Understanding Medicare Benefits - The Parts of Medicare
Understanding Medicare is easier said than done! For many of us, we’ve spent much of our adult life participating in employer health coverage and really haven’t had to think much about the nuts and bolts of it. Then, before we know it, we’re turning 65 and we have to figure out Medicare and how it works. If you feel overwhelmed, you’re not alone. The number one reason people procrastinate when it comes to enrolling in Medicare is because it’s very confusing. Hopefully, I can bring some clarity into the situation.
Many people start off confused because they relate Medicare to Social Security. And while it is true that you go through Social Security to enroll in Medicare, it is not necessary to take SS benefits to have Medicare. Anyone who is 65 in America, even permanent residents who have lived here at least 5 years can enroll in Medicare. Individuals who have qualified for 24 months of Social Security disability also become eligible for Medicare. For those individuals aging into Medicare at 65, it doesn’t matter if you are taking Social Security benefits yet.
Once you’ve confirmed you qualify for Medicare, it’s important to understand the basics of Original Medicare, what it covers and what it will cost. It can be confusing to make your way through the Medicare alphabet, as I like to call it, so I’m going to make it as simple as possible.
Original Medicare, the Red, White and Blue card, is provided by the federal government and consists of Parts A and B. It helps pay for hospital stays and doctor visits.
Medicare Part A - Hospital Coverage. This coverage includes your room and board in a hospital or skilled nursing facility, labs and tests as an inpatient, your hospital meals, operating room / recovery room services and hospice care for the terminally ill. If you have made payroll contributions to Social Security for at least 10 years, there is no premium for Part A. However, there are costs associated with the benefits such as deductibles, copays, and coinsurances.
Medicare Part B - Outpatient Coverage. This coverage includes your doctor visits, lab-work, X-rays, MRIs and CT scans, outpatient surgeries, durable medical equipment, diagnostic tests, etc. Medicare Part B charges a monthly premium that is determined by your tax reported income from two years prior. Part B also has a deductible and coinsurance associated with the benefits. If you do not enroll when you are first eligible for Part B, you could incur a penalty unless you qualify for a Special Enrollment Period.
Medicare Part D - Drug Coverage. You may purchase a stand-alone Part D plan or have coverage included in a Medicare Advantage plan. Part D plans are offered by private insurance companies approved by Medicare and allow you to purchase your prescriptions at a much lower price than retail. It is important to enroll in Part D even if you don’t take any current prescriptions to avoid future penalties.
If you are turning 65, you Medicare enrollment period begins 3 months prior to the month you turn 65, the month of your 65th birthday and 3 months following. I recommend beginning to research Medicare 6 months prior to your 65th birthday so you can make the best determination in regards to Medicare enrollment.
Yes the ABCs of Medicare can be confusing, but they don't have to be. Find a local agent that is licensed and certified in Medicare that will guide you through the process.