Getting to know the basics of Medicare for the first time can be difficult, but it is important to understand it comprehensively before you make your coverage decisions. Below we have broken Medicare down into easy to understand bits so that you can have a clearer understanding of Part A and B, costs, coverage, Medicare Plans, and more.
Medicare is a social health insurance program for people 65 or older who have met the work history requirements, disabled individuals, and people with End-Stage Renal Disease (kidney failure), or Amyotrophic Lateral Sclerosis (ALS), also known as Lou Gehrig’s Disease.
Parts A and B
Part A covers inpatient hospital stays, hospice, skilled nursing facilities, and home health care.
Part B covers outpatient and inpatient Medicare approved professional services most commonly doctors services. It also covers durable medical equipment like wheelchairs, and therapeutic medications, like some of the meds used for chemotherapy.
Assuming that you are receiving Medicare by ordinary means (retiring after at least ten years of work through which you paid the Medicare tax), you get a period of time to enroll in Medicare, and Medicare plans known as the initial enrollment period. It starts three full months before the month of your 65th birthday, the entire month of your 65th birthday, and three full months after the month of your 65th birthday, for a total of seven months. During this time you can enroll in Medicare, and sign up for a Medicare health plan, Medicare Supplement, or Prescription Drug Plan.
What If You Miss Your Initial Enrollment Period?
If you missed your Initial Enrollment Period because you were working and you had health insurance through your job, you would get a Special Enrollment Period to enroll in Medicare without penalty. Just make sure that you contact Social Security as soon as you are ready to retire or as soon as you receive notification that you are losing your health coverage to avoid penalties.
What if you were not working? If you missed your Initial Enrollment Period, and you were not actively working and receiving health insurance from your employer, you must enroll during the next General Election Period. The General Election Period starts on January 1st and ends on March 31st of every year. During this time you may enroll in Medicare Parts A and B and your Medicare will be effective on July 1st of that year. Using the General Election Period because you missed your Initial Enrollment Period may result in a Medicare Part B Late Enrollment Penalty.
Medicare Supplement plans do precisely what their name suggests, they supplement or fill the gaps of original Medicare. So for argument sake, a person with Medicare and a Medicare Supplement policy would be covered by both Medicare and the Medicare supplement. The Medigap policy would be secondary coverage. The Medicare Supplement would help to pay some of what Medicare doesn’t pay. There are 8 Medigap plans available in most states, they have letter names, and they are all are standardized by the federal government. That means, for example, that a Medicare Supplement Plan N from one insurance company will have the same coverage model as a Medicare Supplement Plan N from any other insurance company the only difference might be the cost.
Medicare Advantage (Part C)
Medicare Advantage plans are health insurance plans offered by private insurance companies. They are designed to be used instead of Medicare. Insurance companies that offer Medicare Advantage plans receive payments from CMS on your behalf so they would be responsible for your health care while you have the plan. Essentially CMS is paying for a health insurance policy for you to use instead of Medicare. While on a Medicare Part C plan you must continue to pay your Part B premium. A person with Original Medicare and a Medicare Advantage plan would present their Medicare Advantage plan ID card when they receive service, and the insurance company would pay the claim minus the cost sharing if any. Part C plans can cover outpatient prescription drugs.
Medicare Part C plans are required to cover everything that Medicare covers, and in some cases they provide extra benefits that may go a bit above original Medicare. However, plans vary from company to company. Monthly premiums, cost-sharing, doctor networks, and prescription drug formularies are some examples of how they can differ.
Part D Plans are private insurance policies that are subsidized by the federal government and are designed to assist you with the cost of your outpatient prescription drugs. Medicare Parts A and B do not cover outpatient prescription drugs, so it is vital that you get Part D coverage. Part D coverage can be had either as a stand-alone policy, or built into a Medicare Advantage plan.
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