Making Sense of Medicare – An Overview
America’s senior citizens can qualify for Medicare when they turn 65 years old, or you can be eligible earlier if you receive Social Security disability benefits. When you near age 65, you likely will become bombarded by sales agents either through phone calls, mail, or emails trying to sell you a Medicare plan. The solicitation can begin to become confusing and overwhelming, as there are different Medicare parts, plans, costs, and enrollment periods. If you are trying to make sense of Medicare, here is an overview.
Initial Enrollment Period
When you receive Social Security benefits four months before your 65th birthday, you will be automatically enrolled in Medicare Parts A and B. However, if you are not taking Social Security benefits, you must enroll yourself in Medicare through the Social Security office.
You cannot just enroll in Medicare whenever you please. There is a particular time to enroll in Medicare, called the Initial Enrollment Period (IEP). The IEP begins three months before your 65th birthday month and ends three months after your birthday month (totaling seven months).
An example of this would be if you were to turn 65 on September 14, your IEP would begin on June 1 and end on December 31. When you apply for Medicare within the first three months of your IEP, your Medicare coverage will start on the first of your 65th birthday month.
If you fail to enroll in Medicare Part A and Part B during your IEP and aren’t covered by large employer coverage, you will be charged a life-long late enrollment penalty when you enroll in Medicare.
Medicare Part A and Part B
Medicare comes in two parts: Part A and Part B. These two parts are entirely different from one another, and Part A will never cover a service that falls under Part B and vice versa. Medicare covers any service deemed medically necessary by a physician.
Medicare Part A covers inpatient services, such as a semi-private hospital room, three meals a day, and any Medicare-approved lab services and medications you are administered as an inpatient. Part A covers more than just your inpatient services; it also covers skilled nursing, short-term home health care, hospice, and medical social services.
Part B covers outpatient services you receive at an outpatient facility. For example, Medicare Part B provides coverage for doctor’s visits, durable medical equipment, ambulance rides, select vaccinations, chemotherapy, and much more. If you were to visit an emergency room, your visit would fall under Part B and not Part A since an E.R. is considered an outpatient facility.
Medicare does not cover routine vision, hearing, dental services, or prescription medications.
Prescription drug coverage
As mentioned above, Medicare does not cover prescription medications. If you do not have drug coverage, you will pay 100% of your medication’s cost. Luckily, Part D plans became available in the year 2006 for senior citizens. A Part D plan is solely coverage for prescription drugs.
You will not enroll in a Part D plan through Social Security because private insurance companies sell these types of plans. You can work with a carrier or Medicare broker directly when enrolling in a Part D plan, or you can search for the available plans in your zip code by using Medicare’s plan finder tool.
The time to enroll in a Part D plan is also during your Initial Enrollment Period. Now, although Part D plans are not sold through the federal government, you can still be charged a late enrollment penalty if you fail to enroll in a Part D plan during the IEP. But, if you have creditable coverage for Part D, such as the V.A. or employer insurance, then you can delay Part D.
Medicare does not cover 100% of all your healthcare costs. Many seniors have out-of-pocket costs when Medicare is their only coverage, which is why many beneficiaries purchase a Medigap plan, also known as a Medicare Supplement. Medigap plans work with Original Medicare. If Medicare pays for a service, so will a Medigap plan. You can also travel anywhere in the U.S. and use your Medigap plan if the doctor takes Medicare.
Medigap plans typically cover the costs Medicare would pass on to you, such as deductibles, copayments, and coinsurance. How it works is that when you receive a Medicare-approved service, Medicare would pay its share first, and your Medigap plan will likely pick up the rest (depending on which type of plan you have).
There are ten standardized Medigap plans, and each are identified by a letter, such as Medigap Plan G and Plan N. Each plan offers a different set of benefits. However, each plan letter will have the same benefits regardless of which carrier you purchase the plan from. For example, Medigap Plan G has the same benefits whether you buy the plan from carrier A or carrier B. The only difference between the two carriers will likely be the plan’s premium.
Medicare Advantage plan
Medicare Advantage plans, also known as Part C, are an alternative to Medicare. If you purchase an Advantage plan from a private insurance carrier, you opt to receive Part A, Part B, and Part D benefits through that carrier and not the government.
The carrier sets the plan’s cost-sharing amount and the network of doctors and pharmacies you can receive your care from. If you purchase an HMO Medicare Advantage plan, you can only receive your healthcare services inside the network. If you were to go out-of-network to visit a doctor, you would pay for your services in full out-of-pocket (unless it’s an emergency).
Medicare Advantage PPO plans are more lenient, as you can go in and out of network for your care. However, you will pay more for out-of-network services compared to in-network services. Now, unlike Medicare and Medigap plans, many Medicare Advantage plans offer additional benefits. For example, many Medicare Advantage plans offer hearing, vision, and dental benefits, and some carriers even offer a free gym membership.
Making sense of Medicare can become overwhelming, and sometime an overview isn’t even enough. Many Medicare beneficiaries who seek out Medicare help contact a reputable Medicare broker. Medicare brokers often represent multiple companies and are proficient in Medicare knowledge.