What is Medicare?
Medicare is health insurance for people aged 65 or older. Also for individuals under age 65 with certain disabilities and people with End Stage Renal Disease (permanent kidney failure). You must have entered the United States legally and have lived here for at least 5 years to be eligible for Medicare.
Medicare consists of four parts: Part A, Part B, Part C and Part D.
Original Medicare or Traditional Medicare is administered by the federal government. Traditional Medicare has two parts: Part A and Part B.
Medicare Part A
Part A is hospital insurance that helps pay for inpatient care you get in a hospital, skilled nursing facility or hospice. Part A also pays for home health care if you meet certain conditions. Most people don’t have to pay a monthly premium for Part A because they or a spouse paid Medicare taxes for 40 calendar quarters (10 years) while working in the United States. If you aren’t eligible for premium-free Part A, you may be able to buy Part A. You must meet one of these conditions:
- Your 65 or older. You’re entitled to or enrolling in Part B and you meet the citizenship or residency requirements
- You’re under 65. You are disabled and your premium-free Part A coverage ended because you returned to work. If you’re under 65 and disabled, you can continue to get premium-free Part A for up to 8.5 years after you return to work.
Many people are automatically enrolled in Part A. If you’re age 65 or older and you are not getting Social Security or RRB benefits yet, you won’t get Part A and Part B automatically. You need to sign up for them by contacting Social Security Administration at 1-800-772-1213 or visit a local office. TTY users should call 1-800-325-0778. If you worked for a railroad, contact the RRB to sign up.
Part A Late Enrollent Penalty
If you don’t sign up for Part A until after you’re first eligible, you may have to pay a penalty equal to 10% of the Part A premium, unless you’re eligible for a Special Enrollment Period. The 10% premium penalty applies no matter how long you delay Part A enrollment. You will have to pay the premium penalty for twice the number of years you could have had Part A, but did not sign up.
Medicare Part B
Part B covers medical services like doctors’ services, outpatient care, home health services and other medical services. Part B also covers some preventive services. There is a monthly premium for Part B. The standard Part B premium for 2020 is $144.60.
Many people automatically get Part B. If you collect benefits from Social Security or the Railroad Retirement Board (RRB), you will automatically get Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance). If you don’t want to keep Part B, you must follow the directions when you receive your Medicare card to inform Medicare that you don’t want it.
By not enrolling in Part B when you are first eligible, you may have to pay a late enrollment penalty to get it later. For each 12-month period you delay enrollment in Part B, you will have to pay an extra 10% of the Part B premium, unless you qualify for a Special Enrollment Period. An example of a Special Enrollment Period would be if you had coverage through an employer and did not need to enroll in Part B. In most cases, you will have to pay that penalty every month for as long as you have Part B. If you’re enrolled in Part B because you’re disabled and you’re paying a premium penalty, you no longer have to pay this penalty once you turn age 65.
There are three enrollment periods that allow you to enroll in Part B:
Initial Enrollment Period – You can sign up when you’re first eligible for Part B. For example, if you’re eligible for Part B when you turn 65, this is a 7-month period that begins 3 months before the month you turn 65, includes the month you turn 65, and ends 3 months after the month you turn 65. If you enroll in Part B during the first 3 months of your Initial Enrollment Period, your coverage start date is the 1st day of your birthday month. If your birthday is the first day of the month, your coverage begins on the 1st day of the prior month.
General Enrollment Period – If you did not sign up for Part A and/or Part B (for which you pay monthly premiums) when you were first eligible, you can sign up between January 1–March 31 each year. Your coverage will begin July 1. You may have to pay a higher premium for late enrollment.
Special Enrollment Period – If you did not sign up for Part A and/or Part B (for which you pay monthly premiums) when you were first eligible because you’re covered under a group health plan based on current employment, you can sign up for Part A and/or Part B as follows:
- Anytime that you or your spouse (or family member if you’re disabled) are working, and you’re covered by a group health plan through the employer or union based on that work.
- During the 8-month period that begins the month after the employment ends or the group health plan coverage ends, whichever happens first.
Part B Late Enrollment Penalty
For each 12-month period you delay enrollment in Medicare Part B, you will have to pay a 10% Part B premium penalty, unless you have insurance from you employer or spouse’s employer. Also, you will not be charged a penalty if you are eligible for a Medicare Savings Program (MSP).
Note: If you have COBRA coverage or a retiree health plan, you don’t have coverage based on current employment. You’re not eligible for a Special Enrollment Period when that coverage ends.
Types of Medicare Plans:
- Original Medicare – Managed by the Federal government, it provides your Medicare Part A and Part B coverage. (You can choose to have either one, or both parts.) In addition to Original Medicare, you can enroll in a Part D plan for prescription drug coverage. You can also purchase Medicare Supplement Insurance or “Medigap” to cover the gaps in Original Medicare.
- Medicare Advantage (Part C) – Medicare Advantage Plans are an alternative to Original Medicare and are only available through private insurance companies.
- Medicare Cost Plans – Medicare Cost Plans are a type of Medicare health plan available in certain areas of the country.
- Demonstrations/Pilot Programs
- Programs of All-inclusive Care for the Elderly (PACE)
Part C are Medicare Advantage Plans. Private insurance companies offer the Medicare Advantage Plans. You must have both Part A and Part B to join one of these plans. The plans provide all of your Part A and Part B services and generally provide additional services. You usually pay a monthly premium, and co-payments that will likely be less than the coinsurance and deductibles under Original Medicare. In most cases, these plans also offer Part D prescription drug coverage. Costs and benefits vary by plan.
The different types of Medicare Advantage Plans are:
- Health Maintenance Organization (HMO) Plans – An HMO plan has a network of primary care doctors, specialists, hospitals and other providers that you must go to. Most plans require referrals to see specialists.
- Preferred Provider Organization (PPO) Plans – A PPO plan has a network of primary care doctors, specialists, hospitals and other providers that you may go to. You have the flexibility to go to any doctors, specialists, or hospitals that are not on the plan’s list, but it will usually cost more.
- Private Fee-for Service (PFFS) Plans – You can receive services from any Medicare-approved provider such as a doctor or hospital. The provider must agree to the Private Fee-for-Service Plan’s terms and conditions of payment before treating you. If your provider does not agree to the plan’s terms and conditions of payment, the provider should not provide services to you except for emergencies. You will need to find another provider that will accept the plan.
- Special Needs Plans (SNP) – Plans for people with certain chronic diseases and conditions or who have specialized needs. One example is people who have both Medicare and Medicaid. or people who live in certain institutions).
- HMO Point of Service (HMOPOS) Plans – An HMO plan that may allow you to get some services out-of-network for a higher cost.
- Medical Savings Account (MSA) Plans – A plan that combines a high deductible health plan with a bank account. Medicare deposits money into the account (usually less than the deductible). You can use the money to pay for your health care services during the year.
Annual Election Period (AEP)
You can enroll in a Medicare Advantage Plan every year during the Annual Election Period (AEP). The Annual Election Period begins on October 15 and goes thru December 7.
Initial Election Period (IEP)
You can also enroll in a Medicare Advantage Plan during your Initial Election Period (IEP). Your IEP starts the three months before your 65th birthday. It ends three months following your 65th birthday. In total, it’s a 7-month period.
Special Election Period (SEP)
A Special Election Period (SEP) allows you to make changes to your Medicare Advantage and Part D coverage.
Some examples of Special Election Periods are:
- If you move out of the plan’s service area
- If you lose employer group coverage
Open Enrollment Period
The Open Enrollment Period (OEP) is from January 1 thru March 31.
What you can do:
- If you’re in a Medicare Advantage Plan, you can switch to another MAPD.
- You can drop your MAPD and return to Original Medicare. You’ll also be able to join a Part D Plan.
What you can’t do:
- Switch from Original Medicare to a Medicare Advantage Plan.
- Join a Part D plan if you’re in Original Medicare.
- Switch from one prescription drug plan to another if you’re in Original Medicare.
Medicare Part D
Part D Plans are prescription drug plans. Private insurance companies offer the plans. There are two ways to get prescription drug coverage:
- Medicare Prescription Drug Plans – These are stand alone plans (sometimes called “PDP’s”). Stand alone plans can be added to Original Medicare, Medicare Cost Plans, Private-Fee-for-Service (PFFS) Plans and Medical Savings Account (MSA) Plans.
- Medicare Advantage Plans – You get all of your Part A and Part B coverage, and prescription drug coverage (Part D), through these plans.
To join a Part D plan, you must have Part A or Part B. You must also live in the plan’s service area.
Extra help or low income subsidy (LIS) is a program that helps the out of pocket costs of Part D coverage.
Low Income Subsidy (LIS) Benefits
- Pays for your Part D premium
- Lowers the cost of your prescription drugs
- Gives you a Special Enrollment Period allowing you to make a change in coverage
- You will not be subject to a Part D Late Enrollment Penalty
Medicare Savings Programs (MSP)
These are federally funded programs administered by each individual state. These programs are for people with limited income and resources. They help pay some or all of their Medicare premiums, deductibles, copayments and coinsurance.
There are four Medicare Savings Programs:
- Qualified Medicare Beneficiary (QMB).
- Specified Low-Income Medicare Beneficiary (SLMB).
- Qualifying Individual (QI or QI-1).
- Qualified Disabled & Working Individuals (QDWI).