As you age, health insurance costs become an increasing concern. Medicare coverage is a benefit that those 65 and over have, but is often confusing. Below are some Frequently Asked Questions that we often receive from our clients to help understand Medicare more clearly.
What is Medicare?
Medicare is the federal health insurance plan for individuals 65 and older. It is also for people under 65 who receive Social Security Disability Insurance, or under 65 and have End-Stage Renal Disease. Medicare is partly funded by Social Security and Medicare taxes that you pay on your income, through premiums and through the federal budget.
What are the different Parts of Medicare?
Medicare Part A
This is hospital insurance which helps you with the cost of inpatient care and skilled nursing facility stays. It also helps with hospice and home health care. In general, think of it as helping with room and board and not any actual treatments that you may need.
Medicare Part B
This is your medical insurance that covers any treatments, lab work, preventive services and surgeries; essentially everything outside of your inpatient hospital fees (which would be covered by Part A). You can’t be enrolled in Part B, without Part A.
Medicare Part C
There are Medicare-approved private health insurance plans for individuals, known also as Medicare Advantage Plans. To enroll, you must also be enrolled in A & B, however it provides all of your Part A and Part B coverage. There are generally additional benefits, such as vision, dental and prescription drug coverage.
Medicare Part D
This provides drug coverage; you choose a carrier in your area and sign up for their drug plan.
Now let’s talk cost –
Medicare Part A for most people is usually zero, because you’ve spent your working years paying taxes to pre-fund the premiums. As long as you’ve worked at least 10 years, it won’t cost you anything; if not, there is a monthly premium to be covered. The cost of Medicare Part B is controlled by Medicare and changes each year. Medicare Part C & D premiums depend on the type of plan and plan provider in your area.
When do I enroll?
Already taking Social Security?
This is easy, you will be automatically enrolled in Parts A and B. You can elect to not take Part B since there is a monthly cost, however if you keep it the cost will be deducted from your Social Security.
Delayed Social Security?
If you haven’t started Social Security, you can sign up for Medicare up to 3 months before you turn 65. You have a 7-month Initial Period that begins 3 months before the month you turn 65, includes the month you turn 65, and ends 3 months after the month you turn 65.
For example, if your birthday is April 15, 1952 your Initial Enrollment Period is
December 1, 2016 – June 30, 2017.
Enrollment can be done online through the Social Security website: https://www.ssa.gov/medicare/ or you can visit your local office.
CAUTION! If you miss your Initial Enrollment Period, you may have to pay a penalty that will increase your monthly premium and you may have to wait longer to be covered. Also, you don’t receive a notice when you’re eligible; you must be proactive about enrolling.
Should I enroll in Medicare if I have health insurance through my current employer (or my spouse’s)?
The answer to this is not simple – it depends. If the company you work for has less than 20 employees, the employer may require you to sign up for Part B when you turn age 65; making Medicare your primary coverage and your employer’s plan second. If your employer has more than 20 employees, then they will be your primary coverage. When you or your spouse leave your job, you have an 8-month window to enroll in Medicare Part B. Whether you’re able to stay with your employer’s benefits as primary or not, it’s best to compare the two, to ensure you have the best health insurance plan in place.
With so many options to consider, it’s easy to feel overwhelmed. It’s important to start planning, so you can weigh your options. Consider things such as your health status, what drugs you may be taking, and what is best for you financially.
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