Medicare is a national health insurance program that provides coverage for seniors. However, it can be difficult to navigate its complex rules and costs.
Most people get enrolled in Part A free of charge because they or their spouse paid FICA taxes for at least 10 years. But they must pay a premium for Part B and may need to sign up for Part C (Medicare Advantage).
Also, beneficiaries can buy a private Medicare Prescription Drug Plan, known as Medigap, to help cover their out-of-pocket expenses.
Part A
Medicare is a federal health insurance program for people 65 and older, as well as some under 65 with disabilities. It helps pay for hospital and medical coverage, but doesn’t cover all costs. There are also premiums, deductibles and copayments to consider.
Most beneficiaries automatically get Part A of Medicare when they’re first eligible because they’ve paid into the system through payroll taxes over the years. This coverage pays for inpatient hospital care, hospice care and some skilled nursing services.
You’ll receive an Enrollment Kit from Social Security, or you can sign up online through your MySocialSecurity account. The best time to enroll is during your three months before turning 65 or the month you stop working and are no longer covered by a company-sponsored health plan (EGHP). You’ll have an Initial Enrollment Period (IEP) during which you can choose your Part A and Part B coverage. If you wait to enroll, you could face late enrollment PENALTIES (with certain exceptions).
Part B of Medicare covers doctor visits, lab tests, medical equipment and ambulance transportation. It typically requires a monthly premium, a yearly deductible and copayments.
You might decide to join a Medicare Advantage Plan, which is a Medicare-approved private health plan that includes Part A and B, as well as other benefits such as vision, dental and hearing. These plans are subsidized by the federal government and contracted through insurance companies and managed care organizations.
Part B
The second part of Medicare covers doctor visits, laboratory tests, diagnostic screenings and medical equipment. It also pays for ambulance transportation and some outpatient services. Part B comes with a monthly premium and deductibles, copays and coinsurances. If you do not sign up for Part B when first eligible and you later decide to enroll, you could be charged a penalty in the form of an increased premium for as long as you are enrolled in Medicare.
There is a general enrollment period each year in the first three months of the year. Enrollment during this time will prevent late enrollment penalties and will ensure your coverage begins on July 1 of the year in which you were born.
Medicare Advantage is a private health insurance option that allows you to receive your Medicare benefits through a private insurer rather than the federal government. These plans are required to offer, at a minimum, the same benefits as Original Medicare (Parts A and B). However, the rules, costs and coverage restrictions differ by plan.
A SHINE counselor can assist you in understanding the options available to you in this area and help you find the best plan for your unique situation. SHINE counselors are highly trained and dedicated volunteers who have been screened and certified annually. They are available to meet with you in person and answer your questions. They can also screen you for programs that can reduce your Medicare costs. To request a consultation, contact the Massachusetts Division of Insurance or call the SHINE Helpline at 1-800-648-7854. You can also visit SHINE’s website for more information. The Massachusetts Division of Insurance and the Centers for Medicare and Medicaid Services have additional information available on their websites as well.
Part C
Medicare Part C is a bundled alternative to Original Medicare that offers a variety of ways to finance your health care services. Managed care plans such as HMOs and PPOs are the most common, although there are also medical savings accounts and private fee-for-service plans. Beneficiaries should consider carefully whether any of these plans will work for them and enroll in them only after careful study and thought.
Most Medicare Advantage plans include Parts A and B and usually offer extra benefits such as vision, hearing and dental care. Some plans even provide prescription drug coverage (Part D). Medicare Advantage plans are offered by private insurance companies approved by the federal government. They are paid a per-capita rate to cover the costs of beneficiaries. These rates are adjusted each year to reflect changes in costs.
To qualify for a Medicare Advantage plan, you must be enrolled in both Parts A and B of Original Medicare. You may also choose to combine Parts A and B with a Medicare Advantage plan. If you do, you must still continue to pay your Medicare Part B premium.
If you decide to join a Medicare Advantage plan, it is important that you understand the rules regarding disenrollment. You must give three months notice to your current plan if you want to return to Original Medicare. You must also cancel your Medicare Advantage plan if you move out of the area where you live.
Many people with Medicare supplement Part D to help pay for out-of-pocket costs like deductibles and coinsurances. These policies are offered by private insurance companies and are standardized nationwide with 10 options: A, B, F, G, K, L, M, N, and W.
Part D
Medicare Part D is prescription drug coverage. People with Traditional Medicare (TM) pay a premium for Part D and may have out-of-pocket costs like deductibles, copays or coinsurance. Some people don’t need to enroll in a Part D plan if they have creditable drug coverage from an employer or union or qualify for Extra Help paying for their prescriptions. Those who do need to enroll can choose from private Medicare prescription drug plans or Medicare Advantage plans with Part D.
Stand-alone Medicare Part D plans vary in cost, depending on the drugs you take and whether they are generic or brand name. The annual deductible can also differ. Medicare sets a maximum deductible amount each year. A plan’s costs also depend on how much the drug maker charges for each drug, how often you buy it and if you get it from an in-network or out-of-network pharmacy. Part D plans also negotiate prices with drug makers and pharmacies and set their own copays and coinsurance rates.
Most people don’t pay a premium for Part A, since they paid into the system through tax deductions from their paychecks for decades. However, if you’re still working and don’t have a spouse or other dependents with Medicare through their work records, you may have to pay a Part B premium.
If you’re new to Medicare, you’ll have the opportunity to sign up for a Part D plan during your initial enrollment period three months before your 65th birthday month and continue coverage on the first day of your 65th birthday month. It’s best to sign up during this window so that you don’t incur any penalties in the future.
Medigap
In addition to Medicare Advantage plans, there are a number of private insurance companies that offer Medigap policies. Federal law requires that these insurers provide guaranteed issue protections for Medigap policyholders, meaning that they cannot deny you a plan or increase your premium based on any health condition you have. Most states also require that premiums be community rated, which means that you will pay the same amount as a neighbor your age in the same area regardless of your health status. However, in some cases, the insurer can still adjust your premium based on other factors, including smoking status, gender and residential area (Table 1).
There are ten standard Medigap plans labeled A through N, with each offering different coverage to fill various “gaps” in Medicare cost-sharing. These plans are standardized, meaning that all insurance companies must offer the same benefits within a given letter plan, although the premiums can vary from company to company. You might also find yourself interested in the mutual of omaha plan g.
It is important to study the various plans available and consider how each will fit into your specific health care needs. For example, do you have a chronic health condition that may require ongoing attention and treatment? If so, a plan that covers the Part B deductible could be beneficial. Likewise, do you anticipate needing skilled nursing facility or hospice care? Those needs will be better served by a Medigap policy that includes these services in its coverage.
It is also important to understand that you can only enroll in a Medigap policy during an open enrollment period, and only if you have had continuous creditable coverage (a Medicare Advantage plan, for instance) in the six months preceding your application for a Medigap policy. In addition, Medigap insurance providers can only withhold coverage for pre-existing conditions during the first six months of a new policy.
