Turning 65 in September was a momentous life event for me. Birthday celebrations, my thoughts becoming more focused on retirement and my eligibility for Medicare. I was no longer eligible for my employer’s health savings account and I needed to sign up for Medicare to provide my medical insurance coverage. It is unbelievable the amount of mail solicitations that I received regarding Medicare supplemental insurance and related drug coverage insurance plans. In case you are in a similar position, I wanted to share some general knowledge about Medicare.
Types of coverage
Basically, Medicare has two parts of medical coverage. Part A (Hospital Insurance) covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care. Part B (Medical Insurance) covers certain doctor’s services, outpatient care, medical supplies, and preventive services. If you have accumulated forty (40) quarters of earnings, Part A is provided at no cost. If you are not eligible for the premium-free Part A, you may be able to buy Part A coverage. Part B has a monthly cost that you must pay. The monthly premium is based on your modified gross income from two years ago.
Did you know that if you do not enroll in Medicare when you are first eligible, there is a late-enrollment penalty? The penalty is 10% of your monthly premium. You can avoid the penalty, and any gap in coverage if you enroll during your initial enrollment period. Your seven-month initial enrollment period usually begins three months before the month you turn 65, includes the month you turn 65 and ends three months after the month you turn 65.
Medicare covers only about 80% of the Part B expenses. In addition, Parts A and B have deductibles and co-insurance. Therefore, to limit my out-of-pocket cost, I enrolled in a Medicare supplement insurance plan (also called “Medigap” insurance). The federal government has defined standard benefits for each Medicare supplement insurance plan.
Prescription drug coverage
In addition to Part A and B, Medicare offers Part D coverage which is contracted through private insurance companies. Part D is for prescription drug coverage. Like Medicare Parts A and B, if you do not join a Medicare Prescription Drug Plan when you are first eligible, you may have to pay a late enrollment penalty if you change your mind later.
There are many exceptions and other conditions regarding Medicare and related insurance plans that cannot be discussed here due to space limitations. However, the Social Security Administration provides a very informative booklet entitled “Medicare & You.” The Medicare website, www.medicare.gov, is a great resource of information as well to assist you with your Medicare questions.