Medicare covers, or will eventually cover, virtually all American workers, but this massive healthcare program isn't well understood by millions of people. Many don't know when they will become eligible for Medicare, what it covers (and doesn't), and what it costs. With that in mind, here are seven frequently asked questions about Medicare and the answers to each.
1. When can I get Medicare benefits?
Unless you're disabled, the answer is 65 years old. A common misconception among Americans is that you can get Medicare as soon as you claim Social Security benefits, which can be as early as age 62. Unfortunately, even if you retire early and claim your Social Security benefit early, you'll have to wait until 65 before you'll be covered for Medicare.
2. How do I apply for Medicare?
You may not have to. If you're already receiving Social Security retirement benefits when you turn 65, you'll be enrolled in Medicare automatically. If this is the case, you'll be automatically enrolled in Parts A and B of Medicare (more on the parts in a bit), and you can expect to receive your Medicare benefits card about three months before you turn 65.
If you aren't receiving your Social Security retirement benefit when you turn 65, you'll have to apply for Medicare, which you can do quite easily on the Social Security Administration's website. Your initial enrollment period begins three months before the month of your 65th birthday and extends for three months after.
3. What are the "parts" of Medicare?
There are four "parts" of Medicare. Here's a quick rundown, along with links to learn more about each part:
- Part A is Hospital Insurance, or HI. This primarily covers hospital stays and some stays in skilled nursing facilities.
- Part B is Medical Insurance. This covers doctors' visits, lab tests, and outpatient procedures, just to name a few.
- Part C is Medicare Advantage. These are plans offered by private companies to provide Medicare benefits.
- Part D is Prescription Drug Coverage. This is optional for beneficiaries.
Parts A and B are collectively referred to as "Original Medicare," and are generally what's being referred to when I use the term Medicare.
4. How much does Medicare cost?
Medicare Part A is free for the vast majority of American seniors, but has a deductible of $1,340 per benefit period, as well as coinsurance requirements if your hospital stay lasts more than 60 days or if your skilled nursing stay extends beyond 20 days.
Medicare Part B has a monthly premium. For 2018, the standard monthly premium is $134, but high-income seniors pay significantly more than this. At the high end, seniors with incomes over $320,000 (joint tax return) or $160,000 (individual) have to pay $428.60 per month. In addition, Medicare Part B has an annual deductible of $183 for 2018.
Part D, prescription drug coverage plans, come with an average monthly premium of $35.
5. What does Medicare not cover?
One of the most important things for seniors to know is what Medicare doesn't cover. While this isn't an exhaustive list, Medicare doesn't cover long-term care, dental care, eye exams or glasses, dentures, acupuncture, hearing aids, and routine foot care.
This list is what Original Medicare (Parts A and B) doesn't cover. Certain Medicare health plans may cover some of these services.
6. What is Medigap?
Since there are many copays and deductibles, private insurers sell Medicare Supplemental Insurance Plans, or Medigap plans. There are 10 different varieties of Medigap plans, with Medigap Plan F (the most comprehensive) the most commonly chosen option. While Medigap plans are standardized in terms of the coverage they provide, costs can vary significantly.
7. I have health insurance already through an employer. Do I have to enroll in (and pay for) Medicare at age 65?
It depends what kind of health insurance you have. If you have insurance through your employer or your spouse's employer and the primary insured is still working, you may not be required to enroll in Medicare as long as the company sponsoring your coverage has at least 20 employees. In this case, you'll have a special enrollment period after you (or your spouse) retire or leave that employer.
On the other hand, if your insurance is through an employer you've already retired from, you still have to sign up at 65. If you are required to sign up for Medicare Part B, and don't, you'll face a permanent penalty of 10% of the Medicare Part B premium for every year you were supposed to enroll but didn't.
It's also worth noting that since Medicare Part A is free, it generally doesn't make sense to delay signing up for it, even if you're not required to. Your employer's insurance will be your primary coverage, and Medicare will be secondary. However, since Part B comes with a premium, it does make sense to wait if you're still covered by your employer's plan.