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Understanding Medicare & What It Covers

Taking the first steps toward learning about Medicare can be overwhelming—there are many terms to understand and options to consider, so it’s completely understandable if the handbooks and pamphlets have left you dazed and confused. The good news is that we’re here to help you cut through the clutter of Medicare.

In just minutes, we can compare all the Medicare options available for you. Don’t wait to ensure you’re getting all the benefits you deserve.

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What is Medicare?

Medicare—a federal health insurance program—pays for a variety of health care expenses and services such as hospitalizations, physician visits, prescription drugs, preventive services, skilled nursing facility and home health care as well as hospice care. It was created in 1965 for people ages 65 and over, regardless of income, medical history or health status. In 1972, the program expanded to cover those under age 65 who have a long-term disability.

Medicare is administered by the Centers for Medicare & Medicaid Services (CMS), a division of the U.S. Department of Health & Human Services (HHS). Similar to Social Security, Medicare is an entitlement program, with most U.S. citizens aged 65+ being eligible to receive Medicare Part A. Individuals and their spouses qualify if they are eligible for Social Security payments and will not have to pay a premium for Part A if they paid payroll taxes for 10 or more years. Even if you didn’t work long enough to be entitled to Medicare benefits, you still may be eligible to enroll, but might have to pay more.

People under the age of 65 who receive Social Security Disability Insurance (SSDI) payments generally become eligible for Medicare after a two-year waiting period, while those diagnosed with end-stage renal disease (ESRD) and amyotrophic lateral sclerosis (ALS) become eligible for Medicare with no waiting period.

The Parts of Medicare Insurance

There are four different parts to the Medicare program. Medicare Part A and Medicare Part B are often referred to as Original Medicare while Medicare Part C is private health insurance and Medicare Part D offers coverage for prescription drugs.

Original Medicare: Part A and Part B

Original Medicare is made up of Part A (hospitalization coverage) and Part B (medical coverage). Many physicians accept Original Medicare, but not all, so you need to confirm this when you make an appointment with your doctor. People who choose Original Medicare may also want to add Part D (prescription drug coverage) to round out their Medicare coverage needs. It is important to understand that Original Medicare only pays for about 80% of all healthcare costs, so it’s important to consider options to cover the gap.

Medicare Advantage: Part C

A Medicare Part C plan is an alternative developed by the government and sold through private insurers. It is widely known as “Medicare Advantage,” and by law, this plan offers—at a minimum—the same benefits as Original Medicare. The costs, rules and even the way coverage works can vary depending on the private insurer you purchase from. These plans often can include dental, vision, hearing coverage, extra benefits and in some areas, $0/mo. premiums.

Medicare Prescription Drug Plan: Part D

Medicare Part D is a stand-alone drug plan offered through private insurers that will cover most of your outpatient prescription medications. It’s good to know that if you choose a Medicare Advantage plan instead of Original Medicare, the benefits of Part D are often incorporated into your Medicare Advantage plan.

What are Medicare Supplement Insurance plans?

Because Original Medicare doesn’t cover every expense, many people add a Medicare Supplement Insurance plan (also called a Medigap plan) for extra coverage.

In most states, there are currently 8 Medicare Supplement Insurance plans available through private insurers. Each of the plans – which are standardized across all the states offering them – have a letter designation: A through N. Keep in mind that not all supplement plans are offered by every private insurer AND private insurers set their own premium rates, so it’s important to shop around.

Enrolling in Medicare

You can enroll in Medicare during the Initial Enrollment Period (IEP), which begins three months before and ends three months after your 65th birthday. Individuals on Social Security Disability Insurance (SSDI) become eligible for Medicare in the 25th month of SSDI benefits and are automatically enrolled in the program by Social Security. Some people may be eligible for special enrollment periods based on their employment history or other health insurance coverage they have.

Learn More About Enrolling in Medicare

Things to Keep in Mind

If You're Still Employed

Once you turn 65, Medicare is considered your primary insurer, making other insurance companies your secondary. This is true even if you haven’t applied for Medicare yet. It’s also true even if you have retiree health insurance, individual health insurance or COBRA. This is important to know and understand because it means you might not be able to count on your other forms of insurance to pay for your hospital or physician bills once you turn 65.

If You Miss Your Enrollment Period

If you miss the Initial Enrollment Period (IEP), you can still sign up for Medicare during the General Enrollment Period which runs from January 1-March 31. People who sign up during the General Enrollment Period will be eligible for coverage the following July. Late enrollment penalties typically apply for people who miss their Initial Enrollment Period. Depending on the Part of Medicare that you apply for, these penalties can vary from 10% for every 12 months you delay enrollment or 1% per month.

If You’re Taking Social Security

If you’re on Social Security (which you can begin at age 62), then you should be automatically enrolled in Medicare Part A and/or Part B when you turn 65. However, you should check to confirm that this is true—either by contacting Social Security or Medicare—or you may incur a late enrollment penalty.

If You and Your Spouse are Both Eligible

Medicare is an individual benefit and each member of your family needs to apply for Medicare separately. There are no family Medicare plans.

If You’re a High Earner

If you choose traditional Medicare and your income is above a certain threshold, you’ll pay more for Parts B and D. Premiums for both parts can come with a surcharge when your adjusted gross income (plus tax-exempt interest) is more than:

  • $97,000 if you are single
  • $194,000 if married filing jointly

In 2023, high earners pay $230.80-$560.50 per month for Part B, depending on income level, and they also pay extra for Part D coverage; from $12.20-$76.40 on top of the regular premiums.

If You’re All About Health and Wellness

Today’s Medicare options, especially Medicare Advantage plans, often include a number of free preventive services. For example, you can get a one complimentary home “wellness” visit to develop or update a personalized prevention plan. You may also be entitled to a free cardiovascular screening every five years, annual mammograms, annual flu shots and screenings for cervical, prostate and colorectal cancers.

If You Might Need Long Term Care Soon

Those new to Medicare (and even some who’ve been enrolled for a while) are sometimes surprised to learn that Medicare generally does not cover long-term care. There are certain circumstances where coverage is available. An example of when coverage is available is after a hospitalization to treat an acute-care event. In this case, Medicare will pay for medically necessary skilled-nursing facility or home health care. However, “custodial care” services such as helping you with the activities of daily living (dressing, bathing, etc.) are not covered. You can help address these gaps with your own savings, long-term insurance or Medicaid, if you meet income and asset requirements.

If You’re Concerned About Claim Rejections

There may be an occasion where you don’t agree with a Medicare health plan decision about your coverage or payment. In this case, you’re entitled to file an appeal. There are five levels to the appeals process, some of which are settled at lower levels and others taking more time. Be sure to present as much relevant information as you can when you first make your appeal—your physician can help. It’s also important to collect any relevant hospital records or information from other providers and/or suppliers. In situations where a decision needs immediate attention, you can request a fast-track decision and it must be made within 72 hours. (This requires the agreement of your doctor and/or your Medicare plan).

How can I better understand my Medicare options?

We specialize in helping consumers understand the ins and outs of Medicare. We can ensure you’re getting all of the available Medicare benefits you deserve. In just minutes, we can compare all the Medicare options available for you. Some Medicare plans have $0/mo. premiums and may also include dental, vision and prescription drug coverage. Don’t wait to ensure you’re getting all the benefits you deserve. Get started today—there’s no obligation to enroll.

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