This post originally ran in September, 2012. Last week a regular blog reader mentioned how helpful it was to him when he was researching his options. I noticed it is still getting some views even after 5 years, so I thought it would be good to bring it back for new readers and those who are now close to 65 and looking for a simple review. I have freshened it up a bit from the original.
Here you go!
One query that pops up rather often a concern about Medicare. The worry is not about the fate of the program or asking for help in determining what the politicians are likely to do (good question!). No, it is much more basic: "Please explain Medicare to me" or "What decisions do I need to make?"
Disclaimer: I am still about 19 months away from qualifying for Medicare coverage, so I can't speak from experience. However, I'll do my best to summarize what you need to know. I will be covering Medicare, not Medicaid which is an entirely different program. As with most federal programs and health insurance coverage there are enough exemptions and differences to fill 20 posts. I will only attempt to explain the usual, most common situations.
Medicare is a federal program that pays for certain health-related expenses for people 65 and older. While many costs are covered, an individual enrolled in Medicare is responsible for certain deducible and copays. Some services are not covered at all and others for only a limited period of time.
There are four parts of Medicare:
Part A is hospital insurance. Copays, deductibles, or coinsurance will determine what you pay. Usually there is no premium for Part A.
Part B is medical insurance that helps pay for doctor visits, outpatient care, health health care, and equipment. There is a monthly premium for Part B.
Part C is better known as Medicare Advantage. This is coverage provided by Medicare approved private insurance companies.
Part D is prescription drug coverage. This is also run by Medicare-approved private insurance companies.
Most folks get Part A and Part B automatically. If you receive benefits from Social Security you will automatically get Part A & B coverage starting the first day of the month you turn 65. If you aren't yet receiving Social Security (because you are still working for waiting until your full retirement age of 66 or later) you must sign up 3 months before your 65th birthday to get Medicare coverage.
If you must sign up (as noted above) there is something called the Initial Enrollment Period which is the period from 3 moths before until 3 months after your 65th birthday. If you miss this window your benefits will be delayed.
If you decide to wait until after the Initial Enrollment Period, there is a general Enrollment Period during the first three months of each year. However, if you use this option, realize your part B premiums will be higher.
If you are covered by a group health plan at your place of employment and then want to start Medicare, there is another time period, called the Special Enrollment Period that generally allows you to avoid the higher premiums for late sign up.
With me so far?
Other Factors to Consider
Medicare does not pay 100% of most services. So-called Obamacare has put in place several free screening tests for those on Medicare, like colonoscopies and mammograms. But, most doctor visits, tests, drugs, and equipment are going to cost you money...usually something approaching 20%. That's where Medigap coverage enters the picture. This is a policy, sold by a private insurance company, that acts as secondary coverage to Medicare and pays what is left over after Medicare pays what it will.
Just like the rest of Medicare there is a specific enrollment period for Medigap coverage. You can buy any policy that is offered for sale in your state, regardless of your health status. The amount of supplemental coverage, the monthly cost, and any deductibles are different for each policy offered. You decide how much supplemental help you want and can afford.
Speaking of costs, Part A Medicare coverage costs you nothing since you already paid into the Medicare fund while you were working. Part B coverage does carry a monthly cost. For 2012 most pay $99.90 per month (for 2017 it is $104.90). There is also a small deductible. Part D prescription coverage costs vary depending on the plan you select and the level of drug coverage.
The infamous donut hole is a gap in coverage where you are mostly responsible for drugs after you have spent a certain amount each year. The "hole" closes after you have passed the yearly maximum. Depending what happens with Obamacare or its successor, the donut hole is currently scheduled to come to an end in 2020.
What is Covered?
There is no simple answer to that question. Medicare publishes a 150 page booklet that still suggests calling for specifics. But, in general, here is what you can expect:
Part A pays part or all of inpatient hospital care, inpatient care at a skilled nursing facility, hospice care services, and home health care services. As you might guess there are all sorts of qualifications and exclusions for this list but this is the primary purpose of Part A coverage.
Part B helps cover medically necessary services like doctor visits, outpatient care, durable medical equipment, and several preventive services and screenings.
Part C is the designation of Medicare-approved private insurance companies that has various coverage options and costs. You still have Part A and Part B coverage, but the specifics are likely to be different from original Medicare. Generally, coverage is more complete but the costs are higher.
Part D covers some of your presecition drug costs. If you don't need a lot of drugs now, it still may be wise to take this coverage because of late enrollment penalties. Part D is provided by private insurance companies and varies widely in costs and coverage. There are usually copays and deductibles involved. The "Donut Hole" limits coverage on what these plans will pay for your drugs.
Importantly, these items are not covered by Medicare (not a complete list):
- Routine Dental care
- Cosmetic surgery
- Hearing Aids
- Exams for fitting hearing aids
- Long term care
If you'd like more detailed information or see if specific services are covered, this government website should be your first stop.
The official government handbook Medicare and You is also a must-have resource.