to do to get started with
Medicare and how to avoid
Learn About Original Medicare
- What is Medicare Health Insurance?
- Why Most People with Medicare Need More Coverage
- If You Don’t Qualify For Medicaid You Are At Risk
- How To Protect Yourself If You Don’t Qualify For Medicaid, VA Benefits, etc.
- What is Medicare Supplement Insurance?
- What is Medicare Prescription Drug Insurance?
- What is Medicare Advantage?
- Why Do I Need Dental Insurance If I Have Medicare?
- Who Is Eligible For Medicare?
- When Can I Sign Up For Medicare Health Insurance?
- How Much Does Original Medicare Cost?
- How Do I Enroll In Original Medicare?
What is Medicare Health Insurance?
Medicare is health insurance for U.S. citizens and legal residents ages 65 and older. Benefits are also available to people with with kidney failure (End-Stage Renal Disease), Lou Gehrig’s Disease, and certain disabilities. Most people earn their Medicare benefits by working and paying taxes. For those who did not work for the required years (10), you may be entitled to receive Medicare benefits at a higher rate. When Medicare was first conceived it had two parts, A and B. This is commonly called Original Medicare. Part A is hospital insurance (inpatient health care). Medicare Part B is medical insurance for your outpatient health care. Original Medicare covers most of your major medical healthcare expenses. That said, the healthcare services not covered by Medicare, combined with your share of the covered services, is a serious financial risk for most people.
Most people grossly over estimate the coverage Medicare provides versus what they must pay out of pocket. This leaves millions of seniors unprepared in their retirement years. The reality is that Medicare pays for about 51 percent of the total cost of the average retiree’s health care. The rest is either paid out-of-pocket or by supplemental health insurance. It’s true that Medicare does pay for approximately eighty percent of the health care services covered. The problem is, they don’t cover all necessary medical expenses, including prescriptions, dental, vision and hearing. For all of these health services, and more, you must pay out of pocket or purchase additional insurance.
The hard truth is that Original Medicare puts millions of seniors at risk of loosing everything. Without additional insurance coverage to pay for the health care expenses that Medicare does not cover, an accident or critical illness is enough to bankrupt most people. Hospital, doctor and other medical expenses add up at a staggering rate, and there’s no escaping it without proper insurance. Interestingly, the Affordable Care Act law (aka, “Obamacare”) reformed the private health insurance industry and Medicaid, but not Medicare. So, while poor people and people with private health insurance are protected from excessive medical bills, people with Original Medicare are not. If you are poor and qualify for Medicaid in your state, get it. When you have both Medicare and Medicaid (“dual eligible”) you have the most complete coverage possible. Many seniors that are dual eligible don’t realize it and continue to pay out of pocket when additional assistance is available.
If you don’t have additional health coverage, including Medicaid, Veterans Administration benefits, TRICARE, or health benefits from an employer, you need to buy it. There are several types of additional coverage that you can get:
The type of additional health insurance you purchase is up to you. You need to consider your own personal health needs and finances. If you can afford it, your Original Medicare combined with a Medicare Supplement (Plan F), Medicare Part D, and a dental plan will give you the most complete coverage with the most flexibility. If your budget is a primary concern, you can get the most coverage for your money, with a little less flexibility, with a Medicare Advantage plan and a separate dental plan.
Medicare supplement insurance, also called a Medigap plan, is indemnity insurance that helps pay some of the major medicare costs not covered by Medicare (e.g., your deductibles, co-payments and co-insurances). Medigap coverage is in lock-step with Medicare, so if Medicare does not cover the service, it’s not covered by this type of supplemental insurance.
Medicare Part D is an add-on plan to your Original Medicare that helps pay for your prescriptions. It provides coverage on all medically necessary prescriptions up to the initial coverage limit. After the initial coverage limit you pay out-of-pocket until you reach the government’s catastrophic coverage level, at which point you receive full coverage. Plans start at less than $20 per month, making them very affordable.
Unlike a Medigap policy that supplements your Original Medicare coverage, a Medicare Advantage plan completely replaces your Medicare Part A and Part B with a private HMO or PPO plan. For many seniors, particularly those just entering the Medicare system, Medicare Advantage is ideal because it has the overall lowest monthly cost (on average), offers more services than Original Medicare (plans vary), and is most like employer based health plans. Plus, every Medicare Advantage plan must provide the same basic coverage as your Original Medicare, and most plans include Part D prescription drug coverage and other benefits not covered by Original Medicare (that’s the “advantage”).
Medicare does not cover dental expenses unless it is deemed medically necessary. That means you are on your own for this critical care. Some Medicare Advantage plans offer dental coverage, but in most cases you are better off shopping for the exact policy and coverage you need. Basic dental insurance plans are very economical, you can start and stop anytime, and it’s easy insurance to get.
To qualify for Medicare you must be a United States citizen or a permanent, legal resident for at least five years. Second, you must meet at least one of the following criteria:
- Be age 65 or older and eligible for Social Security; or
- Be permanently disabled and receive Social Security disability insurance benefits for at least two years; or
- Have End Stage Renal Disease (ESRD) and require dialysis treatment or a kidney transplant; or
- Have Lou Gehrig’s Disease (Amyotrophic Lateral Sclerosis).
Most people are automatically enrolled in Medicare Part A (hospital insurance) as soon as they meet the eligibility requirement. This is not true of Part B. Most people turning age 65 will get their Medicare Part B automatically, and most pay the full Part B premium (typically taken directly from your social security). You must enroll in Medicare Part B as soon as you are eligible. Your reason for qualifying determines when you are required to enroll. The General Enrollment Period is January 1st through March 31st. Your Individual Enrollment Period is within two months (before or after) of your actual date of eligibility. Failure to enroll in Medicare Part B when you become eligible has a penalty. You may be fined up to ten percent of the monthly Part B premium for each 12-month period you were not enrolled. You are excluded from this rule as long as you have credible insurance through an employer.
For most people, Medicare Part A is funded completely through the payroll taxes that were collected while you worked. If you or your spouse did not pay Medicare taxes for for at least 40 quarters, you will have to pay a monthly premium. Not everyone pays the same amount for their Medicare Part B. The Affordable Care Act made changes to Medicare that allows the government to charge a variable rate based on how much you earn. That said, most seniors will pay the base rate for Part B, which changes each year. For calendar year 2014 the base rate is $104.90 per month, and there is a $147 annual deductible. If you earn more than $85,000 your premium will be more (up to $335.70 for seniors earning over $214,000 per year).
Most people in the continental United States, Hawaii and Alaska are automatically enrolled in Medicare when they turn age 65. The Social Security Administration (SSA) kicks off your Medicare Part A hospital insurance and/or Medicare Part B medical insurance when you turn 65. U.S. citizens living in one of the U.S. territories, such as Guam or Puerto Rico, are automatically enrolled in Medicare Part A only. If you are not automatically enrolled, there are several enrollment periods. Medicare can charge you penalties for not signing up when you should, so pay close attention. If you choose to delay receiving your Social Security retirement benefits or Railroad Retirement Benefits (RRB) beyond age 65, it is your responsibility to notify SSA and then initiate Medicare Part A enrollment when you decide to retire. Be sure to contact the SSA or RRB three months before you turn 65 or retire. You can stop by your local SSA office, visit their website (http://www.ssa.gov/), or call them at 800-772-1213800-772-1213. The RRB toll-free number is 877-772-5772877-772-5772. If you decide to declined Medicare Part B automatic enrollment because you have coverage through your employer, or if you were not automatically enrolled, there are several enrollment periods. Your Initial Enrollment Period (IEP) is a seven-month period that begins three calendar months before you first become eligible for Medicare and lasts for three calendar month after your month of eligibility. For most of us, that means three months before our 65th birthday. If you become eligible due to a disability, your IEP starts on the 25th month after you first start collecting disability benefits from the SSA.