Medicare Basics: Understand the program

Medicare is complicated. It is also a vital component of the U.S. healthcare system that every citizen should understand. Enrolling in Medicare is a major milestone that for many individuals means better healthcare and lower costs. Before picking a Medicare option, consumers should familiarize themselves with some key facts. 

What is Medicare?

Medicare is a federal program that offers health insurance to American citizens and legal residents over the age of 65 and those with qualifying disabilities. 

Medicare has four parts: A, B, C, and D. 

• Part A – Covers hospital stays, limited skilled nursing and rehabilitation care, limited home health care, and hospice care. There is no cost for this coverage for most Americans over the age of 65. Parts A and B are sometimes known as Original Medicare. 
• Part B – Covers doctor visits, surgeries, labs, tests, emergency room care, urgent care, medical equipment, and a variety of other services not covered under Part A. Consumers pay premiums and co-pays and must meet deductibles before Medicare pays. Premiums are based on income and change annually. 
• Part C – Frequently called Medicare Advantage Plans, these provide an alternative for those who want more coverage than what Part A and Part B offer. Medicare Advantage plans are operated by private insurance companies and provide benefits that meet or exceed those found in Original Medicare, as well as additional benefits for dental, vision, hearing and other health needs. Plans usually include Part D coverage as well. Care is delivered by an approved network of providers.
• Part D – Prescription drug coverage administered by Medicare.  It gives beneficiaries the opportunity to purchase retail prescriptions at an affordable, discounted rate. Provided as a stand-alone plan or as part of a Medicare Advantage plan.
• Medicare Supplement Plan - Also known as Medigap, these plans are offered by private insurance companies to fill the gaps that Original Medicare doesn’t cover. They cover deductibles, copayments and other services not covered by Parts A and B. 

Sign up or Set Back?

If you ARE NOT receiving Social Security or Railroad Retirement benefits when you turn 65, you will have to sign up for Medicare during your IEP. Your IEP begins 3 months before your 65th birthday month and ends 3 months after your 65th birthday. YOU WILL NOT RECEIVE A REMINDER FROM THE GOVERNMENT TO SIGN UP. Sign up at ssa.gov.

If you ARE receiving social security benefits prior to age 64 and nine months, you’re automatically enrolled in Medicare A and B. Coverage will begin on the first day of your birth month, and your card will be sent automatically.  

Don’t be Late

If you do not enroll in Medicare Parts A, B and D when you are eligible, being late can result in financial penalties that could last the rest of your life. For instance, if you do not enroll in Part B during your IEP or another Special Enrollment Period, the federal government will charge you a 10 percent penalty for every 12 months you delay. 

Delaying enrollment will also delay coverage and potentially expose consumers to large healthcare bills.

Enrolling or Changing Plans

If you wish to enroll after your IEP has expired and you are not eligible for a Special Enrollment Period (triggered when leave a job or have another life-changing event), you can enroll during the general enrollment period from January 1 – March 31 each year. Coverage will begin on July 1 of the same year. 

Medicare recipients can change their existing plans during the open enrollment period, which runs from October 15 – December 7 every year.  

To Wait or Not?

Are you working beyond age 65? Should you switch to Medicare or maintain employer-based health insurance coverage?

If your company has less than 20 employees, you must enroll in Medicare. The government will 

consider Medicare the primary payer of your health insurance claims after you turn 65.

If you work for a company that has more than 20 employees, you can delay enrollment into Medicare and not face any penalties. When you retire or decide to disengage from your employer-sponsored healthcare, you can apply for Medicare. 

Calculating Costs

Medicare is not free. You must pay premiums for Parts B and D, or for a Medicare Advantage program. Your costs for Parts B and D will be higher if your income exceeds certain limits.  

Understand the Limits of Medicare

Medicare will cover care provided by medical professionals; however, it will not cover the activities of daily living. Therefore, Medicare will not cover care delivered in an assisted living community or by home health caregivers. 

Home health care will only be covered if it is skilled nursing or physical therapy and only on a limited basis. Help with chores, meals, bathing, dressing and transportation is not covered by Medicare. Some Medicare Advantage plans include coverage for home care, including assistance with the activities of daily living. 

Original Medicare also does not provide benefits for dental, vision or hearing. 

Review Your Plan

Medicare is not a one-time decision. It is a good idea to review your plans regularly.

If switching to a Medicare Advantage plan, be sure that your doctor or preferred provider is in network with the plan.

On-Demand Recordings of Discussions

• Medicare 101 + Q&A

• Prepare for Medicare 2022 Open Enrollment