For Americans 65 years of age and older, as well as for younger people with certain disabilities, Medicare is available to help with the cost of medical care. With the right “gap” insurance plan, increased medical coverage may be achieved.
The program is provided regardless of income or medical history.
Upon enrollment in Medicare, you will typically get your red, white and blue Medicare card three months before turning age 65, or your 25th month of disability. Upon or before your 65th birthday you can sign up during the seven-month period that includes the three months both before and after the month you turn 65, plus the month you turn 65.
Example: if I turned 65 on August 1, I could sign up for Medicare anytime from May 1, through November. If you have already been receiving Social Security or Railroad Retirement Board benefits; have end-stage renal disease and are already receiving Social Security benefits; or you live in Puerto Rico and already have Medicare Part A, you have been automatically enrolled in Medicare.
Medicare has four parts: A, B, C and D, offering different types of coverage and different types of insurance. Originally, Medicare included Parts A and B. Part C was formally added by Congress with the Balanced Budget Act in 1997. Part D went into full effect in 2006.
Before you worry about supplemental coverage, first familiarize yourself with the Medicare basics. Your Original Medicare consists of Part A and Part B. These are provided to you by the federal government… in fact, you will enroll in these two parts (and only these two parts) through the Social Security office.
This means that anything in your mailbox that comes from the Social Security office, or the Centers for Medicare & Medicaid services… these items are keepers.
Part A is your Hospital Coverage – think of this as paying for your room and board in the hospital and skilled nursing facilities.
Part B is your Outpatient Coverage, which is pretty much everything else: doctor visits, equipment, labwork, surgeries, durable medical equipment, diagnostic tests, etc.
Part D is your drug coverage. This is a pharmacy card which will allow you to purchase your prescriptions at a much lower price than if you had no insurance. While it is technically, in reality it is an insurance you buy for any present AND future medication needs. It’s pretty important to have unless you can afford to pay for all your medications out of pocket now and in the future.
You are eligible for these 3 parts of Medicare on the first day of the month in which you turn 65 or earlier if you have qualified for Medicare due to disability.
Now that you understand these 3 basic parts, keep them in mind. We’ll refer back to them in the rest of the article to build upon what you have learned so far. (We haven’t forgotten about Part C – we’ll have more on that in Step #4 because that Part is optional and not everyone chooses it.)
Understand Your Costs for these Parts
Alright, so we know you are eligible for the 3 parts of Medicare at age 65. Now you’ll need to know what you can expect to pay for each of these parts. This is especially important if you are deciding whether to stay working past age 65 at an employer who offers health benefits or whether you will retire and go onto Medicare as your primary insurance.
Medicare Part A is free for most people, as long as you or a spouse have worked at least 10 years in United States.
Medicare Part B depends on your income. People new to Medicare in 2016 have a base rate of $121.80/month. However, people in higher income brackets will pay what is called an Income Adjustment. Really that’s just a nifty term for explaining that people who earn higher incomes pay higher costs for Medicare.
Your income adjustment is based on your tax returns from 2 years prior. If your income has decreased since then, you can present proof of that and ask Social Security to reconsider your premium.
Once Social Security has determined what you’ll pay based on your income, Social Security will deduct your Part B premiums from your monthly income benefits check if you are already receiving those benefits. If on the other hand you have delayed enrollment into income benefits, then they will invoice you for Part B on a quarterly basis for now. Later on when you file to start your income benefits, they’ll switch over to monthly deduction for Part B.
Medicare Part D plans have varying premiums. Most states have around 30 different Part D plans to choose from. The national average Part D premium is currently around $34/month, so that’s a good ballpark figure to use if you are just running some estimates today. Plans have different drug formularies so you’ll choose one that offers your medications at decent prices. The Medicare website has a handy plan finder tool to help you choose one that fits you.
Part D premiums are paid directly to the insurance carrier or you can have it deducted from Social Security. Just like Part B, Part D also carries an Income Adjustment for people in higher annual income brackets. This surcharge will be added to the monthly premium of your chosen Part D drug plan.
- Medicare Supplement Insurance (Medigap): Health insurance sold by private companies. Its role is to fill the gaps in Medicare plan coverage. There is a premium charge for this coverage.
- Medicare Part C: Single plan offered by private insurance companies that combines coverage for Part A and Part B, and sometimes Part D. In some plans, additional benefits such as dental or vision are provided. There is a premium charge for this coverage.
How to Enroll
There are several ways to enroll in Medicare: 1) visit www.Medicare.gov, 2) call 800.MEDICARE or 3) visit your local Social Security office.
Medicare Advisors or topic experts are other resources when planning to enroll in Medicare. They can assist you in making sure your enrollment is submitted correctly as well as offer guidance throughout the process.
Mintco Financial has been a help to people enrolling and understanding Medicare for over 20 years. Please contact us with questions or if you need to enroll. IT’S FREE to enroll. And there is no cost to get a help from our specialists.
Call us at 813 964 7100 or 716 565 1300