We get a lot of questions from clients and non-clients about what Medicare is and what it covers. Here are our answers to the Medicare questions we get the most.
What is the difference between Medicaid and Medicare?
Medicare is a federally funded health insurance program. The program primarily covers people who are either age sixty-five and over or disabled, regardless of income. There is a monthly premium for non-hospital coverage, and patients also pay part of the costs through deductibles, copayments, and/or coinsurance.
Medicaid is a health assistance program jointly funded at the federal and state levels. The program supports low-income individuals and families, regardless of age. The income eligibility requirements vary from state to state. Patients typically do not pay anything toward covered medical expenses.
What does Medicare cover?
The answer to that depends on which “Part(s)” of Medicare you have selected:
- Part A (Hospital Insurance): Covers inpatient hospital care, skilled nursing facility care; hospice care & home health care
- Part B (Medical Insurance): Covers doctor’s services; outpatient care; durable medical equipment; home health care
- Part C (Medicare Advantage): Covers all benefits from parts A and B, and usually part D – as well as other benefits and services for an extra cost
- Part D (Medicare Prescription Drug Coverage): Covers prescription drugs
What sort of choices do I have with my coverage?
If you have coverage through an employer, union, Medicaid, TRICARE, or veterans’ benefits, you may have other coverage options. The rest of us choose one of two main paths:
- Original Medicare (Part A and/or Part B): You may elect to add Part D as well. You may also choose to add a Medicare Supplement Insurance plans – these are sometimes referred to as Medigap policies, and are available from third-party insurance companies. Medigap plans A, B, C, D, F, G, K, L, M and N are available with varying levels of coverage.
- Medicare Advantage (Part C): Obtained through a third-party insurance company. Covers the benefits from Part A and Part B. You may also elect to add part D as well.
How much does it cost?
Premiums and deductibles are subject to change each year. For 2016, the premiums are:
Part A: Typically, there is no premium cost for Part A if you or your spouse paid Medicare taxes while working.
Part B: Standard premium is $121.80/month for individuals with less than $85K/year income (or couples with less than $170K/year income). There are four additional “brackets” with higher premiums for those with higher incomes. The top bracket is for individuals earning more than $214K/year (or couples with more than $428K/year) who pay a Part B premium of $389.80/mo.
Part C: Premium varies according to coverage chosen. Premiums typically range from $0 to $120/month. This is in addition to your Part B premium (and Part D premium if applicable).
Part D: Premium varies according to the number and type of prescription drugs, generic vs. brand name, pharmacy used, etc. Premiums are typically in the $30 to $50/month range. The same five income “brackets” apply to Part D as applied above in Part B. Those in all but the lowest bracket will pay an additional amount ranging from $12.70/month to $72.90/month – depending on which income bracket they are in.
How do I enroll?
If you are already receiving social security benefits: You will be automatically enrolled in Part A and Part B when you become eligible.
If you are NOT already receiving social security benefits: You must enroll in Medicare by calling 1-800-772-1213 or going to www.medicare.gov. You can enroll as early as three months before the month you turn sixty-five.
If you are over sixty-five and losing employer health coverage due to retirement or termination: You will have a special enrollment period and need to contact Medicare as outlined above.
**Important Note: You will not receive any notices from Social Security. If you fail to enroll in Medicare Part B when you are first eligible, you may be subject to a penalty for as long as you have Part B.
Where can I get more information?
Medicare Website: www.medicare.gov
Medicare Phone Number: 1-800-MEDICARE (633-4227)
If you are a client of McLean Asset Management Corporation, you also have free access to a Medicare consultant who provides webinars, as well as one-on-one consultation to guide you through all of your Medicare choices. Just ask your advisor for details.
Medicare choices can be extraordinarily complex. Mistakes can mean insufficient coverage and/or penalties that last for years. This is one area of planning where you definitely don’t want to “go it alone.”
Want to talk about your Medicare options? Contact us today.
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