Medicare open enrollment is here, and you may be wondering whether or not you qualify — or, if you’re already enrolled, what exactly is covered. In fact, given its confusing, alphabet-soup-style descriptors, you may even find yourself wondering, “what is Medicare, anyway?”
Like any health insurance policy, Medicare’s ins and outs can be a bit confusing at first. But that’s no reason to skip out on this special, government-sponsored healthcare option, which can be a valuable financial asset as you approach retirement.
In this post, we’ll break down the basics of Medicare, including what’s coverage under its various “parts” and what you can expect to pay toward your policy. We’ll also discuss when and how to go about enrollment if you’re ready, and how the plan interacts with your Social Security benefits.
Ready to cure that Medicare confusion? Let’s get started!
What is Medicare, Exactly — and Who Qualifies?
Medicare is a government-sponsored health insurance program primarily built for people aged 65 and over, though it also covers some younger people with specific disabilities. The coverage is broken down into individual parts (A, B, and so on, which we’ll get to below), and is funded via a combination of taxes and beneficiary premiums.
That’s right — Medicare coverage isn’t free, although you may end up qualifying for $0 monthly premiums if you’ve been paying income tax for a long enough period of time (which you probably have during your working years). Your Medicare coverage can also work with your existing health insurance, and in many cases is worth signing up for even if you’ve still got a healthcare plan through your employer.
The A, B, Cs — and Ds — of Medicare
So what does Medicare cover, exactly?
Well, that depends on what “part” you sign up for. The basic sections of Medicare include the following:
- Medicare Part A: Hospital Insurance (inpatient services)
- Medicare Part B: Medical Insurance (outpatient services)
- Medicare Advantage Plans: Also sometimes known as “Medicare Part C.” These plans are run by private insurance companies, but subject to government regulations, and must include both Part A and Part B coverage, but may “do so with different rules, costs, and restrictions,” according to the Medicare Rights Center.
- Medicare Part D: Drug coverage.
Part A is generally geared toward inpatient services, and covers hospitalization, skilled nursing facility care, hospice care, and home health care.
Part B is generally geared toward outpatient services, and covers both preventative wellness and medically necessary procedures for both diagnostics and treatment. (In short, it covers regular doctor visits.)
Advantage Plans offer both Part A and Part B coverage, but because they’re run through private companies, your out-of-pocket costs may differ from what you’d pay on Original Medicare.
Part D adds prescription drug coverage to an existing Medicare plan.
It’s important to understand that Medicare does cover every medical cost you might encounter. Some common procedures that aren’t covered by Medicare include:
- Long-term care (also called custodial care )
- Most dental care
- Eye exams related to prescribing glasses
- Cosmetic surgery
- Hearing aids and exams for fitting them
- Routine foot care
How Much Does Medicare Cost?
Although Medicare’s cost is offset by government contributions (funded by income and payroll taxes), some beneficiaries do still pay a monthly premium toward their coverage. Most people who’ve spent a lifetime working will have offset their Part A premiums by paying taxes over the years, but if not, you might pay up to $422 per month for Part A coverage.
Part B’s standard premium is $134 per month, but may be higher depending on your income — or lower if you’re receiving certain Social Security benefits. Premiums for Medicare Advantage Plans and Part D coverage vary depending on your specific plan provider. (For the latest information on Medicare pricing, visit their official website.)
When (and How) Should I Sign Up for Medicare?
Medicare’s open enrollment period runs from October 15 through December 7, 2018 — which means it’s open right now!
While many people are automatically enrolled as part of their Social Security benefits, it’s important to verify your enrollment to ensure you can get coverage, as the window is limited. Furthermore, if you’re delaying your Social Security benefits for any reason, you’ll need to sign up manually.
If you’ll be receiving Social Security at least four months before you turn 65, you’ll automatically receive Part A and Part B coverage starting on the first day of the month of your birthday. Look for a red, white and blue Medicare card in the mail three months before you cut the cake.
If, however, you won’t be receiving those benefits, you’ll need to enroll yourself, which you can do in the three months leading up to your birth month, the month of your birthday, and three months after. For your convenience, there are a variety of ways to sign up for coverage:
- Apply online by visiting this link.
- Visit your local Social Security office, which you can find by clicking here.
- Call Social Security directly at 1-800-772-1213 (TTY: 1-800-325-0778).
Medical expenses are a large factor in our financial planning and goal-devising, especially as we age. Medicare can help offset the high costs of medical procedures and allow you to enjoy the retirement you’ve worked so hard for with an easy mind.
For more information on Medicare coverage, eligibility, and how to fund the expenses of healthcare, don’t hesitate to reach out to us directly. We’re happy to help you find the coverage you need, so you can get back to worrying about the important stuff: enjoying your time, your freedom, and the wealth that supports them.