What is Medicare?
Medicare is a federal health insurance program for people 65 years of age or older, certain younger people with disabilities, and people with End-Stage Renal Disease (ESRD)
Medicare covers services & supplies considered medically necessary to treat a disease or condition. Some of these items include lab tests, surgeries, doctor visits, wheelchairs & walkers
What does Medicare cover?
What are my coverage choices?
Original Medicare (Part A & Part B), Medicare Advantage Plan (Part C), Prescription Drug Plan (Part D), Medicare Supplement Insurance (Medigap)
Medicare Part A generally covers hospital care, skilled nursing facility care, nursing home care, hospice & home health services
What does Part A cover?
What does Part B cover?
Medicare Part B generally covers “medically necessary services” & preventive services
Medically necessary services – services or supplies that are needed to diagnose or treat your medical condition & meet accepted standards of medical practice
Preventive services – Health care to prevent illness (ex: flu) or detect it at an early stage when treatment is most likely to work best
What can I expect to pay for Part A and Part B (Original Medicare)?
Usually you will not pay a monthly premium for Part A coverage (Hospital Insurance) if you or your spouse paid Medicare taxes while working.
Most people will pay the standard Part B premium amount of $135.50 in 2019
If your modified adjusted gross income (MAGI) is above a certain amount, you may be required to pay an Income Related Monthly Adjustment Amount (IRMAA)
Medicare uses the MAGI from 2 years ago in the current year’s calculation
Many people already receiving Social Security the last couple of years have paid less than the Medicare standard premium. This is because of the Hold-Harmless provision when the Part B premium increases more than their cost-of-living increase for Social Security benefits.
It is notable that this Hold-Harmless provision may not apply to most people in 2019 since the 2.8% cost-of-living increase for Social Security benefits is large enough to cover the Medicare premium difference up to the standard premium.
You will pay the standard premium amount (or higher) if you meet 1 of 5 requirements this year
Enrolling in Part B for the first time
You don’t get Social Security Benefits
You are billed directly for Part B premiums
You have Medicare & Medicaid, and Medicaid pays your premiums
Your MAGI from 2 years ago is above a certain amount
Part B Deductible & Coinsurance
The annual deductible for Part B is $185. After this is met, you will typically pay 20% of the Medicare-approved amount for the following:
Most doctor visits
Most doctor services while you are a hospital inpatient
Durable medical equipment
What does Part C (Medicare Advantage Plan) cover?
Part C is offered by private companies that contract with Medicare to provide you with all of your Part A & Part B benefits. Medicare Advantage Plans must cover all services that Original Medicare (Part A & Part B) covers, except hospice care, and is provided by private insurance companies.
In most plans, you will need to use doctors, hospitals & other providers allowable under your specific plan or you will pay more or pay all of the costs
The plan has the ability to choose not to cover the costs of services that are not medically necessary under Medicare
Check with your provider before you get the service if you are unsure whether a service is covered
A helpful resource to compare plan options in your area is the Medicare Plan Finder.
What does Part D (Prescription Drug Plan) cover?
Part D adds prescription drug coverage & is offered by insurance companies and other private companies approved by Medicare. Each Medicare Prescription Drug Plan has a unique list of covered medications. These medications are organized into different “tiers” based on the specific plan with each tier having a different cost.
What does Medicare Supplement Insurance (Medigap) cover?
A Medigap policy is sold by a private company & can help pay some health care costs not covered by Original Medicare (ex: coinsurance, deductibles, medical care when you travel outside the U.S.)
You must have Medicare Part A and Part B in order to purchase a Medigap policy
If you are already receiving Social Security benefits at or before age 65, you will be automatically enrolled. You should receive your Medicare card in the mail 3 months before your 65th birthday.
If you are not already receiving Social Security benefits, you can sign up in the 3 months preceding your 65th birthday either online (www.ssa.gov/medicare) or by visiting a Social Security office.
In either case, you can choose how to receive your Medicare coverage, whether you use Original Medicare (Part A and Part B) or a Medicare Advantage Plan (Part C), and/or Medicare prescription drug coverage (Part D).
If you don’t enroll during your Initial Enrollment Period, you may have to pay a late enrollment penalty in certain circumstances on Medicare Part A, Part B, or Part D. For example, if you do not enroll in Part B, your monthly premium may go up 10% for each full 12-month period that you could have had Part B.
However, you may NOT have to pay the late enrollment penalty if you meet certain conditions allowing you to sign up during a Special Enrollment Period.
Do you have to enroll?
How does Medicare work with other insurance?
When you have other health insurance/coverage, each is considered a “payer”. When there is more than one payer, “coordination of benefits” rules apply to decide which one pays first.
Primary payer pays up to the limits of its coverage
Secondary payer then pays if there are uncovered costs remaining that the primary insurer did not cover
The secondary payer may not pay all of these uncovered costs
If your employer insurance is secondary, you may need to enroll in Medicare Part B before that insurance will pay anything
Part A will be free for most people eligible for Medicare
Contact your employer to find out if your current coverage will change as a result of Medicare enrollment
If your employer has more than 20 employees, your employer’s group health plan will be the primary insurer, and you are not required to sign up for Part B right away
After you retire, you will have a special 8-month enrollment period to sign up for Part B
If your employer has fewer than 20 employees, it may make sense to enroll when first eligible because Medicare is the primary insurer
Contact your employer because your employer plan may refuse to cover you for services that Medicare would cover
What if I plan to continue working past my 65th birthday?
Are there any unique/special Circumstances?
Special rules apply to those with Railroad Retirement Board (RRB) benefits and/or disability benefits, in addition to other things. Contact your financial planner if you think you might have a special circumstance.
Check out these additional sources of information from The Center
Source: www.medicare.gov and www.ssa.gov/medicare
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