Turning 65 and looking forward to being a member of the Medicare system? Most people do. Initial eligibility in Medicare makes health insurance available to people who may not be able to afford it or medically qualify for it under other circumstances.
Signing up can be accomplished online if necessary, but like much else concerning Medicare there is a “Yes, but…“ that muddies the water from being crystal clear.
Most people qualify for Medicare coverage when they attain age 65.
When Medicare became law during the Lyndon Johnson administration in 1965, full retirement age for Social Security was also 65 and enrollment was automatic for most people. In 1983, Congress amended the related Social Security law to gradually increase the age for full benefits to 67 over 22 years.
Partial Social Security benefits are available for many individuals who elect them beginning at age 62. Medicare signup is also automatic for these people receiving benefits from Social Security, the Railroad Retirement Board, or who are disabled. Since many people wait until their eligibility age for full SSN benefits, they will need to sign up for Medicare at age 65. Social Security does not offer full benefits to most Baby Boomers until age 66 or 67 depending on their birth year.
There are additional eligibilities connected to where you live and if you have certain life ending diseases, but these cases are relatively rare. If you have additional questions, they should be addressed to your nearest Social Security office or looked up at www.medicare.gov online.
Original Medicare has three main parts. They are (generally) Part A (Hospital), Part B (Provider Reimbursement), and Part D (Prescription Drugs).
For most people, the Part A premium has been paid in advance through payroll deduction while you were working. In order to qualify for premium free Part A, you need to have worked for at least ten years and be a U.S. citizen or legal resident for the last five years. (This seems to be a conflict in the wording of the requirements, but it comes right off a government eligibility website.) People who do not qualify for free Medicare Part A may alternatively otherwise qualify for Part A and pay a monthly premium payment.
Medicare Part B is signed up for usually at the same time as Part A. There is a premium charge for Part B. It changes every year and is deducted automatically from your monthly Social Security monthly transfer into your bank account. In 2013, the charge is 104.90 for persons who earn less than $85,000 a year. Higher income earners pay more.
In the case you decide to work after your initial eligibility and have employer sponsored health insurance, you may sign up when your employer sponsored insurance ends. COBRA (an 18 month mandated extension of employer health insurance availability) does not count for signups to Medicare Part B.
Medicare Part B does not pay all your expenses. It generally pays 80 percent of allowable provider charges. Most people buy an additional MEDIGAP insurance policy to pay for expenses that Medicare does not pay. There a number of different flavors of MEDIGAP policies. Almost all MEDIGAP policies named the same thing are identical between companies. The premiums for these policies will vary between the offering companies and in the various states. More information on the flavors of MEDIGAP will be included in later columns.
When you sign up for Medicare Part B can be very critical to your coverage. First, late signers can be charged a penalty by Medicare. Secondly, the MEDIGAP insurance company you choose is prohibited from asking you any medical questions during your initial enrollment. Signing up late will allow insurers to “rate you.” If a senior has a pre-existing health condition, insurance companies can take your health into account and delay payment for that condition for a period of time or refuse to issue you a policy.
Medicare Part D is the government’s prescription drug benefit. For about $30 per month (the amount varies), the government looks at your maintenance prescriptions and helps you choose a prescription insurance company. The insurer pays most drug bills up to $2900 or so after a deductible. At that point, you are on your own in something called the donut hole. The donut hole continues until you have spent $4700 for drugs in a coverage year. If you have catastrophic drug costs, the PART D benefit kicks in again and pays about 95 percent of your costs. The donut hole will gradually disappear each year until 2020 when it vanishes all together.
When you visit your physician, ask him or her to prescribe as many generic medications as possible. Generics usually cost a fraction of the similar brand name medication.
Part D is optional. You are not required to buy the additional policy, but if you have any maintenance medications, it is probably a good purchase.
We’ve introduced Parts A, B, and D. Whatever happened to Medicare Part C? There is a Part C and it is called “Medicare Advantage.” It will be addressed more completely in a separate article. Briefly, Medicare Advantage may allow for some premium savings and combinations of coverage different from the services offered in Medicare Parts A, B, &D with some additional insurances. Participants give up a number of personal choices in exchange for this managed care.
Next: Deductibles and co-pays. The stuff most folks are unaware of before they sign up.