When enrolling in Medicare, you should know several important factors when it comes to the basics, the enrollment process, and the costs you could face. That’s why Hitcho Insurance has broken down the top ten things you should know about Medicare, so you can be more informed when making your decisions.
Medicare Basics
- Who is Eligible
Medicare is open to Americans with disabilities and seniors over age 65 who are eligible for Social Security or Railroad Retirement. If you are 65 and have received Social Security benefits, you will automatically be sent your Medicare card in the mail before your 65th birthday.
If you have received Social Security Disability Insurance for at least 24 months, you qualify for Medicare. If you have End-Stage Renal Disease (ESRD), you can start receiving Medicare benefits within three months of beginning a course of dialysis. If you have Amyotrophic Lateral Sclerosis (ALS), you are immediately eligible for Medicare.
- What Medicare Covers
Original Medicare encompasses Medicare Part A and Part B.
Medicare Part A is hospital insurance, which covers inpatient care in a hospital or skilled nursing facility, hospice care, and home health care.
Medicare Part B is medical insurance, which covers physician services, outpatient care, a “Welcome to Medicare” visit, Wellness visits, and Advanced Care Planning. Coverage also includes laboratory tests, x-rays, bloodwork, medical supplies, durable medical equipment (DME), and ambulance services.
- Home Health Care
Medicare covers 28-35 hours per week of skilled nursing or home health care for beneficiaries that are homebound. They do not have to be bed bound to receive this coverage.
- What Medicare Doesn’t Cover
Original Medicare, Part A and Part B, do not cover annual physicals, vision care, prescription drugs, routine dental care, hearing aids, foot care, custodial care, or long term care. Medicare also has virtually no coverage outside of the United States.
Enrollment Periods
- When to Enroll/How to Switch (Guaranteed Issue Rights)
A senior’s Initial Enrollment Period begins three months before the month of their 65th birthday and extends three months after. During this time, you should sign up for Part A and Part B, unless you qualify for a Special Enrollment Period.
Special Enrollment Periods are available to working seniors who still have health coverage from their employer or their spouse’s employer. Companies must employ at least 20 people to qualify as group health coverage. You can ask your benefits manager if you have creditable coverage. For those who qualify, their Special Enrollment Period begins when the employment ends or the health coverage ends and lasts for eight months.
- Annual Notice of Change (switch during open enrollment October 15 to December 7)
Medicare Advantage and Prescription Drug Plans change every year. Companies send out an Annual Notice of Change to make you aware of changes to their coverage or costs. Thus, it is important to review your policy every year around this time to make sure your prescription drugs will still be covered and that you have a cost-effective plan.
- Late-enrollment Penalties
If you choose not to sign up for Part B or Part D during your Initial Enrollment Period, you may have to pay a late-enrollment fee. Part B has a late-enrollment fee of 10% added to your monthly premium for every twelve months you went without Part B. This lasts for as long as you hold Part B coverage, so it is important to have timely enrollment. Suppose you had health coverage through your employer or otherwise qualified for a Special Enrollment Period. In that case, you do not have to pay this penalty.
Part D has a late-enrollment penalty if you went more than 63 days without creditable prescription drug coverage before signing up. Part D is optional.
- Optional Coverage
When you enroll in Medicare, you are signing up for Part A and Part B. The rest of the available packages are optional.
Medicare Advantage Plans, known as Medicare Part C, are offered through private companies vetted by Medicare to provide Part A and Part B coverage. They often offer additional coverage for vision, hearing, dental, or prescription drug coverage.
Medicare Prescription Drug Plans, also called Part D, are standardized by Medicare. Each plan has a formulary that groups drugs into tiers to determine the copayment you owe. At least two drugs in each class are covered under all plans.
Medicare Supplement Plans, also called Medigap Plans, exist to make Medicare more affordable. There are ten plans to choose from, and each helps to pay the expenses left over after Medicare pays its share for Part A and Part B.
Costs of Medicare
- Premium-Free Part A
Most people covered under Medicare do not have to pay premiums for Part A. If you or your spouse has paid Medicare taxes through their employment for at least ten years, you qualify for premium-free Part A.
- Out-of-Pocket Costs
With Medicare, you owe the deductibles, coinsurance, copayments, and premiums. The inpatient deductible for Part A is $1,408 for each benefit period. The Part B deductible is $198 with 20% coinsurance and monthly premiums of $144.60.
