What is Medicare?
Medicare is the federal health insurance program for people who are 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD). The different parts of Medicare help cover specific services:
Medicare Part A (Hospital Insurance) - Part A covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care.
Medicare Part B (Medical Insurance) - Part B covers certain doctors' services, outpatient care, medical supplies, and preventive services.
Medicare Part C (Medicare Advantage Plans) - Part C is a type of Medicare health plan offered by a private company that contracts with Medicare to provide you with all your Part A and Part B benefits. Medicare Advantage Plans include HMO (Health Maintenance Organizations), PPO (Preferred Provider Organizations), PFFS (Private Fee-for-Service Plans), SNP (Special Needs Plans), and MSA (Medicare Medical Savings Account Plans). If you’re enrolled in a Medicare Advantage Plan, most Medicare services are covered through the plan and aren’t paid for under Original Medicare. Many Medicare Advantage Plans also offer prescription drug coverage.
Medicare Part D (prescription drug coverage) - Part D adds prescription drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private-Fee-for-Service Plans, and Medicare Medical Savings Account Plans. These plans are offered by insurance companies and other private companies approved by Medicare. Medicare Advantage Plans may also offer prescription drug coverage that follows the same rules as Medicare Prescription Drug Plans.
Medicare Supplement Insurance - Medicare Supplement Plans, also known as Medigap Plans are plans offered by private insurance companies and “supplements” Original Medicare by paying some or all of the costs that Original Medicare does not cover, depending on which plan is selected.
Medicare Key Considerations
Eligibility - You're eligible for Original Medicare (Part A and Part B) if you're at least 65 years old, or if you're under 65 and qualify on the basis of a disability or other special situation. You also must be a US citizen or a legal resident who has lived in the US for at least 5 consecutive years. You're eligible for Medicare Advantage (Part C) if you're enrolled in Original Medicare (Part A and Part B), and you live in the plan's service area, and you do not have end-stage renal disease (ESRD) - some exceptions may apply.
Enrollment - There are 3 Medicare enrollment periods each year:
1. Initial Enrollment Period - Initial Enrollment Period begins 3 months before and ends 3 months after the month of your 65th birthday (a 7 month window). If you have employer or plan-sponsored coverage when you first become eligible, you won't need to enroll until you retire or otherwise lose that coverage. Prescription drug (Part D) coverage must be creditable or you may be subject to a late-enrollment penalty when you enroll in a plan with Part D benefits.
2. Annual Enrollment Period - October 15-December 7. During this time you can add, drop, or switch your Medicare plan coverage.
3. Medicare Advantage Open Enrollment Period - January 1 - March 31. If you are already a Medicare Advantage plan member, you may disenroll from your current plan and either switch to a different Medicare Advantage plan one time only, or go back to Original Medicare during this period.
4. Special Enrollment Period - Some individuals may also qualify for a Special Enrollment Period if you: Retire and lose your employer coverage, Move out of the plan's service area, Receive assistance from the state, and Have been diagnosed with certain qualifying disabilities or chronic health conditions.
Medicare FAQs
1. I currently have a plan. Does the plan stay the same? No. Plans change every year, so at a minimum you may want to review your benefits every two or three years.
2. I am 65, but I want to keep working. Do I have to go on Medicare? No. You have options. You will automatically be enrolled in Medicare Part A, if you have the worked 40 quarters and contributed to Medicare. Part A has no additional Cost and helps pay for hospital stays and inpatient care. However, you do not have to enroll in Part B. You can stay on an employer plan, though you will want to make sure that it is considered creditable coverage, otherwise you will incur a penalty when you eventually go onto Medicare
3. My neighbor pays less than I do for Part B, even though we both retired at the same time and are the same age. Is that right? It can be. Your Part B payments are based on your income. So if you earned more than $85,000 (single individual) in 2016, you will pay more for your Part B than your neighbor in 2018, if they earned less than $85,000, (single individual).
4. When do I need to enroll in Medicare? That depends. If you are under 65 and have been on disability for 24 months, on the 25th month you will be automatically enrolled in Medicare. If you are 65 and retiring, you can enroll in both Medicare Parts A & B, which would allow you to enroll in Medicare plans. If you choose to work beyond 65 you can enroll in Part B when you are ready to retire.
5. I don’t understand, how can a Medicare Advantage plan offer so many benefits and have a $0 monthly premium? While true that in certain parts of the country premiums for Medicare Advantage Plans have a $0 premium, it is not the case for all parts. Due to the competitiveness of the market place, some counties do have $0 premiums. However, remember, while you were working, you were paying into Medicare. Furthermore, you continue to pay for your Part B premiums. So, even though the plan you are considering has a $0 premium, it is not free.
6. Are all Medicare Supplement Insurance Plans the same? No. First of all, there is a belief that all plans are supplements. This is not true. Some plans are known as Medicare Supplements, but others are known as Medicare Advantage Plans. Furthermore, Medicare Supplement plans have many options, depending on the carrier, ranging from A-N. This can be confusing, which is why it is best to work with an agent to help explain the differences.
7. Can I travel out of the area with my plan? Yes. If you have a Medicare Supplement Plan you can see any doctor in the U.S. that accepts Medicare. If you have a Medicare Advantage Plan, you can use urgent care and emergency room facilities. There may be co-pays involved.
8. I like to travel overseas in my retirement, will the plan I’m on cover me? Yes. Medicare Supplement Plans cover you when traveling outside the U.S. However, plans vary and may cover different amounts. Check with your carrier to make sure of the coverage you have while traveling overseas.
9. I don’t take any prescription drugs. Do I need to enroll in any plan? You may choose to remain on Original Medicare and not enroll in a Medicare Supplement or Medicare Advantage Plan. However, Original Medicare does not cover costs for prescription drugs. If you should at some point need prescription drugs and decide to enroll in a Part D prescription drug plan, you may be subject to penalties for not enrolling when you were first eligible.
10. What is the out-of-pocket maximum (OOPM)? It’s not a deductible. It is a safety net measure, and when your costs reach the maximum amount, then all costs over and above that are covered by the plan. Out-of-pocket maximums to vary, depending on the insurer.
Learn More about Medicare
If you would like to learn more about Medicare, please see the below resources: