Medicare healthcare coverage looms ahead for most of us, though we typically don't know much about it. And even those of us currently covered by it would do well to learn more. After all, the more you know, the better use you can make of the program. Here are three things every American needs to know about Medicare -- see how many you know.
1. Know how financially healthy the program is
Matt Frankel: There has been a lot of coverage on the financial state of Medicare – some accurate and some exaggerated. So one thing Americans should know is where Medicare actually stands, financially.
Simply put, Medicare Part A, which is the hospital insurance that's financed through the payroll tax, is expected to completely run out of money in 2028. However, it's important to note that after this point, the income payroll taxes are expected to cover about 86% of the program's costs, so reports that Medicare is "broke" aren't exactly true. In fact, Medicare is expected to run a surplus through 2020, before deficits happen and the program's reserves start getting depleted.
The problem is that a large group of the population, the baby boomers, are reaching retirement age, and there won't be enough workers paying into the system to support the level of support needed for Medicare enrollees. Historically, there were about four workers paying Medicare tax for each beneficiary around 2001, but this has been steadily dropping. By 2030, it's expected that less than 2.5 workers will be paying taxes for each beneficiary.
Fortunately, there's time to fix the situation, and several ways it could be done. The obvious solution would be to raise taxes, but we could also restructure benefits, increase the eligibility age, or allow the government to negotiate drug prices.
2. Know when you're eligible to receive benefits
Brian Feroldi: Most people are aware that Medicare coverage is available when you reach age 65, but that doesn't tell the whole story. There are a few other requirements that need to be satisfied before you can sign up for coverage, so it's critical to make sure you understand how and when to apply for coverage. (In fact, applying for coverage late can cost you -- in increased premiums for the rest of your life.)
For those 65 or older, the following conditions must be met before you qualify for full Medicare benefits:
- You must have been a U.S. citizen or a permanent legal resident for at least five years.
- You or your spouse must have worked long enough to qualify for Social Security or Railroad Retirement benefits. This means having earned at least 40 work credits, which typically requires 10 years of work. Or you or your spouse worked as a government employee and paid Medicare payroll taxes while working.
If you don't meet all of these requirements, you still might be able to get coverage. However, you'll probably have to pay at least a portion of the premiums for Medicare Part A, which covers hospital visits, our of pocket.
If you aren't yet 65, that doesn't necessarily mean you don't qualify for Medicare coverage. There are a handful of exceptions to the rule, including if any of the following conditions are met:
- You have ALS (Lou Gehrig's disease).
- You are permanently disabled and have been receiving Social Security disability benefits for at least two years.
- You are on dialysis because of End-Stage Renal Disease requiring dialysis, or you have had a kidney transplant.
Are you interested in figuring out if you qualify? Head on over to Medicare.gov to enter your information and see if you can get coverage.
3. Know what's covered -- and what isn't
Selena Maranjian: It's good to look forward to being covered by Medicare or to already be enjoying its services. To get the most for your money, though, learn what is and isn't covered by it.
In a nutshell, the main parts of Medicare are referred to as parts A, B, C, and D. Parts A and B, respectively covering hospital expenses and medical expenses, make up what it now often referred to as traditional or "original" Medicare. That's because you can now opt for Part C instead of A plus B -- with Part C being a Medicare Advantage plan that offers the same or better coverage. Part D offers prescription drug coverage, including insulin supplies.
Part A covers inpatient hospital care (such as surgery), as well as care provided by skilled nursing facilities, hospice, and some home health-care providers. It also covers some lab tests and doctor visits. Part B covers certain doctors' services, outpatient care, medical supplies, and preventive services. More specifically, it covers "medically necessary" services needed to diagnose or treat you, as well as preventive and early detection services such as certain vaccines and screenings for cancers and other conditions. It also covers durable medical equipment (such as blood sugar monitors and home oxygen equipment), mental-health care, and limited prescription drugs.
Original Medicare generally doesn't cover vision, hearing, or dental expenses, as well as basic home health help, such as assistance with bathing or toileting -- unless the patient is also receiving skilled nursing care. Alternative medicines or treatments (such as acupuncture, acupressure, homeopathy, or chiropractic care) are generally not covered. Care you receive while outside the U.S. is not covered, either. When it comes to Part D, weight-loss pills, erectile dysfunction treatments, fertility drugs, or over-the-counter medicines are generally not covered. Medicare Advantage plans, though, will often include some of the above, such as dental, vision, and hearing coverage, as well as prescription drug coverage.
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