What is Medicare?
Medicare is such a broad topic that I can get very technical, but for the sake of simplicity, I will mention the parts I speak to consumers about daily.
Medicare is a federal health insurance program. If you have a red, white, and blue Medicare paper card, by itself, it is known as “Original Medicare.” Original Medicare consists of Part A and Part B. We will cover what these are below.
It is partially funded by the taxes we pay while we’re working. Look at your past pay stubs. Remember all the money that was taken out labeled “Medicare?”
Unfortunately, it’s only for individuals. Couples can’t join a joint plan. There’s no family plan. Medicare insurance is a completely different animal than being covered by your employer.
What Medicare isn’t
It’s not social security. You might pay for Medicare out of your Social Security check, but it is not social security. It is not Medi-Cal (California’s name for Medicaid) or Medicaid (also known as a low-income program).
It’s not free (unless you qualify for low-income programs).
How do you qualify for Medicare?
You must be a US citizen to qualify for Medicare or legal resident (you’re legally here for five years in a row).
Work History/ Paying for Medicare
You earn premium-free Part A through work credits. You qualify for a premium-free Part A if you or your spouse has worked in America full-time for 10 years (part-time also qualifies as long as you earn enough credits).
Part B is usually paid monthly and is adjusted according to your income. Typically, a Medicare beneficiary will pay $144.60 in 2020 for their Medicare B premium. If you’re a high income earner, then you would pay more. If you’re low income, a portion or more could get paid for.
Enrolling into Medicare for the First Time
Initial Enrollment into Medicare is important. If you are receiving social security income when age into Medicare at 65, you will be auto-enrolled into Part A and B (Original Medicare). You don’t have to be currently receiving social security when you enroll into Original Medicare; it is okay if you decided to delay your SSI benefits. If you aren’t on social security and you aren’t auto-enrolled, enrollment into Medicare, especially Part B is important. You can incur a lifetime penalty if you enroll late.
If you are currently working and you have credible coverage through your employer (who has 20+ employees), then you may be able to delay your enrollment into Part A and Part B without a penalty. To know if you have credible coverage, Medicare.gov recommends that you ask your benefits manager if you have group health plan coverage (as classified by the IRS) from work. If you do, you can delay enrollment without penalty.
If you retire or get laid off, you will have an 8-month time period where you will need to enroll into Medicare Part A and B before that period is up. You can apply for enrollment into Medicare before you lose your employer coverage to ensure you don’t have a lapse in medical insurance or a Medicare penalty.
Age – 65 and older
You usually age in at age 65 and in because Medicare is for people who are 65 or older.
Age – Younger than 65 / Disability
Did you know that there are many people who are under 65 that have Medicare? People who are under 65, but are disable and receiving social security disability income can qualify for Medicare.
Also, if you have ALS or Lou Gherig’s disease, or you have End Stage Renal Disease, you can qualify for Medicare at any age.
Original Medicare: What does the red, white and blue paper card cover?
Let’s keep it simple. Original Medicare is made of two parts: Part A and Part B.
Part A covers your hospital costs. It is called hospital insurance.
Part B covers your medical costs, and is called medical insurance.
Also, if you want to know if your test, service or item is covered, Medicare.gov has a search tool here.
If you have just Original Medicare, what isn’t covered is your cost of care. Your premiums, your deductibles, your coinsurance and copays are all not covered. It will have to come out of your pocket. Also, Original Medicare has no limit to what costs are incurred while you are on it. Original Medicare does not have a max out-of-pocket limit.
Part D is Prescription Drug coverage. To make it easy to remember, I would say that the D in Part D stands for drugs.
You can get coverage for your prescription drugs by either purchasing a stand-alone plan where you have Original Medicare and you enroll in a drug plan or you can enroll into a Medicare Advantage Plan that includes a Prescription Drug Plan (also known as MAPD).
The drugs that are covered under a plan depends on the plan you choose. Each plan has their own list of drugs that they cover, and that list is known as a “formulary.”
Medicare requires drug plans to cover at least two drugs in the most commonly prescribed categories and classes, which helps Medicare consumers get drugs for their needs. If your drug isn’t covered by a plan, you can request an “exception” to have your drug covered.
Enrolling into Part D
You can enroll into a Part D plan when you first get Medicare Part A and B. If you do not have creditable prescription drug coverage for longer than 63-days, and you are eligible for a Part D plan, you can be subject to a penalty.
If you already have Original Medicare, you can enroll or change plans during the Annual Election Period. This period occurs every year from October 15th until December 7th.
Part C are Medicare Advantage plans. Medicare Advantage plans are also known as MAPD, as a majority of these plans have Prescription Drug coverage. Part C plans is another way that you can get your Medicare benefits, provided by private insurance companies. When you enroll into a Part C or MAPD plan, you are still a part of the Medicare program.
These plans have limits to your costs (maximum out of pocket), unlike Original Medicare. This is helpful, as if you need to use your medical benefits, your costs will be limited to a certain amount every calendar year. The amount of the max out of pocket varies by plan.
How Do MAPD Plans Work?
Medicare Advantage plans combine your Part A, Part B, and Part D into one plan. One plan will manage these benefits for you, so if you have an issue, you only contact your MAPD plan. MAPD plans also offer ancillary benefits that Original Medicare does not. These plans typically come as HMO’s or PPO’s.
Qualifying for a Part C Plan
To qualify for a Part C plan, you have to be enrolled in Part A and Part B, and live within the service area. You won’t be denied coverage due to financial means or your health status, including pre-existing conditions.
Enrolling into a Part C Plan
You can enroll into a Medicare Advantage plan when you first enroll into Part A and B. If you already have Medicare, you can enroll during AEP (October 15th – December 7th). There are certain conditions that would give you access to a Special Election Period, where you would be able to change your Part C plan throughout the year, depending on your situation.
Medicare supplement plans are also called “Medigap” because it fills in the gaps of what Original Medicare doesn’t cover. There are set plans that are standardized by federal government. The set plans each are labeled with a different letter, and each plan letters has standard coverage. The coverage offered by each set plan stays the same, even if offered by different insurance companies. The more coverage you have, the higher premium you pay every month. In addition to the cost of paying for a Medicare Supplement, you will also have to purchase a separate, standalone drug plan (Part D).
The coverage offered by each set plan stays the same, even if offered by different insurance companies. The only difference from each insurance company will be the amount they charge for the set plan.
Medigap plans are different from Medicare Advantage and you cannot have both Medicare Advantage and a Medigap plan.
Enrolling into a Medigap Plan
You can enroll into a Medicare Supplement plan when you first enroll into Part A and B. You will also need to enroll into a Part D plan.
If you have further questions, or you are a visual learner like I am, we have an upcoming webinar on this topic. We will be giving an easy overview of Medicare and answering your questions virtually. You can register for this free, educational, online event here.
Original Medicare and the plans that work with it can be confusing. My Medicare Plan Advisor tries to make that process more clear and easy to understand. We are local health plan consultants that can help you with your Medicare questions.