The U.S. government offers health insurance, known as Medicare, to its senior citizens. There are different Medicare parts, plans, and enrollment periods you will want to learn about. Medicare can look like a never-ending maze if you don’t become familiar with it before age 65. Keep reading to learn more about Medicare before you turn Medicare age.
1. Understand how Medicare works
There are two parts of Medicare: Part A and Part B. Medicare Part A covers inpatient hospital services. For example, Part A covers a semi-private hospital room, three square meals daily, lab services, and medications administered as an inpatient. Part A also covers hospice, home health care, and skilled nursing.
Medicare Part B is insurance for your outpatient care. Here are a few services that fall under Part B:
- Doctor’s visits
- Ambulance rides
- Certain vaccines
- Durable medical equipment
- Chemotherapy and radiation
- Emergency room visits
Medicare Part A and Part B cover medically necessary services to diagnose or treat an illness, disease, or injury. But there are many services that Medicare does not find medically necessary.
2. Know what Medicare doesn’t cover
You might have noticed that prescription medications were not listed under Part A or Part B coverage because Medicare does not cover medicines you pick up at the pharmacy. You must purchase a Part D drug plan from a private insurance carrier to have drug coverage. Now, Part B will cover medicines administered to you in an outpatient facility, but it will not cover any drugs you pick up at the pharmacy.
Original Medicare also doesn’t cover routine vision, hearing, or dental services. If you were to go in for a teeth cleaning or an eye exam, you would pay 100% of the cost out-of-pocket (if you don’t have standalone insurance).
3. Become familiar with Medicare costs
Before you reach 65 years old, you will want to become familiar with the cost of Medicare. It’s common for seniors to believe Medicare is free since many of you paid Medicare payroll taxes while working in the U.S. But, those Medicare taxes only funded your Part A premium.
The cost of Medicare Part A
If you or your spouse have worked 40 quarters in the U.S., equivalent to ten years, Part A will cost you $0. But, if you only have 30 quarters, your Part A premium will be pro-rated at $278 per month in 2023. If you have less than 30 quarters, you’ll pay the total Part A premium of $506 per month in 2023.
Now, when you are an inpatient for three or more days, you will be charged the Part A deductible. The Part A deductible is $1,600 per 60-day benefit period in 2023. After you pay the deductible, Part A will cover your inpatient services for the next 60 days. If you surpass day 60, you will begin to pay a daily copayment.
Medicare Part B costs
Regarding Medicare Part B, you will pay the premium no matter what (unless you have help from Medicaid). In 2023, the standard Part B premium is $164.90 per month. However, suppose Social Security finds that you were in a high-income tax bracket two years ago. In that case, you will pay an income-related monthly adjustment amount (IRMAA) fee on top of your monthly premium. You can file an IRMAA appeal if you no longer make the same income you did two years ago.
There are many preventative services that Part B will cover in full, such as your Welcome to Medicare visit. But for most services, you will need to pay the Part B deductible before Part B starts to pay its share. In 2023, the annual Part B deductible is $226. After you pay this amount, Part B will begin to cover 80% of your approved costs, leaving you responsible for the remaining 20% coinsurance.
4. Determine what coverage is best for you
Since Medicare leaves you with many out-of-pocket costs, such as deductibles and coinsurance, many beneficiaries purchase a Medigap or Medicare Advantage plan. Private insurance carriers sell these types of plans, and their purpose is to help you with your cost-sharing amounts.
Medigap plans (Medicare Supplement) work as secondary coverage to Original Medicare. If Medicare covers a service, so will a Medigap plan. There are no network restrictions regarding Medigap plans, so you can visit any doctor in the U.S. that accepts Medicare and use your Medigap plan.
There are ten standardized Medigap plans, and each covers a different set of benefits. So, you will want to shop Medigap plans with a Medicare broker to ensure you are enrolling in a Medigap plan that is cost-effective for you and covers your healthcare needs.
When you enroll in a Medicare Advantage plan, you opt to receive your Medicare Part A and Part B benefits through the insurance carrier and no longer through the government. The insurance carrier will set your cost-sharing amounts for your medical services and create a network of doctors and pharmacies for you to visit.
Many seniors favor Advantage plans due to their perks. For example, many Advantage plans offer vision, hearing, and dental benefits. But, insurance carriers are not required to include these perks in their plans, and they are not guaranteed in the new year. Again, working with a Medicare broker can help you understand the plan options available in your zip code.
5. Avoid late enrollment penalties
You can delay Medicare past 65 if you or your spouse actively work for a large employer with 20 or more employees and their health insurance plan covers you. If this is not the case for you, you will need to enroll in Medicare during your Initial Enrollment Period (IEP).
Your IEP begins three months before your 65th birthday month and ends three months after your birthday. For example, if you turn 65 years old on August 3, your IEP begins on May 1 and ends on November 30. You will apply for Medicare Part A and Part B during this time through the Social Security office.
If you fail to enroll in Medicare during this time, you will be charged a life-long late enrollment penalty. So you must enroll in Medicare on time to avoid late enrollment penalties.
Understanding Medicare is no walk in the park. Before you reach 65 years old, connect with a Medicare broker to ensure you are set up for success!
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