What You Should Know About Medicare
Medicare consists of four parts which are often confusing to understand and make the application process challenging. Those individuals reaching the age of 65 are eligible to apply and can be negatively impacted financially due to several reasons: choosing an option (Part A, Part B, etc.), deadlines, and potential penalties that retirees face. Everyone has a unique situation; there is no one-size-fits-all with Medicare enrollment. Hopwood Financial Services is here to help you understand the basics of Medicare and what makes sense for you so that you have clarity during the enrollment process.
The Parts
There are four main parts of Medicare:
Part A: Hospital Insurance
Helps to cover:
- Inpatient care in hospitals
- Skilled nursing facility care
- Hospice care
- Home health care
Part B: Medical Insurance
Helps to cover:
- Services from doctors and other health care providers
- Outpatient care
- Home health care
- Durable medical equipment (wheelchairs, walkers, etc.)
- Many preventative services (screenings, vaccines, annual checkups, etc.)
Part D: Prescription Drug Coverage
Helps to cover:
- Cost of prescription drugs and many recommended shots/vaccines
Original Medicare vs. Medicare Advantage (Part C)
Original Medicare typically consists of Part A and Part B, and additional drug coverage under Part D. You can also purchase a supplemental (Medigap) policy to help pay out-of-pocket costs. Original Medicare allows you to go to any doctor or hospital that takes Medicare in the U.S.
Medicare Advantage can be thought of as an alternative “all-in-one” package. In most cases, you must use an in-network doctor, but plans may have lower out-of-pocket costs than Original Medicare. Most Medicare Advantage plans also include benefits not covered by Original Medicare, such as dental, vision, and hearing.
Enrollment Period
There is a seven-month window around your 65th birthday during which you can enroll in Medicare (three months before, the month of, and three months after). Medicare coverage will start at different times depending on when you sign up during this initial enrollment period.
- If you sign up during the three months before your birthday, coverage will start on the first day of your birth month.
- If you sign up during the month of your birthday, coverage will start the first day of the following month.
- If you sign up during the first month after your birthday, coverage will begin 2 months after you sign up. If you sign up the second or third month, it will begin 3 months after you sign up.
Late enrollment penalties and/or a delay in coverage may apply if you do not sign up for Part B during the initial enrollment period. The penalty increases Part B premiums by 10% for each 12-month period you could have signed up but did not.
Social Security
If you are already receiving Social Security benefits, you will be automatically enrolled in Medicare Part A and Part B upon turning 65. The premiums will be taken directly from your Social Security benefits. If you do not receive Social Security benefits yet, you will have to sign up for Medicare and pay any premiums separately.
Employer-Sponsored Healthcare
If you or your spouse are still working and receiving health insurance through an employer plan, you may be able to delay enrollment in Part B and sign up later during a Special Enrollment Period. The Special Enrollment Period is an eight-month period following the last month of employment or coverage by a health plan. You should contact your employer to determine whether Medicare is the primary insurer or not.
How to Enroll in Medicare
If you are currently receiving Social Security benefits, you will be automatically enrolled in Medicare Part A and Part B at age 65. Medicare will send you a “Welcome to Medicare” package that will include important information about other dates and deadlines you will need to pay attention to.
To get more information and sign up for Part A and/or Part B, call the Social Security Administration at 1-800-772-1213 or visit http://socialsecurity.gov/medicareonly.