November 20, 2020
Medicare. You’ve heard of it; you’ve read about it; but are you ready for it?
Medicare provides important health benefits for our aging and disabled population. It can be very complicated, since there are numerous enrollment periods, choices to make (eg. Original Medicare or Medicare Advantage), options to compare, and websites/mail to manage. If you or a friend or family member are getting ready to enroll in Medicare, it’s important to properly prepare for and understand what’s involved with enrolling in Medicare.
Medicare is a federal health insurance program for people who are 65 and older, younger people who have specific disabilities, and people with End Stage Renal Disease. There are two types of Medicare that people can choose from: Original Medicare or a Medicare Advantage plan. The first option, Original Medicare includes: Part A (Hospital Insurance), Part B (Medical Insurance), and Part D (Prescription Drug coverage). Many people often purchase a Supplemental - or MediGap - policy to help with cost-sharing. More than 90% of providers in the U.S. accept Medicare assignments. Moreover, beneficiaries who choose Original Medicare can go to any of these providers without a referral.
The other option is to enroll in a Medicare Advantage plan. Typically offered through private health insurance companies, they combine Medicare Parts A and B, and usually Part D. Medicare Advantage plans use provider networks and usually require referrals and prior authorizations. The premiums tend to be lower than premiums for Original Medicare. However, it is important to look at total cost-sharing (premiums, deductibles, co-pays, co-insurance) when making decisions. Medicare Advantage Plans must cover the same benefits as Original Medicare, but also may cover additional services such as vision, dental, and more.
Medicare Part A is what’s typically thought of as “hospital” coverage. Part A covers hospital inpatient stays, qualifying skilled nursing facility stays, some home health services, and hospice care at home. Most people do not pay any premium for Part A coverage, given you or your spouse must have worked at least 10 years in the U.S. to get premium-free Part A.
Medicare Part B provides coverage for most medically necessary outpatient care. This includes office visits, outpatient surgery, lab work and testing. Medicare Part B also covers outpatient physiotherapy, occupational speech therapy, Durable Medical Equipment (DME), some drug costs, and more.
In most cases, a premium is paid for Medicare Part B. In 2020, that monthly premium was $144.60. That cost may increase depending on your level of income. There is also an annual deductible for Part B, which in 2020 was $198.00. Currently Part B covers all costs associated with COVID-19 testing, and will cover the vaccine when it is available.
If you have employer-based insurance, you do not need to enroll in Medicare Part B; however COBRA (The Consolidated Omnibus Budget Reconciliation Act) and retiree insurance do not count. If you do not enroll in Part B when you are 65 and do not have other coverage from another plan, you will have a late-enrollment penalty when you try to enroll at a later date.
It is important to note that coverage does not pay for everything. As a beneficiary, you must be prepared for cost-sharing — ie. deductibles, coinsurances, copayments. Each Medicare benefit has maximum coverage days, qualification guidelines, and/or coverage percentages outlined. In addition, there are certain services that Medicare does not cover.
Question: Will my prescription drugs still be covered?
Answer: Medicare Part D is your prescription drug plan. Enroll in Part D when you enroll in Medicare unless you have what is known as “creditable drug coverage.” Creditable drug coverage is coverage from your job or another source that is at least as good, or better than what is offered by Part D. If you do not enroll and have no creditable drug coverage, you will face a late enrollment penalty when you try to enroll on a later date. If you enroll in a Medicare Advantage Plan, confirm that it includes prescription drug coverage.
The cost-sharing for Medicare Part D plans is complicated, but it is important to understand the following:
You will pay a monthly premium. In 2021, the average basic Part D premium will be $30.50 a month. Depending on your income, you may have to pay more.
The initial deductible is $445.00. In some plans, generics may not be subject to a deductible
There are also then different categories of coverage in Part D that affect your costs, but it is best to speak to a benefits manager or Healthcare Advisor
Each prescription drug plan has an approved list of covered drugs, called a formulary. If you are taking prescriptions, be sure to check if your drug is on the formulary before enrolling. In the event that your drug is not listed, you may have to request an exception, file an appeal, or pay out of pocket. Medicare Extra Help is an assistance program that helps low income individuals pay Part D premiums, deductibles, and co-insurance.
Question: I’m turning 65 within the year. When should I get started?
Answer: Your Initial Enrollment Period (IEP) is a 7-month period that begins three months prior to your 65th birthday, includes your birth month, and ends three months after the month that your birthday is in. For example, if your birthday is in September, you IEP runs from June to December. Most people should sign up for Medicare Part A during this time. Some people can delay signing up for Medicare Parts B and D, or enrolling in a Medicare Advantage plan, depending on whether they have other health coverage. If you miss your IEP, you may also enroll during the General Enrollment Period (GEP) occurring January 1 through March 31 of each year.
Question: Will I have to pay a premium for Part A?
Answer: Most people do not pay any premium for Part A coverage. You or your spouse must have worked at least 10 years (40 quarters) in the US to get premium-free Part A.
The Medicare Eligibility Tool can help determine eligibility and your expected premium.
Question: I have Marketplace coverage. Do I have to cancel it?
Answer: You cannot have both Medicare and a Marketplace plan. If you are on a Marketplace plan and are turning 65, you need to enroll in Medicare. Your family members can still stay on a Marketplace plan, if they are not eligible for Medicare.
If you or a loved one are ready to enroll in Medicare, you may want to consider hiring a Healthcare Advisor to make sure you are getting the best possible coverage and care options for yourself and your loved one.