As most people approach retirement age, they start to think about their healthcare coverage. Most know they will be eligible for Medicare upon turning 65, but many do not understand how Medicare works.
Medicare provides health insurance primarily to retirees, although Medicare coverage can be confusing to some people. Instead of trying to figure it out alone, keep reading this article.
We will tell you everything you need about Medicare in 2024, including eligibility criteria, the enrollment process, and the cost. Continue reading to learn all the details!
What Is Medicare?
Medicare is a health insurance program administered by the Federal government that aims to reduce health care costs for its beneficiaries. Medicare is run by the Centers for Medicare and Medicaid Services (CMC). It is closely related to the Social Security Administration, as most Medicare recipients also receive Social Security benefits. Medicare is funded through payroll taxes, which are included in the FICA taxes. These taxes are placed into two trust funds maintained by the U.S. Treasury.
In addition to payroll taxes, Medicare also receives funding through premium payments. Medicare Part A sometimes requires a premium, and Medicare Part B always requires a monthly premium.
Even though Medicare receives funding from these various sources, it is still in danger of becoming insolvent. Several potential solutions have been discussed, such as raising the Medicare tax or pushing back the eligibility age. As of now, none of the possible changes have taken effect.
The Four Parts Of Medicare
One reason Medicare is so confusing is its four different parts. Each part has different coverage details and costs. Some parts are mandatory, while others are optional. Understanding each part helps tremendously to understand the overall Medicare program. Here are the different parts and their details.
Medicare Part A
Medicare Part A, commonly known as hospital insurance, provides coverage for inpatient care. It is free to those 65 and older who meet the minimum work history requirements.
Coverage under Part A includes inpatient hospital stays, care in a skilled nursing facility, home health care, hospice care, and some nursing home care. Care in a nursing home must be short-term instead of long-term and meet the definition of a skilled nursing facility.
Medicare Part B
Medicare Part B is more traditional health insurance coverage. Part B covers doctor visits, outpatient services, durable medical equipment, ambulance services, and other medically necessary services. It provides limited coverage for prescription drugs associated with an outpatient service. Part B also provides preventive services, like vaccines, wellness visits, and other items.
Medicare Part C
Medicare Part C is another term for a Medicare Advantage plan. Part C plans are managed and administered by private insurance companies, so these companies get to set their own rules about coverage and costs. Each plan must provide the same minimum level of coverage as the Original Medicare plan, but many plans offer additional benefits.
These extra benefits might include gym memberships, prescription drug coverage, and other perks. If you choose not to enroll in a Part C plan, you might enroll in a Medicare supplement plan to help with out-of-pocket expenses not covered under Original Medicare.
Medicare Part D
If you decide not to enroll in a Medicare Advantage plan that includes prescription coverage, you might elect to enroll in a standalone Part D drug plan. These plans offer coverage for prescription medications. Since private insurance companies manage these plans, you must refer to your specific plan documentation for details on costs, such as monthly premiums, deductibles, and copayments.
Unofficial Part – Medigap
This is the unofficial fifth part of Medicare. You might also hear Medigap, referred to as Medicare Supplement insurance. These plans help offset the cost of out-of-pocket expenses that Medicare does not cover. Medicare covers 80% of the price for most services after you have met your deductible. A Medigap plan can help pay for the 20% not covered by Medicare.
Private companies also manage these plans, and the details of each vary. The biggest thing to know about these plans is that they will help you with out-of-pocket costs associated with Medicare.
KEY TAKEAWAYS
- Medicare is a health insurance program administered by the federal government that aims to reduce healthcare costs for beneficiaries, especially those who are retired.
- Medicare is divided into Part A – Hospital Coverage, Part B – Doctor Coverage, and Part D – Perscription Coverage.
- Medicare Part A is free for most people if they have contributed to the Medicare program and earned enough work credits.
Eligibility For Medicare
Many people wonder about Medicare’s eligibility criteria. Here are the basics: You must be at least 65 years old and a U.S. citizen or legal permanent resident for at least five years.
You can enroll in Medicare if you meet these two criteria. If you have enough work credits, you will receive free Part A coverage. Otherwise, you will need to pay a monthly premium for coverage. There are also a couple of other ways to qualify for Medicare.
- Younger individuals receiving Social Security disability benefits can also be eligible for Medicare. If you have been receiving disability benefits for 24 months, you will be automatically enrolled in Medicare coverage.
- Lastly, younger individuals who have been diagnosed with ALS or End-Stage Renal Disease (ESRD) are eligible for Medicare. There is no waiting period for these individuals; they can sign up as soon as the diagnosis for one of these diseases occurs.
Notably, recently introduced legislation could lower the Medicare eligibility age to 60. Democrats in the House of Representatives are attempting to get the bill passed, but there are still some questions surrounding a few specifics. It is unclear how Medigap coverage would work in the 60 to 64-year-old age group, and there is no answer on whether Medicare would become mandatory at age 60.
This legislation will likely have a difficult time passing the Senate, though. There is a lot of worry over the program’s solvency, and lowering the eligibility age could cause it to run out of money even sooner.
Must read articles related to Medicare
- What is a Medicare flex card for seniors & how does it work?
- Will Medigap insurance reduce my out-of-pocket expenses?
- What is the difference between Medigap and Medicare Advantage plans?
- The cost of Medicare Supplement plans.
- Overview of what is covered under Medicare.
Medicare Enrollment Process
Navigating the Medicare maze can be difficult, especially when it comes time for enrollment. How do you sign up for coverage? We will start with the most straightforward method and go from there.
- You will be automatically enrolled in Medicare coverage if you already receive Social Security retirement benefits when you turn 65.
- Similarly, if you receive Social Security disability benefits, you will be automatically enrolled in Medicare after your 24th month of disability.
However, if you do not fit into one of the two categories above, you must apply for Medicare coverage.
You can sign up for Medicare benefits online. This is the quickest and easiest way to apply for coverage. You can also apply over the phone by calling the Medicare phone number at 1-800-772-1213.
You also need to know a few things about the timing of your enrollment. To avoid late enrollment penalties, you should sign up for Medicare when you become eligible.
- This period is called your initial enrollment period. It begins three months before your 65th birthday, runs through your birthday month, and ends three months after your 65th birthday.
You should sign up for Part A and Part B coverage during this time.
- If you miss your initial enrollment period, you might qualify for a special enrollment period. This usually applies to individuals still working and covered under a group health plan through their employer.
If you fall into this group, you can still enroll in Part B coverage at the end of your employment without a late enrollment penalty.
- Finally, Medicare has an open enrollment period each year from January 1 through March 31. If you sign up during this period, your coverage will begin on July 1. However, you might sometimes be required to pay a late enrollment penalty.
The same enrollment periods above apply to most Medicare Advantage plans as well. However, you should contact the insurance company directly to sign up for those plans. Since the providers of these plans are private companies, they set their own rules regarding coinsurance amounts, deductibles, premiums, and other items. They do generally follow the same enrollment period schedule, though.
You can always talk to a licensed insurance agent or other Medicare expert to enroll in one of these plans.
TIP
If you are already receiving Social Security retirement benefits when you turn 65, you will be automatically enrolled in Medicare Part A coverage. In addition, those on SSDI benefits will be eligible for Medicare after 24 months of disability.
Medicare Costs
So, how much does Medicare cost? The answer depends on a few factors and variables. Here is what you need to know. First, let’s talk about monthly premiums. If you have enough work credits, then you will not pay a premium for Part A coverage.
However, without enough work credits, you can pay up to $505 per month, depending on how many work credits you have. The minimum Part B premium is $175 per month, although that amount can increase if your income is higher. Part C and Part D premiums vary according to the specifics of each plan.
In addition to premiums, there are also other costs associated with Medicare. For 2024, the Part A deductible is $1,632 per benefit period. The Part B deductible is $240. Once you have met your Part B deductible, you typically only need to pay 20% of the Medicare-approved amount for doctor services.
Part C and Part D plans have varying deductibles and copay amounts since each insurance company can set its own rules about these plans.
The Bottom Line
Medicare can often be confusing, but it provides many protections for retirees regarding health care. Instead of purchasing the Medicare For Dummies book by Patricia Barry, simply read through the details in this article.
We have provided you with all the details you need to know about Medicare in 2024. Most people become eligible for Medicare when they turn 65, and they also receive premium-free Part A coverage. Failure to enroll in Part B coverage on time can result in a late enrollment penalty.
Remember that private insurance companies administer those plans if you choose to enroll in Part C or Part D coverage. Those companies get to set their own rules about premiums, copays, and deductibles. However, those plans can provide additional benefits like dental and vision coverage.
Frequently Asked Questions
One of the most common misconceptions about Medicare is that it is completely free. While many people receive Part A coverage at no charge, there is always a premium required for Part B coverage. Similarly, Medicare Advantage plans almost always include a premium.
Another big misconception is that you can enroll in Medicare at any time. That is not the case. You can only enroll in Medicare during your initial enrollment period, a special enrollment period, or the general enrollment period.
Outside of these times, you cannot enroll in Medicare coverage. This is why it is so important to understand these periods and get signed up for coverage when you become eligible.
In simple terms, Medicare works like this. It is a health care program that is run by the Federal government that aims to reduce health care costs for its beneficiaries. Most people on Medicare receive Social Security benefits.
Medicare is broken into four parts — Part A, Part B, Part C, and Part D. Part A provides coverage for hospital stays and inpatient services. Part B provides coverage for doctor’s visits and outpatient services. Part C is a combination of Parts A and B into a single plan, and Part D covers prescription drugs.
If you have worked long enough in the past, then you will not be required to pay a premium for Part A coverage. Part B always requires a premium. Since Parts C and D are run by private insurance companies, they get to set their own rules for those plans.
One of the best resources to understand Medicare is their website at Medicare.gov. You will find many great resources there, including coverage details, cost information, enrollment information, and much more.
In addition, the Centers for Medicare and Medicaid Services also publish a lot of useful information when it comes to Medicare.
Finally, you can talk to a local licensed insurance agent. They should be able to assist you with understanding Medicare coverage, and they can also help get you signed up for a plan that best fits your needs.
Medicare Advantage plans allow you to combine all your Medicare coverage into a single insurance plan. This includes Part A and Part B coverage. In addition, these plans typically include Part D coverage and additional benefits like vision or dental coverage.
Medicare Supplement plans, on the other hand, help pay for out-of-pocket expenses not covered by Medicare. These are also called Medigap plans. Since you are generally responsible for paying 20% of the cost of medical services using Medicare, these plans can help cover those costs.
You can find a Social Security Administration office near you by using our SSA office locator and searching for your closest location.
