What is Medicare?
Medicare is a government run health insurance program for people age 65 and older, those under 65 with certain disabilities, and those with end-stage renal disease.
What You Need to Know About Medicare
Participation is essentially mandatory if you want to have health insurance. While you can, and probably should, have additional private insurance, you must enroll in Medicare in order for supplemental insurance to take effect.
When you turn 65, Medicare becomes the primary payer. Under Original Medicare, any private insurance you may have is secondary and will not pay until Medicare has paid its share. The only insurance that remains primary to Medicare is employer group coverage that covers 20 or more employees.
What Medicare Covers
There are several parts to Medicare.
- Part A covers part of the cost of hospitalizations.
- Part B covers part of the cost of doctor visits and other health care services.
- Part C are Medicare Advantage plans sold by private insurance companies and take the place of Original Medicare (Parts A & B).
- Part D covers part of the cost of prescription drugs and is offered through private insurers.
What Medicare does NOT cover
- Long-term care
- Cosmetic Surgery
- Eye examinations related to prescribing glasses
- Hearing aids and exams for fitting them
- Routine foot care
- Most Dental care
How Much Does Medicare Cost?
Some people think Medicare is free. This is not true. You may not have to pay premiums for Part A, but that’s because you or your spouse already paid into the system through medicare taxes for at least 10 years. When people think “free” they are referring to the monthly premiums. If you are hospitalized, you will still pay a deductible before Medicare pays its share. If your hospitalization lasts for more than 60 days, you will be responsible for paying part of the daily rate.
Part B is not free, except for those who qualify for low-income special assistance. If you are receiving Social Security benefits, Medicare will deduct your monthly premium from your check. If you haven’t started receiving Social Security yet, you will get a bill from Medicare for the premiums. High-income individuals pay an extra amount on top of the base premium. In addition to the monthly premium, there is an annual deductible that you or your supplemental insurance must pay before Medicare pays its share. Medicare pays only part of the bill, you or your other insurance pays the remaining amount.
There is also no limit to the out-of-pocket expenses you could pay under supplemental insurance. According to the Employee Benefit Research Institute, Original Medicare (Part A & B) only covers about 62% of the cost of healthcare services.This is why having supplemental insurance is critical.
How to Enroll in Medicare
Some individuals think enrollment in Medicare is automatic. This is only true if you are receiving Social Security when you turn 65 (applying only to Part A and Part B.) If you are not receiving Social Security, you will need to proactively sign up for Medicare three months before your 65th birthday. You can enroll through the Social Security Administration by calling or going online to www.medicare.gov
If you don’t enroll in Medicare during the appropriate enrollment periods, you may have to pay a late enrollment penalty when you finally do enroll. This late enrollment penalty increases your monthly Part B premium for life.
You have several options, depending on where you live. You can:
- Elect Original Medicare.
- Elect Original Medicare and add drug coverage with a Medicare Part D prescription drug plan.
- Substitute a private Medicare Advantage plan for Original Medicare.
- Substitute a private Medicare Advantage plan that also includes Medicare Part D prescription drug coverage in place of Original Medicare.
- Elect Original Medicare, add a Medicare Supplement insurance plan to pay for any gaps in coverage and add coverage with a Medicare Part D prescription drug plan.
How We Can Help
Our team of experts will shop the marketplace to find the best Medicare plan for your needs, at the lowest possible cost. Determining the right approach to Medicare can be very difficult and that’s why we’re here to guide you through the entire process.