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Medicare is the federal health insurance program for people age 65 and older, for those younger than 65 with certain disabilities and for those with end-stage renal disease. Medicare includes:
Medicare Part A
Hospital insurance, or "Medicare Part A," which covers certain expenses for hospitalization as well as limited coverage for skilled nursing facility care (only after a hospital stay), home health and hospice care.
Medicare Part B
Medical insurance, or "Medicare Part B," for which you pay a monthly premium and an annual deductible, covers certain expenses for doctor's visits, outpatient care and some medically necessary expenses not covered by Part A. Copayments and coinsurance will apply to certain services.
If you are receiving Social Security benefits when you turn 65, you automatically will get both Medicare Part A and Part B on the first day of the month in which you turn 65. A card will be mailed to you about three months before your birthday. The red, white and blue Medicare card will include your name and your Medicare number.
If you are not getting Social Security when you turn 65, you should go to your local Social Security office to enroll in Medicare. Your Initial Enrollment Period (IEP) extends for three months on either side of your 65th birthday. The sooner you enroll the sooner your coverage will start.
If you miss your IEP and don't have any other coverage, you can sign up for Medicare Part B during the next general enrollment period. Your premium will increase 10% for each 12-month period that you could have had Part B but didn't take it. In some cases, you can avoid the penalty if you or your spouse is working. Call 1-800-772-1213 for the address of your local Social Security office.
Tip: If you are already receiving Social Security benefits you will automatically be enrolled in Medicare Part A (hospital coverage) and Medicare Part B (medical coverage) starting the first day of the month that you turn 65. If you are not receiving Social Security, three months before you turn 65, you should sign up for Medicare Part A (hospital coverage), which, in most instances, has no premium, and Medicare Part B (medical coverage) which does charge a monthly premium. If you do not apply for Medicare Part B in a timely manner, you could be charged a higher-than-normal premium (or premium surcharge).
If you continue to work after 65 and have health insurance on the job, you can decide not to receive Medicare B benefits until you retire and leave your employment. When (or before) you retire, you should notify Medicare of your change of status and enroll in Part B. Generally, you will have an eight month period after your employment ends or your employer health insurance ends (whichever is first), to enroll in Part B without having to pay a higher-than-normal premium. You should review the government's publication, Enrolling In Medicare, for more information.
It is wise to understand the basics of Medicare even if you currently have retirement health benefits through your employer. Read the booklet from the Centers for Medicare and Medicaid Services that explains Medicare or call the hot line at 1-800-772-1213 for information and assistance.
Medicare Part C
Note: Medicare also provides coverage through private managed care organizations such as health maintenance organizations (HMO) and Preferred Provider Organizations (PPO). Plans that provide these managed care plans are called Medicare Advantage (or Part C) plans. Although these programs are often cheaper than other coverage under Medicare, individuals may have a more limited choice of doctors who they can see under the plan. You should make sure you understand all of the rules that apply to a Medicare Advantage plan before you enroll.
Medicare Part D
Prescription drug coverage, or "Medicare Part D": This program helps cover prescription drug costs. Coverage is provided by insurance companies and other private companies approved by Medicare. Drug coverage is offered by Medicare Prescription Drug plans (PDP) (stand alone plans that just offer prescription drug coverage), or Medicare Advantage Prescription Drug plans (MA-PD) (plans that offer prescription drug coverage as well as coverage for medical services under Parts A and B of Medicare).
Carefully choose a plan (it can be complicated, as some states have more than 40 choices) so you can save the maximum amount on your prescriptions. As you compare coverage, keep the following in mind:
- You will generally pay a monthly premium for coverage. The amount will vary based on the type of coverage that you choose. For individuals with limited income and resources, extra help in paying for a Medicare prescription drug plan is available.
- Each Medicare prescription drug plan may have a different deductible, copayments, and other costs that you will be responsible for paying. Many plans have a “coverage gap,” often referred to as “the donut hole” where you would be responsible for paying all drug costs for a certain time period before Medicare comes in to pick up a large percentage of the cost.
- Each Medicare prescription drug plan may cover different brand name drugs at different costs to you. Your medication may not be covered under every plan.
- Signing up for a Medicare Prescription Drug plan may affect health coverage that you have through your employer. Some employers will drop coverage for an individual that signs up for a Medicare Prescription Drug plan. You should check with your employer health plan before enrolling in a Medicare Prescription Drug plan.
- If you do not enroll in a Medicare Prescription Drug plan when first eligible you may have to pay a late enrollment penalty if you decide later to enroll in a Medicare Prescription Drug plan. This penalty will not apply if, during the time you are without coverage under a Medicare Prescription Drug plan, you have other prescription drug coverage (such as through an employer health plan) that is expected to pay out as much as the standard benefit under Medicare’s Prescription Drug program.
To wade through your Medicare and Part D choices:
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