Are you getting ready to enroll in Medicare? There are many different letters for parts and plans, but what do they all mean? Medicare offers a variety of new choices, but unfortunately, not all of these options will be right for you. Let’s breakdown the basic parts:
- Parts A & B (also known as Original Medicare)
- Medicare Part C (also known as Medicare Advantage)
- Medicare Part D (prescription drug coverage)
Medicare Part A
Medicare Part A is your hospital coverage. Generally speaking it helps to cover:
- Inpatient care in a hospital
- Nursing facility care
- Nursing home care
- Hospice care
- Home health care
It helps to cover these costs at hospitals which accept Medicare, but it does not cover the entirety of the costs. Because of this “gap” many people choose to supplement their coverage with a Medigap plan (also known as a Medicare Supplement plan). Many also choose an Advantage Plan. You can learn more about Advantage vs. Supplement Plans here. Although you are responsible for quite a bit of the costs with Medicare Part A, for most people Medicare Part A, itself is free. So you are not charged on a monthly basis.
Am I Eligible?
You are eligible for Medicare benefits if:
- You are over 65 and a U.S. citizen
- You are over 65 and a permanent legal resident who has lived in the United States for at least five years
- You are receiving or eligible to receive (have worked 40 quarters) social security or railroad retirement benefits
- You are also eligible if you are over 65 and you or your spouse is a government employee or retiree who has not paid into social security, but who has paid into Medicare payroll taxes while working (Medicare covered job)
If you are under 65, you are eligible for Medicare Parts A & B benefits if:
- You have received social security benefits for at least 24 months. These months do not have to be consecutive. There can be breaks in between, but it must be at least 24 months total.
- You have ALS
- You have end-stage renal disease (ESRD)
How Much Does Medicare Part A Cost?
For many people, Medicare Part A has no monthly premium. However, if you are relying on your employment for eligibility and you have not worked at least 40 quarters, you can choose to pay a monthly premium. Currently, this may be up to $458 (or less dependent upon your specific circumstances). If you continue to work, you will no longer be charged these monthly premiums once you reach 40 quarters.
How Do I Enroll?
Many people (if not most) are automatically enrolled in Medicare Part A. If you are receiving social security benefits, your enrollment is automatic. You will receive your card in the mail three months before your 65th birthday. If you are eligible through disability, you’ll receive your card on the 25th month of your disability benefits. You can, of course, choose to defer enrollment. However, since there are no monthly premiums for the vast majority of people enrolled, most choose not to. If it is something you are considering, we recommend contacting a licensed broker to discuss your unique situation. If you are not automatically enrolled in Medicare, you have three opportunities to do so:
- Your Individual Open Enrollment Period
- Special Enrollment
- The General Enrollment Period
Your individual enrollment period is the three months prior to, the month of, and the three months after your 65th birthday.
You may qualify for a special enrollment period. This is based on certain qualifying events, most commonly through the loss of creditable health insurance. May people who work past 65 and defer Medicare are eligible for a special enrollment period.
You also have the option to enroll during the general open enrollment period. It’s the same time every year: January 1st – March 31st. Your coverage will then begin July 1st.
If you don’t enroll during your open enrollment period or special enrollment period, you may be subject to a late penalty.
Medicare Part B
Medicare Part B is your medical coverage. It helps to cover preventative services like wellness visits and medically necessary services. Part B helps to cover:
- Doctors Visits
- Mental health services
- Outpatient Surgery
- Ambulance services
- Durable medical equipment, (wheelchairs, walkers, etc…)
- Limited outpatient prescription drugs (usually drugs that are administered to you such as injections, certain oral cancer drugs or chemo) For more complete prescription drug coverage, you will want to look into Medicare Part D.
Am I Eligible? How Do I Enroll?
The criteria for eligibility and enrollment periods for Part B are exactly the same as Part A. However, with Part B, you are charged a monthly premium. This is why many people choose to defer Part B if they are still receiving creditable coverage elsewhere. It simply doesn’t make sense to pay if you don’t have to! Your monthly premium for Part B is determined by your monthly income. Like Part A, Part B only helps to cover some of your medical costs. You are responsible for a significant portion. This is why many choose a Medicare Supplement or Medicare Advantage Plan.
Timing of enrollment in Part B is very important. You only have a period of six months after enrolling in Part B to enroll in a Medicare Supplement Plan with no underwriting. Once you are subject to underwriting, you can, unfortunately, be denied based on your health. If you choose to defer Medicare Part B and you have been automatically enrolled, make sure to follow the directions on the card and send it back! If you keep the card, you keep Part B. Therefore, you’re responsible for those monthly premiums! So, make sure to think ahead!
Medicare Part C
Medicare Part C is also known as Medicare Advantage. Some choose to forego Original Medicare in favor of a Medicare Advantage Plan. Medicare Advantage or Part C encapsulates the benefits of Parts A & B and very often part D as well. Additionally, Advantage Plans help to bridge the gaps of Original Medicare. Part C helps to limit your out of pocket expenses. Most Part C plans have a zero dollar monthly premium. However, you are required to continue to pay Part B. Also, very often Medicare Part C covers additional services such as dental, vision, hearing, and even gym memberships.
Is Medicare Advantage Right for Me?
How do you choose between a Supplement and Advantage Plan? If you are considering an Advantage Plan, there are many factors to take into consideration. Factors such as:
- the doctors and hospitals you wish to use
- your specific health needs
- financial considerations
- even the state that you live in!
Medicare Advantage offers HMOs and PPOs. It will probably feel similar to the type of coverage that you’ve had in the past. Unlike some supplement plans, there is no medical underwriting. You cannot be denied coverage.
There are many pros and cons of a Medicare Advantage plan and these are all based on your specific circumstances. If you’d like to learn more about Part C, click here. Additionally, if you are considering a Medicare Advantage plan, you can explore your options on medicare.gov, but you would be best served working with a licensed broker.
How & When Can I Enroll?
Your Part C enrollment period is different than parts A & B, but eligibility is the same. If you are eligible for Parts A & B, you are eligible for Part C! You can enroll during:
- Your individual open enrollment period
- A special enrollment period
- The annual enrollment period
Like Original Medicare, your individual enrollment period is the three months prior to, the month of, and the three months after your 65th birthday.
Like Original Medicare, you may qualify for a special enrollment period.
However, the annual enrollment period is different. For Medicare Advantage, the AEP runs from October 15th to December 7th.
Medicare Part C plans can change annually which is why it’s a good idea to review your plan choice annually with a broker.
Medicare Part D
Medicare Part D is an important one! Medicare Part D is your prescription drug coverage. Without prescription coverage, you could end up paying quite a bit! In fact, some name brand cholesterol medications can go as high as $1700 without prescription coverage.
Additionally, Medicare Part D is arguably one of the most confusing parts of Medicare. Like Medicare Advantage, it is offered by private carriers, so it is important that you shop around. Although there are regulations set by Medicare, some carriers may provide better plans than others for YOU! Medicare Part D has 4 stages.
THE FOUR STAGES
- The deductible, which you are responsible for meeting out of pocket. Medicare sets the max deductible. Many carriers choose to lower or waive this deductible to compete for your business!
- The initial period of coverage in which your medication will have copays dependent upon their tier. There are 5 tiers and the higher the tier, the higher the cost.
- The coverage gap where the coverage changes from copays to percentages of the drug’s actual cost. Generally speaking, this donut hole is where people get confused because their out of pockets costs jump up temporarily.
- Catastrophic coverage: you are still charged a percentage but it is maxed at just 5% of the drug’s costs making your out of pocket much lower. Out of pocket costs are at their lowest at this point.
Am I Eligible? How Do I Enroll?
You may have noticed a pattern. If you are eligible for Parts A & B, you are eligible for Parts C & D! The enrollment periods are the same as well.
Like Original Medicare, your individual enrollment period is the three months prior to, the month of, and the three months after your 65th birthday.
Like Original Medicare, you may qualify for a special enrollment period.
AND like Part C, the annual enrollment period is October 15th to December 7th.
Should you have any gaps in your prescription coverage after enrolling in Original Medicare, you may be subject to a late penalty. This will be tacked onto your monthly premium. No one wants to pay more than what is necessary, so please make sure to plan ahead.
Medicare can provide excellent coverage, but it can still be quite confusing! If you’d like any help, you can reach us at iHealthBrokers at (888) 918-0518 or schedule a call today. Our services are 100% free and we are happy to help.
Jesse Smedley is the Principal Broker for iHealthBrokers and the founder, president, and CEO of Smedley Insurance Group, Inc. and iHealthBrokers.com. Since the inception of SIG in 2007, Jesse has been dedicated to helping people save money on their health insurance by providing them with resources to educate themselves on all their health insurance options, both under age 65 and Medicare beneficiaries. He is featured in many publications as well as writes regularly for expert columns regarding health insurance and Medicare.
