What is Medicare?
Medicare is a federal health insurance program created by Congress in 1965 for:
- People who are 65 or older
- People under 65 with certain disabilities
- People with End-Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS) at any age
Medicare is administered by the Centers for Medicare and Medicaid Services (CMS) . Original Medicare is available nationwide and is available only for services in the United States. The Social Security Administration (SSA) is responsible for enrolling employees into Medicare. Railroad employees, however, are enrolled by the Railroad Retirement Board (RRB)
Applying for Medicare
If you retired prior to age 65 and are receiving Social Security or Railroad Retirement benefits on your 65th birthday, you will be enrolled in Medicare automatically and will receive your Medicare card approximately 3 months before your 65th birthday.
If you are have not retired prior to turning 65, the Social Security Administration recommends that you apply 3 months before your birth month.
- You don’t have to be retired to receive Medicare.
- If you’re NOT receiving Social Security or Railroad Retirement, you must sign up to receive Medicare; it does not happen automatically.
- To enroll online, contact the Social Security Administration.
- To enroll at a local Social Security office, phone 800-772-1213 to set up an appointment.
When to Apply for Medicare
Your Initial Enrollment Period (IEP) is 7 months long. It starts 3 months before your birth month, includes your birth month, and continues for 3 months following your birth month. There is a penalty for late enrollment into Medicare unless you are still working and are covered by your employer’s health insurance plan. You should seek the advice of your employer’s benefits administrator to see how your employer’s health plan works with Medicare. Some employer health plans require employees who become eligible for Medicare, either at 65 or due to disability at an earlier age, to enroll in Medicare in order to remain eligible for the employer’s health benefits. In other cases, enrolling in Medicare may make you ineligible to participate in your employer’s health plan.
If you don’t enroll during your Initial Enrollment Period and wish to enroll later, you will have to wait until the General Enrollment Period (GEP) which runs from January 1 to March 31 each year with coverage then beginning on July 1.
Why is it so important to enroll when you are first eligible? Should you pass your Initial Enrollment Period, your next opportunity to enroll into Medicare will be during the following January 1 to March 31 General Enrollment Period. Your coverage would then commence on July 1.
Consider this scenario: On April 1, just one day after the annual General Enrollment Period ends, you suffer an event which necessitates medical intervention. You are not eligible to enroll in Medicare until January 1 of the following year and even then, your coverage will not begin until July 1. In this case, you would go 15 months without medical coverage. This delay could be financially catastrophic.
The Parts of Medicare
Medicare is comprised of four parts:
- Medicare Part A (Hospital Insurance)
- Medicare Part B (Medical Insurance)
- Medicare Part C (Medicare Advantage)
- Medicare Part D (Medicare Prescription Drug Coverage)
This is where the discussion often becomes confusing for those new to Medicare. Not only are the parts of Medicare given letter names (A, B, C, and D), but Medicare supplement plans are named by letters as well (A, B, C, D, F, G, K, L, M, N). To avoid confusion, it is important to distinguish whether Medicare Parts or Medicare Supplement Plans are being discussed.
Medicare Part A (Hospital Insurance)
Medicare Part A helps cover
- Hospital inpatient care
- Semi-private room
- General nursing
- Drugs administered as part of inpatient treatment
- Skilled nursing facility care (not long-term care)
- Home health care
- Hospice care
Medicare Part B (Medical Insurance)
Medicare Part B helps cover:
- Doctors’ services
- Outpatient medical/surgical services and supplies at hospitals and clinics
- Diagnostic tests
- Outpatient therapy
- Outpatient mental health services
- Some preventive health care services
- Durable medical equipment
- Other medical services
Medicare Part C (Medicare Advantage Plans)
- Offered by private insurance companies approved by and contracted with the federal government.
- Includes all the benefits and services covered under Part A and Part B.
- Usually includes Medicare prescription drug coverage usually covered under Medicare Part D.
- Run by Medicare-approved private insurance companies.
- Often includes extra benefits and services such as dental, hearing, or vision care or wellness programs, sometimes for an extra premium.
- Utilizes a managed-care approach with care provided by a Health Maintenance Organization (HMO), Preferred Provider Organization (PPO) or Private Fee For Service (PFFS) plan with higher co-pays for out-of-network services.
- May have a monthly premium which is paid to the plan and the member must continue to pay their Part B premium
Medicare Part D (Medicare Prescription Drug Coverage)
- Offered by private Medicare-approved companies
- Helps cover the cost of prescription drugs
Costs not covered by original Medicare
Most people new to Medicare think that original Medicare, Parts A and B, will cover all their medical costs; this is not the case. Some examples of expenses that Medicare does not cover are:
- Routine dental care
- Routine eye care
- Routine hearing care (exams and hearing aids)
- Deductibles, coinsurance, and co-payments
For more in-depth information, see specific articles on: