Medicare is the government health care program for people 65 and over and its coverage plays a vital role in containing medical costs as you age. But Medicare benefits don’t pay for everything.
As you approach age 65, you’ll need to decide how to deal with some of those coverage gaps. For now, knowing the basics of how Medicare works can help you understand some of the expenses you’ll face.
What Is Medicare?
Medicare is a federal health insurance program for people in the U.S. who are 65 and older, as well as some younger people with disabilities. Medicare is a different program than Medicaid which offers health and other services to eligible low-income people of all ages.
Who Qualifies for Medicare?
You’re entitled to Medicare if you’re at least 65 and a U.S. citizen or a permanent legal resident for the past five years. Medicare also covers some disabled people under 65. People who receive Social Security disability insurance usually become eligible for Medicare after a two-year waiting period, although those with end-stage renal disease (permanent kidney failure) are enrolled automatically upon signing up and those with amyotrophic lateral sclerosis (ALS, also known as Lou Gehrig’s disease) the month disability begins.
How Do I Enroll in Medicare?
If you’re receiving Social Security benefits when you turn 65, you will be enrolled automatically in Medicare Part A which covers hospital costs and Part B which covers doctor visits. If you want Medicare Part D prescription drug coverage you’ll need to enroll yourself – that’s not automatic.
If you’re not receiving Social Security benefits, you’ll sign up through the Social Security Administration website. You typically should do so in the seven-month window around your 65th birthday (which includes the three months before the month you turn 65, your birthday month and the three months after your birthday month) to avoid permanent penalties.
Is Medicare Free?
You don’t have to pay premiums for Medicare Part A if you or your spouse paid Medicare taxes for at least ten years. Medicare taxes are part of the payroll taxes deducted from most working people’s paychecks. You can see if you qualify by checking your Social Security statement available through the Social Security website.
What Does Medicare Part A Cover?
Medicare Parts
Medicare Part A covers inpatient care in a hospital or skilled nursing facility, although not custodial or long-term care. Part A also helps pay for hospice care and some home health care. Medicare Part A has a deductible ($1,484 in 2021) and coinsurance which means patients pay a portion of the bill. For example, there is no coinsurance for the first 60 days of inpatient hospital care but patients typically pay $371 per day for the 61st through 90th day of the hospitalization and more after that.
What Does Medicare Part B Cover?
Medicare Part B covers doctor visits and other medically necessary services and supplies. That includes preventive services or health care to prevent illness, as well as ambulance services, durable medical equipment, mental health coverage and a few types of outpatient prescription drugs.
What Is the Medicare Part B Penalty?
If you don’t sign up for Medicare Part B at 65 and later decide you need it, you’ll likely pay a penalty of 10% of the premium for each 12-month period that you delayed. You will basically pay this penalty for life since few people drop Medicare Part B once they have it.
What Is Original Medicare?
Medicare
Original Medicare refers to Medicare Part A and Medicare Part B, which the federal government manages. People can see any doctor that accepts Medicare assignment and the government pays a portion of the cost.
What Is Medicare Advantage?
Medicare Advantage, also known as Medicare Part C, is a type of health plan offered by private insurance companies that provides the benefits of Parts A and Part B and often Part D (prescription drug coverage) as well. These bundled plans may have additional coverage, such as vision, hearing and dental care.
What Is Medicare Part D?
Medicare Part D helps cover the cost of prescription drugs. Plans are offered by private insurers and require a monthly premium that averages about $33 a month. Higher-income beneficiaries pay more. As with Part B, there typically is a late penalty premium if you don’t sign up when you are first eligible.
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