If you’ve lived in the US, you’ve probably heard about Medicare. Medicare is a federal health insurance program that focuses on three distinct subclasses of citizen:
- Those 65 and older
- A select set of younger people with specific disabilities
- Those who suffer from end-stage renal disease (permanent kidney failure, also known as ESRD)
Medicare’s services as insurance are divided up into three categories:
- Medicare Part A: This section of Medicare is the hospital insurance part of the coverage. It takes care of inpatient hospital visits, nursing facilities, hospices, and offers some healthcare coverage.
- Medicare Part B: Part B deals with medical supplies, outpatient costs, a subset of doctor’s services, and preventative services.
- Medicare Part D: This coverage is dedicated to prescription drugs. It also covers several vaccines and shots.
Part A and Part B form the core coverage for patients, while Part D is seen as an additional, optional buy-in.
What Does Medicare Cost?
Part A and Part B of Medicare both rely on premiums. If, however, you or your spouse paid into Medicare while you were working for a certain amount of years, your Part A coverage is free. Contributions to Medicare during your working life help offset the cost of Part A care and allow you to experience the benefits when you need it.
Not everyone qualifies for premium-free Part A coverage, though. If you don’t qualify for Part A, you can pay for it. If you have paid into Medicare for less than thirty (30) quarters, your premium is $458. If the amount of time you paid for Medicare is more than thirty (30) but less than thirty-nine (39) quarters, you pay a reduced premium of $252 to access Part A. There’s also the caveat that you MUST have Part B coverage, and you MUST pay premiums on both Part A and Part B.
Most people will pay the standard premium of $144.60 to access their Medicare Part B coverage. If you reported value for your modified adjusted gross income on your IRS tax return from up to two (2) years ago, you would have to pay an additional amount. This additional cost is known as the Income Related Monthly Adjustment Amount (IRMAA) and is added as an extra cost to your premium.
Medicare Part D charges a monthly cost that varies from plan to plan. Generally, you only pay your Part D premium. However, there are cases where a patient requires coverage under Part D but didn’t sign up for it when they initially entered the program. Those patients may be required to pay an additional Part D late enrollment penalty. If you have an IRMAA associated with your Medicare, you will be required to pay an adjusted amount for your Part D coverage. If you are informed that you need to pay an IRMAA and refuse to do so, you risk losing access to your Medicare Part D coverage.
There is a further issue with Part D coverage that experts term the “doughnut hole” problem. Using 2020 costs, the coverage gap begins when the volume of money you and your plan have paid reaches $4,020. While you’re in this coverage gap, you’ll pay for 25% of both generic and brand name drugs and their dispensing fees. Both what you pay (25%) and what the manufacturer pays (5% of brand-name drugs, 0% in the case of generic drugs) will count towards your out-of-pocket expenses.
What is Medicare Part C?
You may have noticed that we mentioned Part A, Part B, and Part D. Medicare Part C is a specific type of plan (like an HMO or a PPO) termed a Medicare Advantage Plan. These are plans that are offered by private institutions but are approved by Medicare. Medicare Advantage Plans will usually cover your Part A and Part B coverage. These plans may also provide more in-depth coverage, such as dental, vision, and some health and wellness programs. They also cover Part D costs for your prescription medicines.
How Medicare Works
Medicare covers the cost of your services as you access them. If you’ve accessed services, you’ll be required to pay a deductible at the start of the year. You should also expect to cover up to 20% of your care’s total cost, called coinsurance. As mentioned before, drug coverage is an additional cost, since it’s covered under Part D of the plan.
Medicare tends to pay for a considerable amount but not all of the cost of your healthcare and supplies. Unfortunately, some patients can’t meet the needs of the remaining charges. Medicare Supplement Insurance (Medigap) helps patients pay for the remaining costs of their healthcare, including deductibles, coinsurance, and copayment. Some of these Medigap supplemental plans cover things that Medicare in its original form doesn’t cost, such as accessing healthcare overseas.
Deadlines for Enrollment
For those who want to access Medicare after the age of 65, there’s an enrollment window that you should be aware of. You may sign up for Medicare up to seven months before your 65th birthday. Coverage may begin the same month that you turn 65. There are times when patients need to access Medicare and missed this sign up window. For those patients, an additional late enrollment fee applies to their application. You could avoid this penalty if you delayed your signup because of your job’s group health insurance policy. You have a secondary window of eight months after you leave your employment to sign up for Medicare.
Learning More About Medicare Plans
Many independent companies offer Medicare Part C plans that cover Part A, part B, and Part D, along with additional value inclusions. Additionally, several more businesses focus on Medigap insurance coverage to help clients meet the demands of Medicare, should they need to access it. My Private Health Insurance offers clients the chance to compare and contrast different providers to find a plan that provides them the best value for money. Check us out today to find out more!