverage is known as Part A, and outpatient coverage is referred to as Part B.
Part A covers a semi-private room, three meals a day, necessary lab services, and medications administered to you as an inpatient when you are admitted to the hospital. Medicare Part A does not cover outpatient services, but it will provide coverage for certain post-hospital services.
Medicare Part A would cover skilled nursing at 100% for 20 days if you were an inpatient for at least three days. Part A will also cover services such as hospice, physical therapy, and home healthcare services.
Medicare Part B covers any medically necessary outpatient services you receive at an outpatient facility. For example, Part B covers certain vaccinations, ambulance rides, doctor’s visits, durable medical equipment, and more.
There are a few scenarios where Part B will cover you inside the hospital, such as if you are receiving chemotherapy or radiation or if you have surgery in an outpatient setting.
Original Medicare does not cover routine dental, vision, and hearing services. Medicare also does not cover prescription medications you get from a pharmacy, but we will discuss this later.
2) Avoid late enrollment penalties
The Social Security office handles the enrollment of Medicare Part A and Part B. Some seniors are unaware there is a specific time to enroll in Medicare, and if they miss it, they can be penalized. However, if you receive Social Security benefits at least four months before your 65th birthday month, you will be automatically enrolled in Part A and Part B.
If you are not taking Social Security benefits, you must enroll in Medicare during your Initial Enrollment Period (IEP). The IEP is different for everyone, as it is based around your 65th birthday. The IEP begins three months before your 65th birthday month and ends three months after your birthday month. Therefore, in total, you have seven months to enroll in Medicare Part A and Part B through the Social Security office.
If you fail to enroll in Medicare and you do not have creditable coverage, such as group coverage from a large employer, you will be charged a life-long late enrollment penalty.
3) Enroll in a Part D plan
Medicare only covers inpatient and outpatient services. So, for your prescription medications to be covered, you’d want to purchase a Part D plan. Part D plans are sold by private insurance companies or Medicare brokers and are separate from Original Medicare. Without a Part D plan, you would pay 100% of the cost of your prescription at a pharmacy.
While you use the IEP to enroll in Medicare Part A and Part B, the IEP is also the time for you to enroll in a Part D plan. If you fail to enroll in a Part D plan and don’t have creditable coverage, you will be charged a late enrollment penalty. The cost of a Part D plan can range from $8 to $60+. You can use Medicare’s Plan Finder tool to find the available Part D plans in your area.
4) Be familiar with Original Medicare’s cost
Many seniors believe Medicare is 100% free since they paid Medicare taxes throughout their careers. Unfortunately, you still pay for Medicare. Although Medicare is not free, Medicare Part A is $0 for people who worked 40 quarters, ten years, and paid payroll taxes over that time.
If you worked between 30 to 39 quarters, you would pay $259 per month for Medicare Part A in 2021. If you have less than 30 quarters, your Part A premium will be $471. However, if you do not have the qualifying work history for premium-free Part A, but your spouse does, you can get Part A for $0 through your spouse.
When you are an inpatient at the hospital, you will pay the 2021 Part A deductible of $1,484 per 60-day benefit period.
You will be responsible for the Part B premium regardless of your work history. In 2021, the standard Part B premium is $148.50 per month. But, you will pay more for Medicare Part B and Part D if you were in a high-income bracket two years ago.
When you receive Medicare-approved outpatient services, you must pay the Part B deductible ($203 in 2021) before Medicare pays the Medicare-approved amount. Once you paid the Part B deductible, Medicare Part B will cover 80% of your Medicare-approved services. Therefore, you will pay a 20% coinsurance for your services for the remainder of the year.
5) Understand your Medicare plan options
Medicare does not cover every service at 100%. The 20% coinsurance you pay with Part B can be expensive if you have surgery, chemotherapy, or kidney dialysis. Many seniors purchase either a Medigap or Medicare Advantage plan to help with these out-of-pocket expenses.
Medigap plans, also known as a Medicare Supplement, help cover the gaps Medicare leaves you, such as deductibles, copayments, and coinsurance. Private insurance companies or Medicare brokers sell these types of plans. Medigap plans work along with Medicare, Medicare would be your primary coverage, and a Medigap plan is secondary. Medigap plans do not have network restrictions, so you can visit any doctor in the U.S. that takes Medicare and use a Medigap plan.
Medicare Advantage plans, also known as Part C, are also sold by private insurance carriers. These types of plans are very different than Medigap plans. When you purchase a Medicare Advantage plan, you will opt to receive your Part A, Part B, and Part D benefits through that carrier and not the government.
Medicare Advantage plans have networks of doctors and pharmacies where you can receive your care and prescriptions, which is usually local. Each carrier sets your plan’s cost-sharing amount for your services, and the costs and covered services are subject to change each year.
There are many reasons why you should learn about Medicare, and these are just a five of them. For more detailed Medicare information, reach out to an established Medicare broker that represents a various of companies or visit Medicare.gov.