Medicare Explained

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A Step-By-Step Roadmap To Medicare Explained

A Quick Guide

You always want to meet with a licensed Medicare agent such as a Coverage2Care agent to review this information on a yearly basis but here is a quick guide.

The Basics of Medicare

Medicare Part A

Hospital Coverage

Part A covers inpatient hospital and skilled nursing care. Many Americans will have Part A at no cost to them but there are some exceptions where you may need to pay for it. 

Medicare Part B

Medical visits

Part B of your traditional Medicare Card will cover your doctor, specialists, outpatient, etc visits. Most Americans pay $144.60 per month for Part B while some pay more due to Income related reasons (IRMAA) and some pay less due to other reasons such as Medicare and Medicaid status. 

Part D

Prescription Coverage

Notice Part D is not on your traditional Medicare Card. You must pick it up or face penalties later when you do pick it up. Private Insurance carriers will carry Part D either embedded in a Medicare Advantage plan or you can pick it up as a stand-alone Part D. Choice is yours! 

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Medicare Advantage (also known as Part C) Plans are provided by privately insured carriers to individuals with both Medicare Part A and Medicare Part B.

Usually, they provide additional benefits such as:

  • Dental/Vision/Hearing
  • Fitness memberships
  • Hearing
  • Nutrition programs
  • Over-the-counter drugs
  • Services and supports for those with chronic conditions
  • Transportation to doctor visits
  • Wellness programs

They come in both HMO and PPO policies and can vary depending on where you live. 

Speak with a Coverage2Care agent to see what is available in your area.

A Medicare Supplement (also known as Medigap) does exactly what it says – it supplements what Original Medicare does not cover (the other 20%) since Medicare pays for 80%. Remember to be in compliance and not face a penalty later you will want to pick up your Part D as well.

 

Part D covers your prescriptions. Make sure to look at deductible and copays for your medications in your medicare plan or standalone policy.  If you choose a stand alone Part D plan the monthly premium will be in addition to your Medicare Part B premium.

People have a seven-month window to enroll in Part A and Part B of Medicare.  The Initial Enrollment period begins three months before the month one turns 65 and ends three months after the birthday month.  
   
Enrollment in Medicare can be done online at SocialSecurity.gov or visit the local Social Security office, even if you’re not ready to receive Social Security retirement benefits yet. Go to the Apply for Benefits page to sign up for retirement or Medicare benefits. Also see the SSA’s Checklist For Online Medicare Application for a list of information needed to complete the application. (Those who are already receiving Social Security benefits are automatically enrolled in Medicare at age 65. They will receive a Medicare card in the mail three months before their coverage starts, which is the first day of the month of their 65th birthday.)
 
The timing of the enrollment will determine when coverage kicks in. If you sign up before the month you turn 65, your coverage will take effect on the first day of your birthday month-October 1, in this case. (If your birthday had been on the first of the month, your coverage would take effect the first day of the previous month, or September 1.)
 
Sign up in the month you turn 65 and your coverage will take effect on the first day of the next month. If you sign up one month after your birthday month, your coverage will take effect two months after enrollment. Enroll two or three months after your birthday month and the coverage will take effect three months after the month you sign up. See When Will My Coverage Start? at Medicare.gov for a helpful table illustrating the time frames.
 
You won’t be able to sign up for Part B online if you delayed coverage past age 65. You will have to either mail your application or visit a Social Security office to provide evidence that you had coverage from your employer and shouldn’t be subject to a late-enrollment penalty.  Have this form  filled out before your visit to save time.
 
You will need to enroll in Part B within eight months of losing your coverage at work when you leave your job (or when you lose coverage through a spouse’s employer). If you enroll while you’re still on your employer’s group health plan or during the first full month when you are no longer on the plan, your coverage can either begin on the first day of the month you enroll or start on the first day of any of the following three months. If you enroll during the remaining seven months of this “special enrollment period” after you leave your job, then your Part B coverage begins on the first day of the following month.
 
 
It is important to remember that retiree coverage (or Cobra) is not coverage as an Active Employee.  Failing to sign up by the end of the eight-month special enrollment period can trigger a permanent late-enrollment penalty, which is 10% of the current Part B premium for every full year delayed.  It may also force you to enroll in Part B during the General Enrollment Period for Part B, which is January through March for a July effective.  This may leave you with many months without coverage.

Part B Penalty

If you didn’t get Part B when you’re first eligible, your monthly premium may go up 10% for each 12-month period you could’ve had Part B, but didn’t sign up. In most cases, you’ll have to pay this penalty each time you pay your premiums, for as long as you have Part B. And, the penalty increases the longer you go without Part B coverage.

Usually, you don’t pay a late enrollment penalty if you meet certain conditions that allow you to sign up for Part B during a Special Enrollment Period.

Part B Example

Your Initial Enrollment Period ended December 2016. You waited to sign up for Part B until March 2019 during the General Enrollment Period. Your coverage starts July 1, 2019. Your Part B premium penalty is 20% of the standard premium, and you’ll have to pay this penalty for as long as you have Part B. (Even though you weren’t covered a total of 27 months, this included only 2 full 12-month periods.)

Part D Penalty

The late enrollment penalty is an amount added to your Medicare Part D monthly premium. You may owe a late enrollment penalty if, for any continuous period of 63 days or more after your Initial Enrollment Period is over, you go without one of these:

  • A Medicare Prescription Drug Plan (Part D)
  • A Medicare Advantage Plan (Part C) (like an HMO or PPO) or another Medicare health plan that offers Medicare prescription drug coverage
  • Creditable prescription drug coverage

 

The cost of the late enrollment penalty depends on how long you went without Part D or creditable prescription drug coverage.

Medicare calculates the penalty by multiplying 1% of the “national base beneficiary premium” ($32.74 in 2020) times the number of full, uncovered months you didn’t have Part D or creditable coverage. The monthly premium is rounded to the nearest $.10 and added to your monthly Part D premium.

The national base beneficiary premium may change each year, so your penalty amount may also change each year.

Part D Penalty Example

Mrs. Martinez is currently eligible for Medicare, and her Initial Enrollment Period ended on May 31, 2016. She doesn’t have prescription drug coverage from any other source. She didn’t join by May 31, 2016, and instead joined during the Open Enrollment Period that ended December 7, 2018. Her drug coverage was effective January 1, 2019.

2019

Since Mrs. Martinez was without creditable prescription drug coverage from June 2016–December 2018, her penalty in 2019 was 31% (1% for each of the 31 months) of $33.19 (the national base beneficiary premium for 2019) or $10.29. Since the monthly penalty is always rounded to the nearest $0.10, she paid $10.30 each month in addition to her plan’s monthly premium.

Here’s the math:

.31 (31% penalty) × $33.19 (2019 base beneficiary premium) = $10.29

$10.29 rounded to the nearest $0.10 = $10.30

$10.30 = Mrs. Martinez’s monthly late enrollment penalty for 2019

2020

In 2020, Medicare recalculated Mrs. Martinez’s penalty using the 2020 base beneficiary premium ($32.74). So, Mrs. Martinez’s new monthly penalty in 2020 is 31% of $32.74 or $10.15 each month. Since the monthly penalty is always rounded to the nearest $0.10, she pays $10.20 each month in addition to her plan’s monthly premium.

Here’s the math:

.31 (31% penalty) × $32.74 (2020 base beneficiary premium) = $10.15

$10.15 rounded to the nearest $0.10 = $10.20

$10.20 = Mrs. Martinez’s monthly late enrollment penalty for 2020

While Medicare Advantage for veterans may not seem necessary for retirees using TRICARE or VA health coverage, it could be more beneficial than you know. 

While some healthcare coverage can be restrictive, you are allowed to combine Medicare Advantage with TRICARE and VA health coverage. 

We’ll go over how they can work together to make sure you have convenient and effective healthcare coverage.

 

Advantage plans can provide additional benefits like: 

  • Adult day-care services
  • Dental
  • Fitness memberships
  • Hearing
  • Nutrition programs
  • Over-the-counter drugs
  • Services and supports for those with chronic conditions
  • Transportation to doctor visits
  • Vision
  • Wellness programs

For most Americans Medicare Part B will cost $144.60. In addition to this you may pay a monthly premium for your Medicare Supplement or Medicare Advantage or Part D plan. Prices vary depending on where you live. 

You may also pay a share of the cost for health care services you receive. There are three types of payments you may have:

  • Deductible: A set amount you pay out of pocket for covered services each year before Medicare or your plan begins to pay.

  • Copay: A fixed amount you pay at the time you receive a covered service. For example, you might pay $20 when you visit the doctor or $12 when you fill a prescription.

  • Coinsurance: A percentage of the cost for a covered service that you pay when you receive it. For example, Medicare might pay 80% of the covered service and the remaining 20% would be paid by you.

People have a seven-month window to enroll in Part A and Part B of Medicare.  The Initial Enrollment period begins three months before the month one turns 65 and ends three months after the birthday month.  
   
Enrollment in Medicare can be done online at SocialSecurity.gov or visit the local Social Security office, even if you’re not ready to receive Social Security retirement benefits yet. Go to the Apply for Benefits page to sign up for retirement or Medicare benefits. Also see the SSA’s Checklist For Online Medicare Application for a list of information needed to complete the application. (Those who are already receiving Social Security benefits are automatically enrolled in Medicare at age 65. They will receive a Medicare card in the mail three months before their coverage starts, which is the first day of the month of their 65th birthday.)

 
The timing of the enrollment will determine when coverage kicks in. If you sign up before the month you turn 65, your coverage will take effect on the first day of your birthday month-October 1, in this case. (If your birthday had been on the first of the month, your coverage would take effect the first day of the previous month, or September 1.)

 
Sign up in the month you turn 65 and your coverage will take effect on the first day of the next month. If you sign up one month after your birthday month, your coverage will take effect two months after enrollment. Enroll two or three months after your birthday month and the coverage will take effect three months after the month you sign up. See When Will My Coverage Start? at Medicare.gov for a helpful table illustrating the time frames.

 
You won’t be able to sign up for Part B online if you delayed coverage past age 65. You will have to either mail your application or visit a Social Security office to provide evidence that you had coverage from your employer and shouldn’t be subject to a late-enrollment penalty. Have this form  filled out before your visit to save time.

 
You will need to enroll in Part B within eight months of losing your coverage at work when you leave your job (or when you lose coverage through a spouse’s employer). If you enroll while you’re still on your employer’s group health plan or during the first full month when you are no longer on the plan, your coverage can either begin on the first day of the month you enroll or start on the first day of any of the following three months. If you enroll during the remaining seven months of this “special enrollment period” after you leave your job, then your Part B coverage begins on the first day of the following month.

 
It is important to remember that retiree coverage (or Cobra) is not coverage as an Active Employee.  Failing to sign up by the end of the eight-month special enrollment period can trigger a permanent late-enrollment penalty, which is 10% of the current Part B premium for every full year delayed.  It may also force you to enroll in Part B during the General Enrollment Period for Part B, which is January through March for a July effective.  This may leave you with many months without coverage. 

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