Medicare Basics
Medicare is a Federal health insurance program for people who are 65 and older, people under age 65 with certain disabilities and for people of all ages with End Stage Renal Disease (ESRD) or ALS. You automatically qualify for Medicare if you are 65 years of age and are eligible for Social Security or Railroad Retirement benefits.
Important Note
With the age of full social security extending beyond age 65, it is important to note that you are still eligible for Medicare at age 65 regardless of your full social security eligibility date. It is critical you understand this to avoid penalties with Part B and protect your guaranteed eligibility for a Medicare supplement or initial enrollment period for a Medicare Advantage plan or drug plan.
You now have a choice in how you receive your Medicare health care and prescription drug coverage. The options not only provide you a choice, but may make it harder to choose the appropriate coverage. Imagine Insurance Advisors can provide you guidance in this area as we have many seniors in your position.
The Medicare Options Available
The Original Medicare Plan: This is a government managed fee-for-service plan that covers many health care services and certain drugs. You can go to any doctor or hospital that accepts Medicare. Part A and B are the components of this coverage. Most people get a Medicare supplement and a Part D Prescription Drug Plan (PDP) to cover the costs not covered by original Medicare.
A Medicare Advantage Plan: These plans which include HMO (Health Maintenance Organization), PPO (Preferred Provider Organization) and PFFS (Private Fee For Service) plans may cover more services and have lower out of pocket costs than the original Medicare plan alone. There may be restrictions on doctors and hospitals. This is considered Part C of Medicare. If you have a Medicare Advantage plan, you still have Medicare, but the government does not manage the coverage. The government pays a private insurance company a fee to manage Medicare for its members. You no longer have the original Medicare coverage, you have a Medicare Advantage plan.
Medicare Prescription Drug Plan (PDP): This provides prescription drug coverage for ALL Medicare recipients regardless of their age or income. This is Part D of Medicare. The plans are provided by private insurance companies and funded in part by the government. If your Medicare Advantage plan (Part C) includes drug coverage, you do not need a Part D drug plan.
The Original Medicare Plan Part A
Medicare Part A is no charge for most people as they paid Medicare taxes while working. You are eligible for this when you turn age 65, unless you have a disability or ESRD and are eligible prior to that time. Part A provides for hospitalization coverage.
- Pays 100% of hospitalization up to 60 days – You pay Part A deductible of $1,288 (2016)
- Covers amount over $322/day (2016) for days 61-90 of a hospital stay
- Covers amount over $644/day (2016) for days 91-150 of a hospital stay
- Pays 100% of skilled nursing facility for the first 20 days
- Covers amount over $161/day (2016) for days 21-100 of a skilled nursing facility
- Some home health care services – must meet conditions of coverage
- Pays 80% for Medicare-approved durable medical equipment
- Hospice Care – must meet conditions of coverage
- Covers blood needed after the first 3 pints used
Part B – Medical Insurance
Medicare
Part B has a charge that is typically deducted from your social security check.
The cost for this is $121.80/month (2016). See
our page on the changing Part B premiums. You must be eligible for Part
A to have Part B.
You must enroll in this part of Medicare and this is typically done when you are eligible for Part A. If you don't enroll in Part B when you are first eligible and don't have other medical coverage (such as an employer provided plan), there will be a 10% penalty for each 12 month period you should have been enrolled. This penalty stays on your Part B premium for life. Part B provides for medical coverage such as doctor visits and outpatient surgery.
- Pays 80% of Medicare approved amount for medical services (doctors) – You pay annual deductible of $166 (2016)
- Covers clinical laboratory services
- Some home health care services – must meet conditions of coverage
- Pays 80% for Medicare-approved durable medical equipment
- Outpatient hospital services
- Covers 80% of the cost blood needed after the first 3 pints used
- Some preventive tests and screenings (i.e. bone mass, colorectal, diabetes, prostate, flu shots)
