Medicare is a complicated maze. It is not easy piecing it all together between the different parts of Medicare, enrollment windows, premiums, and penalties. Your current health insurance also plays a role in Medicare, so it is essential to give yourself time to learn about Medicare and prepare for that transition. To help you grasp your Medicare coverage, you can learn more at boomerbenefits.com/understanding-medicare/.
First, it is essential to know if and when you are eligible for Medicare. To qualify for Medicare, you must be a United States citizen or permanent resident and have lived in the U.S. for five consecutive years.
Now, depending on when you can enroll in Medicare has to do with your age. Medicare age starts at 65 years old, although you can delay Medicare past 65 if you have large employer insurance. However, you can qualify for Medicare before 65 if you have been receiving Social Security Disability Income (SSDI) for 24 months, have End-Stage Renal Disease, need a kidney transplant, or have Amyotrophic Lateral Sclerosis (ALS).
Medicare Parts vs. Plans
Medicare has different parts and plans. You will need to know that the federal government provides the two parts that make up Original Medicare, Part A & B, to every beneficiary. Private insurance companies offer the other parts and plans.
Your inpatient hospital coverage falls under Part A. It has a separate premium, deductible, and cost-sharing from Medicare Part B.
Outpatient medical coverage such as doctor visits, surgeries, physical therapy, lab work, and others fall under Part B. Medicare Part B has a premium that all beneficiaries pay and an annual deductible and coinsurance.
You must enroll in Part A and Part B when you are first eligible for Medicare unless you have creditable coverage. Creditable coverage is large employer insurance that is based on active employment. This means you or your spouse must be actively working for an employer with 20 or more employees and be covered by their insurance to delay Part B with no penalty.
Since Original Medicare Parts A and B do not cover prescription drugs, you would get your drug coverage from Medicare Part D drug plans. The plans available to you are based on your zip code so you may have a different plan than someone else.
If you don’t have creditable drug coverage past 65, you will want to enroll in a Part D plan when you are first eligible because there is a late enrollment penalty associated with Part D.
Since Original Medicare Part A and Part B do not cover 100% of your hospital and medical costs, you might consider enrolling in a Medigap plan. These plans are also called Medicare Supplement plans. A Supplement plan would be secondary to Original Medicare and help cover the remaining costs. You would purchase this type of plan from an insurance company, and the premiums are based on zip code, age, gender, and tobacco use.
When you begin your Medicare research, you will want to know your Medigap Open Enrollment window. Most people only have a one-time chance to enroll in a Medigap plan with no health questions asked, and that is during your Medigap Open Enrollment window. Once you are outside that window, you would likely need to answer health questions to apply for a Medigap policy.
Medicare Advantage is also known as Part C. These plans are an alternative way to receive your Medicare benefits. You must stay enrolled in Part A and Part B when you enroll in an Advantage plan. Advantage plans get paid by Medicare to manage your hospital and medical care. They can also include a built-in Part D plan and additional benefits.
Along with the different parts and plans that you should know before you enroll in Medicare, you’ll also need to be aware of the costs. Most people will qualify for premium-free Part A because they have worked at least ten years in the U.S. If you don’t qualify for premium-free Part A, you could pay $274 or $499, depending on the number of work credits you have.
Every beneficiary must pay the Part B premium. In 2022, the standard base premium is $170.10. However, you could pay more for Part B if you had a higher income two years before you applied for Part B.
As you may have noticed, there is quite a bit to know about Medicare. To avoid a penalty, you will want to know each part you need to enroll in, which parts are optional, and the cost and enrollment periods for each part and plan. It takes time to have a complete understanding of Medicare and its coverage. Speaking with a reputable Medicare broker can help guide you through this maze.