Kumar B Goel-
Medicare is a health insurance program of the United States federal government primarily covering healthcare needs of seniors (those 65 years and above). People with disabilities who have been receiving social security disability benefits (SSDI) for two years, those affected by kidney failure (end-stage renal disease – ESRD), and those who have ALS (Amyotrophic Lateral Sclerosis aka Lou Gehrig disease) may also qualify for Medicare.
Medicare has many Parts:
- Part A (hospital insurance),
- Part B (medical insurance),
- Part C (Medicare Advantage or MA Plans) and
- Part D (Prescription Drug Plan or PDP).
Part A and Part B are sometimes called ‘Original Medicare‘ and are managed by the government. There are also MA-PD plans, which include both Part C and Part D, offered by private carriers. Lastly, there are Medicare Supplement plans, aka Medigap, which are also offered by private carriers.
Part A coverage includes inpatient hospitalization, skilled nursing facility, home health care and hospice.
Part B coverage includes doctors’ services, outpatient care, home health services, durable medical equipment and some preventive services.
Part C, also called Medicare Advantage, covers both Part A (hospital insurance) and Part B (medical insurance) and is provided by private insurance companies. Under Part C, you typically use doctors, hospitals and other providers in a plan’s network (HMOs and PPOs. PFFS are different). Part C plans may provide extra coverage like dental, vision and hearing, for which they may charge an additional premium.
Part D covers outpatient prescription drugs, either through a Medicare Advantage plan including drug coverage (MA-PD) or as a stand-alone Prescription Drug Plan (PDP). Prescription drugs are a significant component of healthcare costs so choose carefully.
In addition to the above, Medicare Supplement Plans (aka Medigap) are offered by private insurance companies which provide coverage that is supplemental to ‘Original Medicare’. There are various types of Medigap plans, but their coverage is standardized. For example, Plan type G in a service area will provide the same coverage irrespective of carrier. However, costs may still vary by geography, carrier and other factors for the same type of Medigap plan.
Note that MA and Medicare Supplement are mutually exclusive. Usually, you cannot have both at the same time.
Enrolling at the right time is critical:
Failing to enroll in the program at the right time may result in late enrollment penalties, which may be substantial and permanent. Unless you have equivalent coverage from other sources, enrolling in Medicare at the right time is highly recommended.
If you are already getting benefits from Social Security or the Railroad Retirement Board (RRB), enrollment in Medicare Parts A and B takes place automatically starting the first day of the month you turn 65. Otherwise, you can apply up to three months in advance before the month you turn 65. If you are not enrolled automatically, you may have to apply on your own either online or at your local Social Security office.
There are various enrollment periods which serve different purposes, as explained below.
- Initial Enrollment Period (IEP) – when you turn 65 and become eligible to apply based on age,
- General Enrollment Period (GEP) – Jan 1st to March 31st, for enrolling in Parts A and B,
- Annual Election Period (AEP) – October 15th to December 7th when you may change your existing MA or PDP Plan or go back to Original Medicare,
- Special Enrollment Periods (SEPs) – based on special circumstances like your Plan moving outside your area (there are many more such circumstances)
- Medicare Advantage Open Enrollment Period – January 1st to March 31st during which you may change your MA Plan selected during AEP or go back to Original Medicare (conditions apply), and
- Medicare Supplement Open Enrollment Period – Six months starting when you turn 65 and also have Part B. This may be the only time when you have guaranteed issue rights for Medicare Supplement Plans.
Your out-of-pocket Costs:
Your out-of-pocket costs for Medicare typically consist of Premiums, Deductibles and Copays/Coinsurance. Medicare is subsidized by the federal government so your costs are less than what they would be outside the program.
Premiums – Most people qualify for premium-free Part A but you will have to pay a premium for Part B (even if you enroll in Part C instead). Many MA Plans have zero or low monthly premiums. Premiums may also depend on income.
Deductibles – These are typically annual deductibles. For Part A, there is a deductible per ‘benefit period’. Combined Plans like MA-PD may have separate deductibles for drug coverage.
Copay/Coinsurance – These vary widely based on Plan and are either a fixed dollar amount or a percentage of the Cost.
[Kumar B Goel is President & CEO of Lighted Road Insurance, a web-based start-up helping people select and enroll in the right Medicare Plan for their needs and budget].