Learning about all of the in’s and out’s of Medicare can be a confusing process for many seniors. Medicare benefits are for those who are 65 and older with certain exceptions. The program is broken down into parts labeled “A, B, C, and D.” These parts each represent a different aspect of coverage.
In this article, we’ll learn what each of these parts means. We will also discuss when the right time to enroll is, and what steps you need to take to do so.
What is Medicare?
Medicare is a Federally operated health insurance program. The program is designed for those who are age 65 and older. The program also covers individuals under 65 with certain disabilities. Those with end-stage renal disease are eligible at any age.
Once you have Medicare benefits, you have options available to you regarding the ways you will get your health and prescription drug coverage.
Medicare Options and Coverage Choices
There are two main ways for you to get your Medicare benefits. The coverage is broken down into parts. There is Part A, Part B, Part C, and Part D. Parts A and B fall under Original Medicare. Part C refers to a Medicare Advantage Plan. Certain individuals receive additional coverage. This coverage can include prescription drug coverage or Medicare supplement insurance.
The first step is deciding if you’re interested in Original Medicare or a Medicare Advantage Plan such as an HMO or PPO. We will delve further into what these plans entail soon. Part D refers to prescription drug coverage and the second step is deciding if you need it. The third step is to decide if you want supplemental coverage.
When Should You Apply?
It is recommended that you sign up for Medicare benefits three months before turning 65. This recommendation stands even if you are not ready to begin receiving retirement benefits. You may opt out of collecting cash retirement benefits during the online application process and apply for retirement benefits at a later time.
Special Enrollment Period
If you or your spouse have medical insurance coverage under a group health plan through current employment, you may not need to apply for Part B at age 65. A “Special Enrollment Period” may apply to you. This period allows you to sign up for Part B during:
- Any month you continue to be covered by the group health plan AND the employment of you or your spouse continues; or
- The 8-month period that starts with the month after your group coverage plan or the employment it is based on ends. Whichever of the two come first
Explaining the Parts of Medicare
As we discussed earlier, Medicare benefits are broken into parts or sections. These are labeled Part A, Part B, Part C, and Part D. What do each of these parts entail?
Medicare Part A refers to your hospital coverage. Once you enroll, you are automatically part of this plan. It is your hospital insurance plan, and it covers hospital stays and nursing care.
Part A usually does not require paying a monthly premium due to payroll taxes that were paid during employment. There is, however, a yearly deductible that must be paid before any hospital costs will by covered by Medicare.
Approximately 80% of approved inpatient costs will be paid for the first 60 days you are hospitalized. If the stay exceeds 60 days, you will be responsible for a larger share of the costs.
In a scenario where you have not worked long enough to qualify and cannot qualify through a spouse either, you may be able to buy Part A coverage.
There are two types of services that are covered by Part B. These are:
- Medically necessary services – Includes services or supplies that are necessary to treat or diagnose your medical condition. These services or supplies must meet acceptable standards of medical practice.
- Preventative services – Health care to stave off illness or detect it early on at a point where treatment is likely the best option
You are usually not responsible to pay for preventative services as long as it comes from a provider who accepts assignment.
These are examples of what is covered in Part B:
- Clinical research
- Mental health (includes inpatient, outpatient, and partial hospitalization)
- Durable medical equipment
- Ambulance services
- Second opinions prior to surgery
- Limited outpatient prescription drugs
Part B is optional, so you may choose to opt-out if you are still receiving coverage from an employer, spouse, or union. A word of caution, however. If you opt-out when enrolling but later on decide you want the coverage, you will likely have to pay a higher premium.
Medicare Part C is typically referred to as “Medicare Advantage Plans.” For example, an HMO or PPO. These plans combine coverage for doctor visits with coverage for hospital stays. The plans are run by private companies. You can decide if you want your plan to include prescription drug coverage. Often, this can be incorporated at no additional premium.
If you elect to enroll in a Medicare Advantage plan, the plan provides all of your Part A and Part B coverage. Medicare Advantage plans sometimes offer supplemental coverage. Some examples are:
- Health & Wellness Programs
Medicare pays out a specific amount each month for your care to the Medicare Advantage Plans. The out-of-pocket costs can vary between plans and have different regulations as far as how you get certain services. The rules can also be subject to change on a yearly basis.
Prescription drug coverage, which refers to Part D, is usually part of the plan. Not every plan offers drug coverage. If this is the case, you can enroll in a Medicare prescription drug plan.
You cannot be covered for prescription drugs through an Advantage Plan and enroll in a Medicare prescription drug plan separately. If you have an Advantage Plan that already contains drug coverage and then enroll in a Medicare Prescription Drug Plan, you will be removed from the Advantage Plan and placed back in Original Medicare.
Part D of Medicare refers to Drug Coverage. Anyone who is on Medicare with either Part A or Part B is entitled to drug coverage. Income is irrelevant, and no physical exam is necessary. You cannot be denied because you’re already on other prescription drugs. You also cannot be denied for health reasons.
There are two ways to obtain drug coverage:
- Medicare Prescription Drug Plan (also known as Part D) – These are plans that add drug coverage onto original Medicare. It can also add coverage to different plans. Some of these plans include Medicare Cost Plans, Medicare Private Fee For Service Plans (PFFS), and Medicare Medical Savings Account Plans (MSA)
- Medicare Advantage Plan (also known as Part C) or a different Medicare health plan that offers prescription drug coverage. These programs supply you with all of your Part A (hospital insurance) and Part B (medical insurance) coverage as well as prescription drug coverage (Part D). Medicare Advantage Plans that include drug coverage are also referred to as “MA-PDs.” Part A and Part B are necessary to enroll in a Medicare Advantage Plan
To join a drug plan, you can take these steps:
- Enroll via the Medicare Plan Finder or on the plan website
- Fill out an enrollment form
- Contact the plan
- Contact 1-800-MEDICARE
You may not currently take any prescription medications or need any at the current time. Enrolling in a Part D plan with the lowest premium in your area keeps you covered if you do need it.
There is no single monthly premium when it comes to Part D prescription drug coverage. Each calendar year, each drug plan sets its own premium. There are some Medicare Advantage Plans that do not have an extra premium for drug coverage.
Applying for Medicare for the elderly is not necessarily easy, it is a multi-step process. It is important to understand the differences in coverage as well as how to get them before enrollment.
Do you have experience with the Medicare system? Positive or bad experiences, or tips that could expedite the process? Don’t hesitate to let us know about them in the comments section!