Medicare is American health insurance for those aged 65 years or older and others who qualify earlier due to disability benefits. With 10,000 senior citizens turning 65 years old every day, you would be surprised how many are unaware of how their health insurance works.[1] There are many ways you can learn about Medicare, such as through a Medicare podcast, webinars, and mini-courses. But it’s normal to have questions still! If you will be eligible for Medicare this year, here are the top five questions about Medicare everyone is asking.
When do I apply for Medicare?
The time to apply for Medicare is during your Initial Enrollment Period (IEP). The IEP is based around your 65th birthday month and lasts for seven months. Your IEP will begin three months before your 65th birthday and ends three months after your 65th birthday month.
For example, if your 65th birthday is on October 23rd, your IEP will begin on July 1st and end on January 31st. However, if your birthday falls on the first of the month, such as October 1st, your IEP will begin one month earlier. In this case, your IEP would start on June 1st and end on December 31st.
You will apply for Medicare Part A and Part B during this time through the Social Security office. If you fail to enroll in Medicare during your IEP and aren’t covered by creditable coverage, you will be charged with a lifelong late enrollment penalty. However, if you are covered by employer insurance, you may be able to delay your Medicare enrollment.
Do I need Medicare if I’m still working?
Suppose you or your spouse are actively working for a large employer with 20 or more employees, and the employer’s health insurance plan covers you. In that case, you can delay all parts of Medicare without a late enrollment penalty. You will be given a Special Enrollment Period to apply for Medicare, beginning when you retire or lose active coverage.
However, let’s say you decide to enroll in Medicare while on your large employer insurance. In this case, the employer plan is primary, and Medicare pays as secondary insurance.
If the employer has less than 20 employees, you must enroll in Medicare during your IEP to avoid a late penalty. In this case, Medicare is primary, and the employer plan would pay as secondary.
What does Medicare cover?
Whenever you enroll in Original Medicare through the Social Security office, you will enroll in Medicare Part A, and Part B. Medicare Part A covers inpatient care, such as your hospital room and board, hospice, home health care, and skilled nursing.
Medicare Part B covers all the care you receive outside the hospital. For example, Part B covers doctor’s visits, select vaccines, ambulance rides, medical equipment, outpatient surgery, and more.
However, Original Medicare does not cover prescriptions you pick up at the pharmacy. You would need to enroll in a Medicare Part D plan for drug coverage. Part D plans are sold by private insurance companies and are not offered by the government.
How much does Medicare cost?
The cost of Medicare Part A will likely be $0 for many of you. If you or your spouse have worked in the United States and paid payroll taxes for 40 quarters (ten years), then you will have a premium-free Part A. But, if you only have 30-39 quarters, you will have a monthly premium of $274 in 2022. If you have less than 30 quarters, you will pay $499 per month in 2022.
The cost of Medicare Part B is not based on your work history; your tax returns determine it. The Social Security office will look at your modified adjusted gross income (MAGI) from two years ago to see how much you will pay for Part B and Part D.
The standard Part B premium is $170.10 per month in 2022. But, if you were in a high-income tax bracket two years ago, you will be subject to an income-related monthly adjustment amount (IRMAA). The IRMAA charge would be added to your monthly Part B premium. If you no longer make the same income you did two years ago due to a life-changing event, you can file an IRMAA appeal.
What is the difference between Medigap vs. Medicare Advantage?
You will have out-of-pocket costs throughout the year for your healthcare services since Medicare does not fully cover all services. These out-of-pocket costs could be pricey if you have a medical emergency or need an expensive procedure. Due to these out-of-pocket costs, many beneficiaries purchase a Medigap or Medicare Advantage plan from a private insurance company.
A Medigap plan is very different from a Medicare Advantage plan. When you enroll in a Medigap plan, the plan will pay secondary to your Original Medicare. If Medicare covers a service, so will a Medigap plan. You can travel to any doctor in the U.S. and use your Medigap plan as long as they accept Medicare. Medigap plans serve the purpose of covering the “gaps” in Medicare, such as deductibles, copays, and coinsurance.
When you opt for a Medicare Advantage plan, you will no longer receive your Parts A and B benefits through the government. Your Advantage plan carrier will take on the risk of servicing your Medicare benefits. The carrier will create a network of doctors and pharmacies for you to visit and set your deductible and cost-sharing amounts for each service.
Wrapping up
It’s normal to have questions about your new health insurance! But, you don’t have to go at this alone. Contact a reputable Medicare broker for free help; that way, you can avoid any costly mistakes!
[1] https://www.census.gov/library/stories/2019/12/by-2030-all-baby-boomers-will-be-age-65-or-older.html
