Medicare: All Things Considered

BREAKING: Medicare Part D Premium Costs Confirmed For 2025 (YouTube link)

Who is eligible for Medicare?

• U.S. citizens or legal residents with at least five consecutive years
• Individuals age 65 or older
• Individuals younger than 65 with a qualifying disability
• Anyone with a diagnosis of end-stage renal disease or ALS

Health Care Costs

Qualifying for Medicare doesn't mean that all your health care costs will be covered. Take a note of the following marketing shenanigan:

• Potential costs per month or year
• According to AARP, basic coverage still costs seniors, on average, more than $3,000 a year, thanks to premiums and deductibles. And if you sign up for a Medicare supplement to help cover additional out-of-pocket expenses, that could cost you another several hundred dollars a month.
• Potential lump-sum costs
• Fidelity estimates that a couple who retires in 2013 will need as much as $240,000 beyond their Medicare coverage to pay for health care costs in retirement.^[1]
• The estimate covers deductibles and copayments, out-of-pocket expenses for prescriptions and visits to specialists, as well as other expenses, like dental visits, hearing aids, and eyeglasses — all of which aren't covered under Medicare.

The only lesson here is that you need to have adequate savings set aside for your health care in retirement.

Age 65

Starting at age 65, you can enroll in Medicare.^[1] You no longer have to rely on employer-sponsored or private health insurance plans. There are 2 main ways to get your Medicare coverage:

1. Original Medicare (Part A and/or Part B)
2. Medicare Advantage Plan (Part C)

Before you make a decision, you can get local, personalized Medicare counseling from the State Health Insurance Assistance Program (SHIP).  

You can apply for Medicare online by visiting the Medicare section of the Social Security website.  Note that you can apply Medicare online even if you are NOT ready to retire—read Publication No. 05-10043  and the below article:

     Deciding Whether to Enroll in Medicare Part A and Part B When You Turn 65

You need to register for Medicare benefits during a seven-month window, including the three months before your 65th birthday, to avoid paying higher premiums for coverage. 

IEP vs AEP

If you aren't receiving Social Security or RRB benefits when you turn 65, you will have to sign up for Medicare A and/or Part B during your Initial Enrollment Period (IEP). This enrollment period begins three months before your 65th birthday, includes the month that you turn 65, and ends three months later.

During the annual enrollment period (AEP) you can make changes to various aspects of your coverage. You can switch from Original Medicare to Medicare Advantage, or vice versa.  For 2022 plan, open enrollment will run from October 15, 2021, to December 7, 2021.

Figure 2.  7 Possible Medicare Combinations

7 Possible Medicare Combinations

Medicare isn't one-size-fits-all.  You can combine different Medicare parts and plans to get the coverage you want.  For example, there are seven possible combinations (see Figure 2):

1. Original Medicare (Parts A and B) or just Part A or just Part B
2. Original Medicare (Parts A and B) plus a stand-alone Part D plan
3. Original Medicare (Parts A and B) plus a stand-alone Part D plan plus a Medicare supplement plan
4. Original Medicare (Parts A and B) plus a Medicare supplement plan
5. A Medicare Advantage (Part C) plan with built-in drug coverage
6. A Medicare Advantage (Part C) plan without drug coverage
7. A Medicare Advantage (Part C) plan without drug coverage plus a stand-alone Part D plan
• Only works with certain Medicare Advantage plan types

Things You Can Do During the Open Enrollment Period

• Join a Medicare Prescription Drug (Part D) Plan
• Switch from one Part D plan to another Part D plan
• Switch from Original Medicare to a Medicare Advantage Plan
• Switch from a Medicare Advantage Plan to Original Medicare
• Change from one Medicare Advantage Plan to a different Medicare Advantage Plan
• Switch from a Medicare Advantage Plan that doesn't offer prescription drug coverage to a Medicare Advantage Plan that does offer prescription drug coverage

Medicare Part A

What Medicare Part A (hospital insurance) covers includes:^[12]

• Inpatient care at a hospital
• Skilled nursing facility (SNF)
• Hospice.

Part A also covers services like lab tests, surgery, doctor visits, and home health care.

Most people benefit by enrolling in Medicare Part A at age 65, whether or not they continue to work. There are no premiums, and enrolling now will help you avoid potential penalties or delays down the road.

If you're covered by your employer's plan and your company has 20 or more employees, that plan remain your primary coverage. If you work for a company with fewer than 20 employees, Medicare will be your primary insurer.

Medicare Part B

What Medicare Part B (medical insurance) covers includes:^[12]

• Doctor and other health care providers' services
• Outpatient care
• Durable medical equipment
• Home health care
• Some preventive services

Medicare Part B has high-income premium surcharges, you many be better off sticking with your employer plan if you still work. Once you leave your job, you have eight months to enroll in Part B, or face a penalty.

A Medicare law requires some higher income persons to pay higher premiums.   The law applies to premiums for Medicare Part B (Medical Insurance), prescription drug prescription coverage, and Medicare Part B Immunosuppressive Drug coverage.  

Medicare will contact the IRS to get information about your income, If they decide that you have to pay higher premiums, they will send a a letter explaining their decision.  If you disagree with the decision, you have the right to appeal.  

You have 60 days to ask for an appeal in writing by using "Request for Reconsideration" form, SSA-561-U2. 

 

What's Not Covered by Part A & Part B?

Some of the items and services that Medicare doesn't cover include:^[13]

• Long-term care (also called custodial care)
• Most dental care
• Eye examinations related to prescribing glasses
• Dentures
• Cosmetic surgery
• Acupuncture
• Hearing aids and exams for fitting them
• Routine foot care

You can find out if Medicare covers a test, item, or service you need, click here.

Medicare Part C

When you decide how to get your Medicare coverage, you might choose a Medicare Advantage Plan (Part C) and/or Medicare prescription drug coverage (Part D).

There are specific times when you can sign up for these plans, or make changes to coverage you already have. You don’t need to sign up for Medicare each year. However, each year you’ll have a chance to review your coverage and change plans.

For further information, do

• Watch a brief video about when you can sign up for Part C and Part D.
• Find and compare plans in your area.

Prescription Drug Plan (Part D)

For prescription drug coverage, Medicare-eligible individuals may enroll in one of below options:

1. Adding a Medicare Prescription Drug Plan (Part D)
2. Getting a Medicare Advantage Plan (Part C) such as an HMO or PPO that offers Medicare prescription drug coverage
3. Staying with one of your employer prescription drug plans which offer creditable coverage.

You can join a Medicare Prescription Drug Plan when you first become eligible for Medicare and each year from October 15th to December 7th. Similar to Medicare Part B, Medicare Part D also has high-income surcharges, you may be better off sticking with your employer plan if you still work. However, you should know that if you drop or lose Creditable Coverage offered by your employer, you should join a Medicare Prescription Drug Plan as soon as possible.

Remember that: if you go 63 continuous days or longer without creditable prescription drug coverage, your monthly premium may go up by at least 1% of the Medicare base beneficiary premium per month for every month that you did not have that coverage.

For example, if you go 19 months without Creditable Coverage, your premium may consistently be at least 19% higher than the Medicare base beneficiary premium. You may have to pay this higher premium (a penalty) as long as you have Medicare Prescription Drug coverage. In addition, you may have to wait until the following October to join.

To find out which plans cover your drugs. click here.  Note that when comparing your choices, look at the estimated "Yearly Drug & Premium Cost." A plan with the lowest monthly premium may not always offer you the lowest total cost.

Further Considerations

Finally, there are some details that you might also want to consider:

• Medicare doesn’t cover care provided abroad.^[9]
• Once you enroll in Medicare, you're no longer eligible to contribute to a health savings account (HSA; note that this is not FSA or Flexible Spending Account).^[11,27]
• If you're relying on your HSA to boost your savings, you'll need to postpone Medicare.
• Medicare probably won't pay for long-term care
• Even if it does, it will only cover you for up to 100 days
• With the annual cost of a nursing facility averaging around $78,000, it's the kind of expense that can quickly wipe out your nest egg.
• Medicare premiums will be going up for many^[15,16]

Warning

The information contained in this article is for your reference only.  Do visit the Medicare section of the Social Security, Medicare and Centers for Medicare & Medicaid Services websites for the final confirmation. Alternatively, you can talk to:

• Your employer health plan administrator if you are not ready to retire and want to work beyond retirement or 
• Any local health insurance agent

References

1. 8 Retirement Milestones That Affect Your Investment Decisions
2. For more information about Medicare Prescription Drug Plan coverage:
• www.medicare.gov
• Call your State Health Insurance Assistance Program for personalized help
• Call 1-800-MEDICARE (1-800-633-4227).  TTY users should call 1-877-486-2048.
3. Medicare Part D Prescription Drug Plan - Notice of Creditable Coverage
• Medicare Prescritption Drug coverage became available in 2006 to everyone with Medicare.
• if you will become Medicare eligible in the next 12 months, pay attention to this
• for more information about Medicare Prescription Drug Plan coverage, visit www.medicare.gov
• if you have limited income and resources, extra help paying for Medicare Prescription Drug coverage is available. For information about this extra help, visit Social Security on the web at www.socialsecurity.gov.
• it is very important that you retain this Creditable Coverage notice (from your company). If you decide to join one of the Medicare Prescription Drug Plans, you may be required to provide a copy of this notice when you join to show wether you have maintained Creditable Coverage and, therefore, whether or not you are required to pay a higher premium (a penalty).
4. A Better Alternative To Nursing Homes
5. The Pitfalls of Working Past Age 65
6. Obamacare: Six Tools to Make You a Smarter Health-Care Shopper
• The Kaiser Family Foundation’s Insurance Marketplace Calculator
• Consumer Reports’ Health Law Helper
• AARP’s Health Law Answers
• Find information from the federal healthcare.gov website here and local groups that can assist with enrollment here
• Enroll America offers a tool
• Consumers Checkbook for consumers residing in Illinois
7. Why Shopping Is So Important in Health Enrollment
8. When You Should Sign Up for Medicare
9. 20 Best Foreign Retirement Havens For 2015
• Uruguay is that rare country that allows foreign retirees to use the national healthcare system.
10. Is Travel Insurance a Waste of Money?
• Medicare doesn't cover you outside the U.S., but many Medicare supplements do.
11. Not Ready to Retire (Charles Schwab OnInvesting Summer 2015)
12. What Medicare Covers? (Medicare.gov)
13. What's not covered by Part A & Part B? (Medicare.gov)
14. What Health Care Will Cost You (AARP)
15. Medicare premiums will be going up for many
16. Medicare Costs Set to Skyrocket for Seniors
17. Obamacare "Observations" and the Elusive Search for Improvements; Seniors Beware!
• Make sure you are being "admitted, not observed". The difference can set you back $20,000 or more.
18. Here’s What’s Really Going On With Obamacare Premiums
19. Centers for Medicare & Medicaid Services (CMS.gov)
• The federal agency that oversees the Medicare program.
• Many Medicare beneficiaries have other insurance in addition to their Medicare benefits.  Sometimes, Medicare is supposed to pay after the other insurance.  However, if certain other insurance delays payment, Medicare may take a "conditional payment" so as not to inconvenience the beneficiary, and recover after the other insurance pays.
20. Applying for Medicare: What Documents Do I Need?
21. How Do I Apply for Medicare Online?
22. Special circumstances (Special Enrollment Periods; SEP)
23. When can I join, switch, or drop a plan? (important)
24. Deciding Whether to Enroll in Medicare Part A and Part B When You Turn 65 (important)
25. Social Security Publications
26. UHCMedicareEnrollment.com
27. How do HRA, HSA and FSA differ when you’re eligible for Medicare?
28. How do I change my address with Medicare?
• Yes, you can determine when your changes take place.