Turning 65 is a milestone in anyone’s life. Studies indicate that you have a statistically good chance of living another 18-21 years. Of course, your mileage may vary. Still, it is nice to know your odds look pretty good for having a long time to enjoy living.
65 is also when most of us grab the brass ring of health care: Medicare. The sense of relief in receiving that red, white, and blue card is immense. Not only are you less likely to be put in the poor house by a disease or illness, the lack of all the paperwork, forms, and pre-approvals feels like a two-ton weight has been lifted from your shoulder.
If so, then why do I continue to receive so many questions about Medicare? Why are people so confused? Well, to put it simply, the government has made things rather more complicated than need be. The program may be a godsend to many of us, but you have to make some important decisions before you begin. Then, every fall, you are asked if you want to change your mind about anything. Plus, the reality is, there are serious gaps in what Medicare will and will not cover, requiring you to make more decisions that often involve balancing risk against cost. “
Disclaimer: Just about seven years ago, I made my decisions. Today, I remain comfortable with what I picked: traditional Medicare with a supplemental policy and drug coverage. Of course, that doesn’t mean you should follow my lead unless that is what is best for you and your spouse (if married)
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.
Starting at the beginning, 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 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. All plans must provide A and B coverage, just like Medicare. Services not covered by traditional Medicare are often included. Roughly 40% of all Medicare-eligible Americans now use an Advantage plan. Some plans have a zero monthly cost but look closely at what you may be doing without.
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 or waiting until your full retirement age of 67 (or 70 for extra income), 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 months 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 a late signup.
With me so far?
Other Factors to Consider
Medicare does not pay 100% of most services. Several free screening tests for those on Medicare, like colonoscopies and mammograms, are covered under the ACA or Obamacare if you prefer. 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 most or all of 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 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 2021 most pay $148.50 per month. There is also a $203 yearly deductible. Part D prescription coverage costs vary depending on the plan you select and the level of drug coverage.
What is Covered?
There is no simple answer to that question. Medicare publishes a 130-page booklet that still suggests calling them for specifics. But, in general, here is what you can expect:
Part A pays part or all 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 monthly costs vary widely.
Part D covers some of your prescription drug costs. If you don’t need many 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. Some drugs require prior authorization.
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 (past a limited period each year)
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.
OK, now the fun part. What have I missed or overlooked that you want to pass along? Why did you choose an Advantage plan instead of traditional Medicare? Are you happy, or do you ever consider switching back? How has Medicare treated you so far?
Personally, Betty and I have paid for our own health insurance for over 40 years. We made a very deliberate decision to avoid private insurance companies as much as possible. Hence our choice of traditional Medicare, along with supplemental and drug coverage.