Introduction to Medicare

Medicare, a federal insurance program, was originally established to ensure healthcare coverage and financial stability for our elderly population. Catering to individuals aged 65 and older, as well as those with qualifying disabilities, Medicare encompasses two fundamental components: Part A and Part B, collectively referred to as original Medicare. These segments were set into law by President Lyndon B. Johnson in 1965.

Understanding Original Medicare

Part A pays for hospitalization expenses, including inpatient stays at hospitals, skilled nursing facilities, home care, and end-of-life hospice care. Medicare pays for around 80% after the Part A deductible is met.

Part B focuses on doctors' services, diagnostic screenings, lab tests, outpatient care, preventive services, and certain medical equipment and transportation. Medicare pays about 80% after the Part B annual deductible is met.

Medicare eligibility is not influenced by your income or assets, and pre-existing medical conditions cannot result in denial of coverage. Original Medicare offers the flexibility to consult any doctor or provider within the United States that participates in the program and is accepting new patients. Notably, over 95 percent of surgeons, nearly 90 percent of non-pediatric physicians, 80 percent of specialists, and 60 percent of psychiatrists are open to new Medicare patients.

It's essential to note that various other components of Medicare have been introduced subsequently and are not considered part of original Medicare. Including Part D, prescription drug coverage, which is privatized.

Costs Associated with Original Medicare

While Medicare is invaluable, it's important to remember that it's not free. Comparable to private-sector insurance during your working years, original Medicare entails several fees:

• Premiums: Most individuals don't pay premiums for Part A due to Medicare taxes withheld from 40 quarters or 10 years of work. However, almost everyone pays a premium for Part B, generally around $164.90 per month in 2023. High earners may have higher premiums.

• Deductible: Prior to Medicare coverage activation, you must meet this predetermined out-of-pocket cost. Both Part A and Part B have a deductible. The Part B deductible is $226 (in 2023) and it is an annual deductible. The Part A deductible, of $1,600 (in 2023) is for each benefit period.

• Coinsurance: Following your deductible, you'll be responsible for a percentage of certain bills, often around 20 percent for most Part B services.

• Part D: Prescription Drug coverage is offered through private insurers, whose plans are regulated by Medicare. These plans have a premium associated with the standalone Prescription Drug Plans (PDP) and some Medicare Advantage plans with drug coverage. Other Medicare Advantage plans bundle drug coverage with a $0 premium.

• Late Enrollment Penalties: These penalties, added to monthly premiums, incur when you don’t sign up for Medicare when you are first eligible. These are not one time payments.

  • Part A - If you do not qualify for Part A based on work history , you may have to purchase Part A and pay a monthly premium. If you don’t purchase Part A when you are first eligible, you may have to pay a 10% increase every month for twice the number of years you went without enrolling.

  • Part B - You’ll pay an extra 10% for each year you could have signed up for Part B, but didn’t. If you qualify for a special enrollment period, there will be no penalty.

  • Part D - You will pay an extra 1% for every month you either: go without drug coverage when you are eligible or go 63 days or more without creditable drug coverage (such as VA or TRICARE). Generally you won’t have to pay the penalty if you have creditable coverage or qualify for LIS. (find out more on Part D here)
    

Enrollment Considerations

Enrolling in original Medicare involves several considerations, including your Social Security status and employment situation. One cannot enroll into Medicare at any point of the year, but only during designated enrollment periods. Automatic enrollment applies if you're receiving Social Security benefits before you turn 65. Alternatively, you can self-register within your seven-month initial enrollment period, which begins three months before your 65th birthday. If you choose to enroll after age 65, be mindful of possible late-enrollment penalties unless you retain health insurance through ongoing employment.

Initial Enrollment Period - This is the 7 month window given for someone first eligible for Medicare. With eligibility due to age, this period begins 3 months before turning 65, includes the month they turn 65, and ends 3 months after turning 65. For those eligible due to disability, this period begins three months before their 25th month of disability payments, includes the 25th month, and ends 3 months after.

General Enrollment Period - Between January 1st - March 31st anyone eligible can sign up and their coverage will begin the month following enrollment.

Special Enrollment Period - Typically for people who delayed enrollment due to coverage on a employer sponsored health plan due to current employment. A person may sign up for Medicare while they’re still covered under the group health plan; signing up for Medicare before your current coverage ends can help you avoid a gap in coverage. The employer will need to fill out an employment form (found through CMS) for the employee to verify for the Special Enrollment.

What can I do about the costs that Medicare doesn’t cover? Is Original Medicare the only option?

You have the option of adding a Medicare Supplement and Prescription Drug plan with you Original Medicare, to help cover the out of pocket costs. You can also enroll into a Medicare Advantage plan that coordinates your Medicare benefits (Part A and B) with Part D and additional benefits through private insurers.

Take a look at our articles on Medicare Advantage and Medicare Supplement (Medigap) to see what may be best suited to your needs.

In conclusion, navigating the intricacies of Medicare can seem daunting, but armed with the right information, you can make informed decisions that align with your healthcare needs and financial goals. Understanding the components of original Medicare, its associated costs, and the various enrollment periods is pivotal in ensuring a smooth transition into this crucial phase of life.

At Virtue Senior Benefits, we're dedicated to helping you navigate the complexities of Medicare with confidence. Our team of experts is here to answer your questions, offer personalized guidance, and assist you in making choices that will optimize your healthcare coverage.