Medicare provides health coverage for millions of older Americans, but many future and current beneficiaries don't understand many of the program's basic features. With that in mind, here are 12 frequently asked Medicare questions and what you need to know about each one.
1. Am I eligible for Medicare?
The majority of Americans become eligible for Medicare benefits at age 65. To qualify, you or your spouse will need to have earned enough Social Security "credits."
2. What is the difference between Medicare and Medicaid?
Medicare is federal health insurance, primarily designed for elderly Americans. Medicaid is a state-run health insurance program that is primarily designed for low-income residents.
3. What are the "parts" of Medicare?
Medicare Part A is known as Hospital Insurance, or HI, and covers things like hospital and skilled nursing stays. Medicare Part B is Medical Insurance, and covers things like doctors' appointments and outpatient procedures. Collectively, Medicare Parts A and B are known as Original Medicare.
Medicare Part C is Medicare Advantage, which are plans provided by third-party insurance companies and authorized by Medicare to provide benefits. Finally, Medicare Part D is prescription drug coverage, which is optional for retirees.
4. Will I be automatically enrolled in Medicare at 65?
It depends. If you're already receiving Social Security benefits when you turn 65, you'll be automatically enrolled in Medicare Parts A and B when you turn 65 and your Part B premiums will be taken out of your Social Security checks. On the other hand, if you aren't already receiving Social Security retirement benefits, you'll need to sign up.
5. How can I enroll in Medicare?
The process of enrolling in Medicare only is rather painless, and can be completed in 15 minutes or so at the Social Security Administration's website.
When you first turn 65, your initial enrollment period runs for seven months beginning three months before the month of your 65th birthday. If you aren't exempt from enrolling due to having group coverage through an employer (more on that shortly), your Part B premiums can be permanently increased for failing to enroll during your initial enrollment period. If you do have group coverage and choose not to enroll in Parts A and B during your initial enrollment period, you'll get an eight-month special enrollment period after you (or your spouse) leave your employment.
6. Do I need Medicare if I have other health insurance?
As I'll discuss in a minute, most Americans should enroll in Medicare Part A at age 65 whether they need it or not.
If your health insurance is through your or your spouse's employer, and the employer has more than 20 employees, you aren't required to enroll in Medicare Part B at 65. Once you leave employment, you'll have a special eight-month enrollment period.
If your employer's coverage doesn't meet the 20-employee requirement, or if you have Marketplace coverage, COBRA, or TRICARE (nonactive duty), you'll still need to sign up during your initial enrollment period.
7. Can I only enroll in Medicare Part A?
Yes. In fact, this is a common strategy for senior citizens who are 65 or older, but are still covered through an employer's plan. As long as you're eligible for Medicare benefits, Part A is free, while Part B comes with a monthly premium. Therefore, it can make sense to delay Part B enrollment if you don't need it, but since it's free, there's no financial reason not to enroll in Part A as soon as you're able to.
8. How much does Medicare cost?
For most seniors, Medicare Part A is free. You won't have to pay a premium for your coverage (although there are deductible and coinsurance expenses when you use it). On the other hand, Medicare Part B has a monthly premium, which is $134 per month in 2017. Retirees who already paid their premiums through Social Security pay slightly less due to cost-of-living adjustment rules and higher-income retirees pay more -- up to $428.60 per month -- depending on their income.
Medicare Part C and D coverage costs vary significantly depending on where the beneficiary is located and how much is covered.
9. What if I don't enroll in Medicare when I'm first eligible?
Unless you qualify for a special late enrollment period as I've discussed elsewhere in this article, you may have to pay a late-enrollment penalty if you don't sign up for Medicare Part B during your initial enrollment period.
The penalty can be pretty severe. Your monthly Part B premiums can be permanently increased by 10% for every full 12-month period that you could have had Part B, but didn't sign up.
10. What is Medigap?
Medigap is the common name for Medicare Supplemental Insurance, and is private insurance designed to cover certain expenses not covered by Original Medicare. There are 10 different Medigap plans and availability and cost depend on your location. Don't confuse Medigap with Medicare Advantage, which is not supplementary coverage but rather is a different way to receive your Medicare.
11. What is covered by Original Medicare?
Medicare Part A, or Hospital Insurance, covers hospital services, skilled nursing facilities (for a limited time), nursing home care if medically necessary, hospice care, and certain home health services. Medicare Part B, Medical Insurance, covers outpatient surgeries, medical supplies, and preventative services like lab tests.
12. What is not covered by Original Medicare?
While this isn't an exhaustive list, Medicare doesn't cover long-term care, dental or vision care, acupuncture, or hearing aids.
It's also important to mention that you will have certain out-of-pocket expenses for covered services as well. Medicare Part A has a $1,316 deductible per benefit period and coinsurance requirement for longer hospital or skilled nursing stays. Part B has a $183 annual deductible as of 2017, but you're generally responsible for paying 20% of covered services.
The more you know, the better prepared you'll be
Medicare is an important part of retired life for virtually all Americans, so it pays to learn some of the basic principles of the program. The more you understand about Medicare, the better equipped you'll be to choose healthcare services, know what costs you can expect, and make other healthcare decisions, such as whether you need additional health insurance in retirement or not.