One of the most complicated decisions you need to make after you turn 65 or retire concerns your healthcare coverage. Starting Medicare involves a series of decisions about what type of coverage you want.
We’ve put together this quick Medicare guide to help make this process as easy as possible.
Medicare is a federal health insurance program administered through an agency called the Centers for Medicare and Medicaid Services (CMS).
It is only available to certain individuals, including:
- People who are 65+
- People under age 65 with certain disabilities
- People with End-Stage Renal Disease (ESRD)
While that explanation sounds simple enough, there is a lot more to understand. Let’s start with the parts that make up Medicare coverage.
Different Parts of Medicare Coverage
There are three main parts that make up the Medicare program. Each part covers different aspects of your healthcare needs.
Medicare Part A
Medicare Part A is “hospital insurance”, and it covers inpatient hospital care. Inpatient care refers to any illness, procedure, or treatment that requires admission to the hospital. For instance, if you have knee replacement surgery and then stay in the hospital for a few days, that would be considered inpatient care.
What else is covered under Medicare Part A:
- Semi-private room
- General nursing care
- Drugs, supplies & equipment used during inpatient treatment
- Meals in the hospital
- Special care units (ICU, CCU)
- Other hospital services & supplies
- Lab tests & X-rays
- Operating room & Recovery room
- Rehabilitation services in the hospital
- Some blood transfusions
- Skilled nursing facility care (part-time basis)
- Home health-care services (short-term basis)
- Hospice care
Medicare Part A does not pay for most regular medical services, emergency/urgent care, rehabilitation therapy, or skilled nursing facilities long-term.
Medicare Part B
Medicare Part B is “medical insurance” and it covers doctors’ services, outpatient care, medical supplies, and preventive services.
It includes two basic types of services:
Medically necessary services – This includes services needed to diagnose and treat a medical condition (outside of a hospital stay).
Preventive services – This refers to anything that is designed to prevent illness, such as the flu or pneumonia shot. It also covers diagnostic screenings, such as breast or prostate cancer screenings.
Medicare Part B also covers:
- Clinical research
- Ambulance services
- Durable medical equipment
- Mental health services
- Urgent/Emergency services
Together, Medicare Parts A and B are known as “Original Medicare”. Many people who are applying to Medicare sign up for both parts, but you are not required to do so.
You may be able to get Original Medicare for free. It mostly depends on how much you paid in Medicare taxes while you were working. Otherwise, you might have to pay a monthly premium.
Medicare Part D
Now things get a little more complicated. Original Medicare does not cover most prescription medications. That’s where Medicare Part D comes in. It helps pay for your medications and vaccinations.
You can enroll in a Medicare drug plan, which adds prescription coverage to Original Medicare. In order to get this coverage, you must be enrolled in Medicare Parts A and/or B. You can also enroll in a Medicare Advantage plan (Medicare Part C) or some other sort of Medicare coverage that includes prescription drugs.
There is also something called Medigap Insurance, which is similar to a Medicare Advantage plan. The main difference between the two is that Medigap does not offer prescription drug coverage.
Understanding Medicare Advantage Plans
Medicare Advantage plans are sort of a “one-stop-shop” option for your healthcare needs. They are not part of a federal program but are instead sold through private companies that contract with Medicare to provide medical services.
They include everything covered under Original Medicare, as well as prescription drug coverage. Many plans also include enhanced services that Medicare doesn’t cover, such as vision, hearing, dental, and transportation services.
You do have to pay a monthly premium and copayments for most services, but the amount will depend on your plan, where you live, and many other factors.
Different Kinds of Medicare Advantage Plans
Just when you thought things couldn’t get any more complicated…they do.
There are several different kinds of Medicare Advantage plans:
- Health Maintenance Organization (HMO) plans
- Preferred Provider Organization (PPO) plans
- Private Fee-for-Service (PFFS) plans
- Special Needs (SNP) plans
Enrolling in a Medicare Advantage plan is entirely up to you. They can help you save money on certain medical expenses.
However, many will only provide services in one area. If you like to travel or live in a different state part of the year, you may not be covered when you are outside of the covered area. However, you can find plans that offer coverage wherever you go.
The Rules On Starting Medicare
You cannot enroll in Medicare or a Medicare Advantage plan whenever you want. Enrolling is generally restricted to specific occurrences or certain times of the year.
After you turn 65, you can enroll in any Medicare plan (Original Medicare, Medicare Part D, Medicare Advantage, etc.) within three months of your birthday. This is called your Initial Enrollment Period.
If you choose not to enroll in Medicare then, you will have to wait until Open Enrollment or the Annual Enrollment Period (AEP). AEP runs every year from October 15th through December 7th, with coverage starting on January 1st.
During Open Enrollment you can…
- Enroll in Medicare
- Enroll in a Medicare Advantage or Medigap plan
- Switch from Original Medicare to a Medicare Advantage/Medigap plan
- Switch to a different Medicare Advantage/Medigap plan
- Make changes to your current Medicare Advantage/Medigap plan
- Choose or switch Medicare Part D plans
Outside of Open Enrollment, you can only enroll or make changes to your plan if you meet certain circumstances, such as moving, loss of coverage, or you qualify for both Medicare and Medicaid. This is known as the Special Enrollment Period (SEP).
Get Started On Taking Control Of Your Health
There is a lot to understand when you’re starting Medicare. You must look at the different Medicare plans and make your plan to protect your health. It is possible to find affordable coverage that will allow you to enjoy this time in your life.