Medicare ABCs

In 2019 is estimated by the Centers for Medicaid & Medicare Services that about 60 million seniors are enrolled in Medicare Part A or B with 38 million in original Medicare and 22 million enrolled in Medicare Advantage plans.  With the growing number of Baby Boomers reaching retirement age, that number is sure to rise.  So what does Medicare cover, when should you enroll and what does it cost?  The following is a short review:

Part A

Covers: Hospital care, a limited amount of skilled nursing facility care, hospice and home health services.  Don’t confuse skilled nursing with long-term care.  Skilled nursing is covered only after a qualifying hospital stay of at least three days and Medicare only pays for the first twenty days of skilled nursing care.  After that, the patient becomes responsible for part of  the cost after twenty days and all of the cost after 100 days. Part A does not cover custodial long-term care, dental care, vision care and hearing aids.

When to Enroll: Unless you are receiving social security benefits at least four months before turning 65, you will need to enroll in Medicare. You can sign up for Medicare three months before the month of your birthday and three months after.  If you are still working and covered by a employer health plan,  you have eight months to enroll after your coverage ends.  COBRA doesn’t count as coverage.

What does it cost: If you have paid Medicare taxes during your lifetime there should not be a monthly premium for Part A.  In some cases premiums can be as much as $240 or $437 depending on the number of months you paid Medicare taxes.  There are deductibles and coinsurance. The deductible is $1,364 for each inpatient stay at a hospital or skilled nursing facility up to sixty days. After sixty days the patient is responsible for $341 per day and $682 per day after ninety days. It’s possible to have multiple stays and thus multiple deductible and coinsurance payments in one year.

Part B

Covers: Medically necessary services, preventive services, ambulance service, medically necessary equipment, mental health care, some second opinions.

When to Enroll: If you are not automatically enrolled in Part B you can sign up during the three month periods before and after the month you turn 65.  If you are covered by a group plan you have eight months after your coverage ends to enroll in Part B without penalty.

What does it cost: Premiums will vary by income and are typically deducted from Social Security benefits.  Premiums range from $135.50 to $460.50 in 2019.  The Part B deductible is $185 plus 20% of costs after that.

Part D: Prescription drugs.

Covers: You should enroll in Part D as soon as you are eligible for Medicare.  If you already have drug coverage, you can delay enrollment until that coverage ends.  If you do not enroll when you are first eligible there are penalties for late enrollment.

What does it cost: Premiums and deductibles vary by plan.  Deductibles can be as high as $415.  There is a gap in coverage called the “donut hole”.  Once costs reach $3,820 during the year, you are responsible for part of the cost of drugs until your out of pocket expenses reach $5,100.  After that, you automatically qualify for “catastrophic coverage” and you are responsible for coinsurance or co-pays the rest of the year.

Medicare Advantage Plans

Medicare Advantage plans are private insurance plans that cover Part A, B and most often Part D. These plans can offer other benefits like vision, hearing and dental coverage.  Costs vary and can be lower than original Medicare, but you are usually limited to getting services from providers in a network and you need approval to see a specialist.

Medicare Supplement Plans

Medicare Supplement plans help pay some of the costs Medicare doesn’t pay.  They are sold by private insurance companies and are not the same as Medicare Advantage plans. They usually don’t cover long-term care, dental or vision benefits.  Insurance companies must offer the same benefits, but there are variations between plans and you should be careful choosing a plan to make sure what is covered and not covered.

For more information, the Medicare.gov website and the Medicare and You Handbook are great resources.  State insurance commissions will have medicare supplement guides that are helpful.

It you have any questions, please give me a call.