Virtually every American over the age of 65 is covered by Medicare, or will be after they retire. However, there's a lot about this massive health insurance program that isn't well understood by many people. With that in mind, here are 16 things Americans often don't know about Medicare and what you should know about each.
1. What is the difference between Medicare and Medicaid?
This is perhaps the most frequently asked Medicare questions I get asked by younger people. Medicare is the health insurance program designed for older Americans, and covers virtually all senior citizens over the age of 65. On the other hand, Medicaid is designed for low-income individuals, regardless of age, and is run by the states.
2. Am I qualified for Medicare?
Most Americans qualify for Medicare beginning at age 65. Eligibility depends on whether you (or your spouse) have earned enough Social Security credits for eligibility, and you can find out for sure by checking your latest Social Security statement at www.ssa.gov.
3. Do I need to enroll for Medicare, or is it automatic?
This depends on whether you're already receiving Social Security benefits or not when you turn 65. If you're already collecting Social Security, you'll be enrolled in Medicare Parts A and B automatically. If not, you'll need to enroll. The enrollment process can be completed in about 15 minutes on the Social Security Administration's website.
4. When do I need to sign up?
If you need to sign up for Medicare, you can do so during your initial enrollment period, which is a seven-month period beginning three months before the month you'll turn 65. Unless you're exempt due to having employer coverage, you can be hit with a penalty for failing to enroll during this time frame.
5. Should I enroll in Medicare if I'm still working?
It depends. Medicare Part A is typically free, so it rarely makes sense not to enroll for at least Medicare Part A, even if you have other insurance.
On the other hand, Medicare Part B enrollment isn't necessary if you have health insurance through your (or your spouses') employer, and the employer has over 20 employees. In this case, you'll have an eight-month special enrollment period once you no longer have coverage.
6. What if I pay for other health insurance?
If you have health insurance through the Marketplace (a.k.a. Obamacare), pay for COBRA, or if you have TRICARE and are not in military active duty, you'll still need to sign up for Medicare Parts A and B during your initial enrollment period.
7. What are the "parts" of Medicare?
You may have heard things like "Medicare Part B." Medicare is divided into four distinct "parts":
- Part A is Hospital Insurance, which covers things like hospital stays and care at skilled nursing facilities.
- Part B is Medical Insurance, which covers doctors' visits, preventative care, and outpatient procedures.
- Part C is Medicare Advantage, which are plans run by third-party insurance companies that provide Medicare benefits.
- Part D is prescription drug coverage.
8. What is Original Medicare?
Original Medicare refers to Medicare Parts A and B -- Hospital Insurance and Medical Insurance, the two forms of Medicare that virtually all senior citizens get. Generally, the term "Medicare" is used to refer to just Parts A and B, not to Medicare Advantage or Prescription Drug Coverage.
9. What does Medicare not cover?
Seniors should be aware that there are some healthcare services that are not covered whatsoever by Medicare. These include:
- Eye exams, glasses, and related services
- Chiropractic care
- In-home health aides
- Longer nursing home stays
- Dental care (with a few emergency exceptions)
- Hearing aids
10. How much are Medicare premiums?
For the vast majority of seniors, Medicare Part A has no premium. Medicare Part B has a monthly premium, but it can vary considerably. In 2018, new beneficiaries pay a standard premium of $134 per month, although retirees whose payments have been paid through their Social Security benefits for several years may pay less. And higher-income retirees can pay much more than these amounts.
The costs of Medicare Parts C and D, both of which are optional, vary considerably depending on location and coverage amounts.
11. How much will I still have to pay?
In addition to the premiums, Medicare also has deductibles and coinsurance you may have to pay. Hospital Insurance has a $1,340 deductible for 2018, and additional coinsurance requirements for skilled nursing stays and hospital stays over 60 days. Medical Insurance has a $183 annual deductible, and generally covers 80% of qualifying services beyond that.
12. When can I make changes to my Medicare?
The annual election period (also known as the open enrollment period) runs from Oct. 15 through Dec. 7 every year. During this time, you can make changes such as changing from Original Medicare to Medicare Advantage or vice versa, or add prescription drug coverage.
13. Do all physicians accept Medicare?
No. Doctors who can fall into several categories when it comes to Medicare acceptance. Participating doctors accept the Medicare-approved payment amount, and Medicare covers 80% of the covered service. Non-participating doctors still accept Medicare, but can add another charge to the cost of a service. And many doctors opt out of Medicare, meaning that they won't accept it at all. Be sure to check with your physician to see where they stand.
14. What is Medigap?
Medicare Supplemental Insurance, commonly known as Medigap, is a separate private insurance plan designed to "bridge the gap" -- hence the name -- and cover expenses that Original Medicare does not. There are 10 Medigap plans available, and the most common is known as Plan F, which is the most expensive but covers virtually every deductible and uncovered cost you can incur.
15. What is Medicare Advantage?
Medicare Part C, or Medicare Advantage, is often confused with Medigap. However, Medicare Advantage is simply another way of receiving Medicare, not just an additional form of coverage.
16. Is Medicare in danger of being cut?
The short answer to this question is yes. Medicare isn't bringing in enough tax revenue to cover its projected long-term costs, and without changes, the program will eventually run out of money. However, Medicare changes could come in the form of tax increases instead of benefit cuts, so it's not at all certain that cuts will happen.