Medicare is a complex and often confusing subject. If you are turning 65 or older you have , no doubt, seen many TV ads, read lots of brochures and flyers mailed to you, and even attended some informational meetings about Medicare and all the additional programs in which you can enroll.
Many seniors tell us that all this information can make the subject even more confusing, and that making choices is almost an uninformed gamble.
Below, we will detail the all parts of Medicare; who is eligible, what it covers and what it costs as well as detail all the supplements and programs that help with your out-of-pocket costs.
Our goal here is to lay out all the facts you need, simply and clearly, so that you can make good, informed decisions about your care, and any extra insurance you may need.
In the United States, Medicare is a national social insurance program, administered by the U.S. federal government since 1966, that guarantees access to health insurance for Americans aged 65 and older who have worked and paid into the system, and younger people with disabilities as well as people with end stage renal disease. it was designed to cover most but not all of your mefdically necessary costs
It is referred to as Original Medicare (Medicare Parts A and B)
There are other parts of Medicare (Parts C and D) that were developed in the Mid 80’s and mid 90′,s respectively, which we will also review.
Medicare is a federal health insurance program for U.S. citizens and legal residents. In addition, you must be:
- Age 65 or older.
- Younger than 65 with a qualifying disability.
- Any age and have End Stage Renal Disease. (This is permanent kidney failure requiring dialysis or a kidney transplant. It’s also called ESRD.)
You can join Medicare during designated enrollment periods. Each has a specific purpose.
- Initial Enrollment Period (IEP) This is when you are first eligible to enroll in Medicare. The timing of your personal IEP is based on the date of your 65th birthday. You can sign up during the 7- month period that begins 3 months before the month you turn 65 and ends 3 months after the month you turn 65. If you become eligible due to disability, then the timing is based on your disability date.
- Annual Enrollment Period (AEP) You can sign up for Part C (Medicare Advantage Plans) and Part D (Medicare prescription drug plans) between October 15th and December 7th. You can also switch or drop a Part D plan at this time if you wish. The change will take effect on January 1st.
- General Enrollment Period (GEP) This is a set period of time for people who did not enroll during their IEP. You can sign up between January 1st and March 31st each year. Coverage will begin July 1st. You may have to pay a higher premium for late enrollment.
- Special Enrollment Period (SEP) If you didn’t sign up for Part A and/or Part B when you were first eligible because you were covered under a group health plan based on current employment (or a spouse’s) you can sign up for Part A and/or Part B anytime you’re still covered by the group health plan or during the 8-month period that begins the month after employment ends or the coverage ends, whichever happens first.
What does Medicare Part A cover?
In general Part A Covers:
- A Semi Private Room and meals
- Lab Tests, X-Rays, and Radiation Treatment as an Inpatient
- Operating Room and Recovery Room Services
- Drugs, Medical Supplies and Equipment as an Inpatient
- Care in Special Units Like Intensive Care
- Skilled Nursing Facility Care
- Rehabilitation Services
- Nursing Home Care (as long as custodial care isn’t the only care you need)
- Home Health Services
- Hospice Care
What does Medicare part B cover?
In General, Part B covers
- Doctors visits
- Outpatient Medical Services
- Clinical Laboratory Services
- Ambulance services
- Durable medical equipment
- Some Preventive Care
- Mental Care as an Outpatient
- Limited Skilled Nursing Care
- Getting a second opinion before surgery
- Limited outpatient prescription drugs
- Limited Home Care
- Limited physical and occupational therapy
What does Medicare part A cost?
Most people don’t have to pay a monthly payment, called a premium, for Part A. This is because they or a spouse paid Medicare taxes while working. Most people turning 65 are automatically enrolled in Part A if they have worked a total of 40 quarters in total.
If a beneficiary (a person eligible for Medicare) doesn’t get premium-free Part A, they may be able to buy it if they or their spouse aren’t entitled to Social Security, because they didn’t work or didn’t pay enough Medicare taxes while working, are age 65 or older, or are disabled but no longer get free Part A because they returned to work.
What does Medicare Part B cost?
Most people will pay the standard Part B premium which is $104.90 per month (2014).
However, if your modified adjusted gross income as reported on your IRS tax return is above a certain amount ($85,000 filing individually or $170,000 filing jointly) you may pay more than the standard premium.
Also, the standard premium may be higher if you didn’t sign up for Part B when you first became eligible. The cost of Part B will go up 10% for each full 12-month period that you could have had Part B but didn’t sign up for it. You will have to pay this penalty as long as you have Part B.
What’s not covered by Parts A and B ?
Medicare doesn’t cover everything. If you need certain services that Medicare doesn’t cover, you’ll have to pay for them yourself unless you have other insurance or a Medicare Health Plan. Learn more about on our Medicare Solutions page.
Some of the items and services that Original Medicare doesn’t cover include:
- Prescription Drugs
- Long-term care (also called custodial care)
- Routine dental or eye care
- Cosmetic surgery
- Hearing aids and exams for fitting them
- Routine foot care
- Care Received Outside the United States Except in Very Limited Situations
Medicare Deductibles, Copayments and Coinsurance
Even if Medicare covers a service or item, you will still be responsible for deductibles, coinsurance, and copayments.
You will pay a deductible of $1216 for each benefit period for Part A benefits (usually a hospital stay) as well as significant copays for a skilled nursing facility stay of more than 21 days.
Medicare will generally pay for about 80% of Part B approved benefits. You will be responsible for paying the remaining 20%.
Most people who are enrolled in Medicare decide to get extra coverage to pay for their out-of-pocket health care expenses.
In most parts of the United States, there are two options that are available to you as a Medicare beneficiary (eligible for, or currently enrolled in, Medicare) to reduce or eliminate the out-of-pocket expenses not covered by Medicare Part A & B.
The options are shown below, and the option details follow. Contact us with questions or for more information.
You will need more details than this chart provides to compare and choose a policy. For more details or help with enrolling, contact us or call 415-999-5071
Medicare Supplement and Prescription Drug Plan (Option 1)
If you were to choose option 1, you would purchase a Medicare Supplement or “Medigap” Policy from a private insurance company to cover the gaps in your Medicare Parts A and Part B coverage. In most states there are 10 standardized plans available. The richest of the plans Plan F covers 100% of your out-of-pocket expenses resulting for any Medicare approved benefits. You would most likely enroll in a Medicare Part D plan as well, also through a private insurance company.
Prescription Drug Plans (Medicare Part D)
Since January 1, 2006, Prescription Drug Plans (Medicare Part D) have been available to everyone with Medicare. .
Prescription Drug Plans:
- Can substantially reduce you drug costs
- Can vary in cost and drugs covered
- Require you must use the pharmacy network of the plan
- Require you to live in the service area of the plan
- Administered by private companies
What Does Option 1 Cost?
The additional monthly cost of a Medicare Supplement (“Medigap” Policy) will vary depending on your age, the company, and the plan benefits you choose. It ranges from a low of about $140 to a high of about $300. Additionally, the monthly premium cost for Medicare Part D (Prescription Drug Plan) varies from a low of $15.00 to a high of over $90.00. So the approximate monthly premium cost for option 1 generally runs from about $155 to a high of about $390.00 in addition to your Medicare Part B monthly premium (104.90 in 2013) and any co-pays or coinsurance not covered by the plan you choose.
Medicare Advantage Plans (Option 2)
In Option 2, you would enroll in Medicare Part C, also known as a Medicare Advantage plan, or simply a Medicare Plan. It will help pay for your out-of -pocket costs associated with your Medicare approved benefits, and most plane include a Prescription Drug Plan.
It is important to know that:
- You will actually” leave” Original Medicare (Medicare Parts A and B) and enroll in Medicare Part C
- You Your Medicare Parts A , B and D benefits are combined into Medicare Part C.
- Advantage plans are a government program administered by private Companies
- You must use doctors and other health care providers in the company’s network
- You must live in the service area of the plan
- Specific enrollment periods apply
- Many plans offer extra benefits not covered by Original Medicare
What does Option 2 Cost?
The monthly premium for most Medicare Part C Plans ranges from a low of $0 to about $179.00 depending on your plan area, and the company you choose. In most plans, the monthly cost for Medicare Part D is usually included in this cost. This is in addition to your Medicare Part B premium (104.90 in 2013), and any co-pays or coinsurance in the plan you choose.
Should you choose Option 1 or Option 2?
This is a very individual decision, but there are certain questions you should ask yourself, where the answer will make your decision clearer and easier:
- It is important to me to have the freedom to choose any doctor that accepts Medicare?
- Am I healthy and don’t mind seeing a doctor in a network?
- Am I healthy and on a tight budget?
- Can I afford the premiums and don’t want to be bothered with deductibles, co pays, etc.?
For help with these questions and to get even more ideas for good decision points contact us or call directly at 415-999-5071
What You Should Do Now
If you are turning 65, you should start your research and develop your action plan three months before your 65th birthday, and you should decide what you want to do about a month before your 65th birthday.
If you are older than 65, want to make changes to your to your current coverage, it is a good idea to start your research and have an action plan now. You most likely may be restricted by certain enrollment periods or medical history concerns.
Whether you decide on Option 1 or Option 2, you will be dealing with an insurance company. Not all companies operate the same way. Some companies have a history of keeping premium increases to a minimum. Also, premiums vary, sometimes greatly, and sometimes, the lowest premium is not always the best choice. There are other variables among companies that you need to be aware of. You will need time to research and compare.
Having your plan in place is the best way to avoid any unintended coverage gaps or needless overlaps in coverage. This is especially true if you plan to be employed after age 65. The transition from your employer sponsored medical plan to Medicare at age 65 is not as straightforward as you might think. Your HR department, the broker that handles your company plan, and even the insurance carrier themselves sometimes do not have the right answers for you, simply because it is not an area they have to deal with routinely.
For complete information and help with planning for all these options, or to get detailed information on specific companies and plans as well as certain premium histories, contact us or call us directly at 415-999-5071.