As you head toward retirement, several significant life decisions await you. One of these essential changes will involve your health insurance coverage. Medicare is a federally-sponsored type of health insurance that retirees become eligible for shortly before turning 65. In some instances, you may be eligible before your 65th birthday. Those with disabilities, end-stage renal disease, or ALS can draw on Medicare benefits early.
Medicare is a U.S. federal insurance program that provides health coverage for people over age 65. Coverage has recently expanded to include those with certain illnesses and disabilities who cannot work.
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Eligibility
As you contemplate enrollment in a Medicare plan, you must satisfy specific conditions regarding citizenship or residence status, age, health, and disability. You have natural citizenship or have gained citizenship status; you must be 65 years old or older to enroll.
You also qualify if you have been drawing on Social Security benefits for 24 consecutive months. In addition, those with disabilities, ESRD, and ALS may also be eligible for benefits.
Inner Workings Of Medicare
Original Medicare health care plans offer two types of insurance benefits.
Part A
Part A plans provide institutional benefits such as:
- Hospice care
- Inpatient hospital visits
- Home healthcare
- Skilled nursing care
As you use part A benefits, expect to pay a portion of your medical costs out of pocket. If you have worked for ten years or more, you do not have to pay a premium for part A. Those who do not meet this condition still qualify for a plan, but a small monthly premium may be required to yield benefits. As of 2021, the part A deductible for an individual was $1484.00.
You would be responsible for this deductible for each benefit period. Benefit periods begin when you are first admitted and end when you have been discharged for over 60 days. You could potentially pay this premium several times per year if admitted and discharged to multiple care facilities.
Part B
Part B of an original Medicare plan provides benefits for outpatient services such as:
- Doctor visits
- Diagnostic testing
- Cancer teatments
- Therapy (physical, occupational)
- Mental health services
You start paying for part B when you enroll for coverage. Like part A, you pay a portion of your expenses out of pocket, including “excess charges.” These charges are amounts that some doctors charge beyond Medicare-approved limitations.
While excess charges are rare, they do occur. Talk to your doctor about your insurance plan before a visit to gain more clarity about what your financial responsibility will be.
Prescription Drug Coverage
Unfortunately, prescription drugs are not covered under an original Medicare plan. Enrolling in Medicare part D will allow you to procure coverage for a portion or most of your prescription drug needs. Annual deductibles for 2021 were $445 for part D prescription coverage.
If your drug costs exceed Medicare limits, you may be classified and placed in “Catastrophic Coverage.” Your deductible responsibility will be capped at 5 percent of your total prescription drug costs for a calendar year. Medicare recipients are eligible for part D coverage if entitled to part A or actively enrolled in part B coverage.
Advantage Plans
Medicare Advantage plans are owned and run by private insurance companies with government contracts, and they have strict requirements to have the privilege of doing business with you. Medicare Advantage plans, also known as part C, are offered as an alternative to original Medicare plans. If you enroll in part C, you are no longer entitled to original Medicare benefits.
Part C coverage is more comprehensive than original Medicare, with coverage for dental, fitness, and even transportation to and from medical visits. Many part C plans also wrap in prescription drug coverage, but all of this comprehensive coverage does come with additional costs, such as:
- Monthly premiums
- Annual deductibles for medical services
- Annual deductibles for drug coverage
- Copays and coinsurance for medical services and procedures
To enroll in Medicare Advantage plans, you must already be registered in parts A and B of original Medicare and continue to pay necessary premiums. Part C plans are the most like employer-provided health insurance. You pay a small copay for each service that you receive. There is no minimum age requirement as long as you are enrolled in original Medicare.
Supplemental Insurance
Private insurers issue Medicare supplement plans. They work with original Medicare plans to cover some or all of the out-of-pocket costs you would typically pay. Otherwise known as gap insurance, any premiums that you might pay for this additional coverage are worth the peace of mind you obtain, knowing that any subsequent medical or health services that may be needed will be covered.
Enrolling In Medicare
As you approach your 65th birthday, you’ll want to review all of your options for the best coverage. visit www.medicare.gov or www.cms.gov to get the process started. You can also call Social Security at 800-772-1213 to begin determining eligibility. Connect with a licensed Medicare expert to help you navigate the process, and look forward to continued care in retirement.
