What is Medicare?
Medicare is featured regularly in national headlines and political debates, but there are many misconceptions about this much-discussed program. If you or a loved one is getting close to qualifying, you may want to know more about Medicare enrollment, coverage, options, and costs. Let’s start with some basic information that may help you understand the role Medicare can play in your healthcare and financial planning.
Medicare is the federal program that provides healthcare coverage for individuals 65 years of age and older, as well as individuals under the age of 65 who qualify due to certain long-term disabilities. Established in 1965 under the Social Security Administration, Medicare is now governed by the Centers for Medicare & Medicaid Services (CMS).
The Parts of Medicare
Medicare has four parts: Part A (hospital insurance), Part B (medical insurance), Part C (Medicare Advantage), and Part D (prescription drug coverage).
Part A: Part A helps cover the cost of care you receive when you’re formally admitted into a hospital, skilled nursing facility, or hospice. Part A also covers some home health services.
Part B: Part B covers medically necessary outpatient care, including doctor visits, outpatient procedures, lab work, preventive services, and more. Part B is optional coverage and requires most enrollees to pay a monthly premium.
Part C: Part C, or Medicare Advantage, is an alternative to Original Medicare, giving Medicare recipients the opportunity to get their Part A and Part B coverage through a private company that may offer additional benefits. MA plans vary in coverage and costs, so it’s important to compare plans before enrolling,
Part D: Unfortunately, Medicare Parts A and B do not include prescription drug coverage. You can get Part D coverage through a stand-alone Prescription Drug Plan or it may be packaged within a Medicare Advantage plan. Although Medicare Part D plans are required to include the medications most required by Medicare recipients, plan formularies (lists of covered drugs) and tiers of pricing can vary.
Enrollment in Medicare
If you aren’t automatically enrolled in Medicare when you turn 65, you can sign up during your Initial Enrollment Period which begins 3 months before your 65th birthday and ends 3 months after it. Most people receive premium-free Part A due to taxes paid while working, but Part B and Part D coverage is optional. Most enrollees must pay a monthly premium for coverage. If you don’t sign up for Part B or Part D when you are first eligible, you may incur late enrollment penalties when you decide to sign up later.
Aside from your Initial Enrollment Period, there are other opportunities for you to enroll or change your Medicare coverage during the year, including the following enrollment periods:
Open Enrollment Period – October 15 through December 7
During the annual OEP, Medicare recipients can make changes to their coverage. You can switch from one Medicare Advantage plan (with or without prescription drug coverage) to another Medicare Advantage plan. You can switch Prescription Drug Plans. You’ll also have the chance to drop Original Medicare and enroll in an MA plan, or you can drop your MA plan and revert back to Original Medicare, and sign up for a Prescription Drug Plan at that time.
Medicare Advantage Open Enrollment Period – January 1 through March 31
If you are enrolled in a Medicare Advantage plan, you’ll have the opportunity to make one change to your coverage during this time.
Special Enrollment Period
If you experience certain life events, you may be eligible for a Special Enrollment Period. For instance, if you move out of your current plan’s service area, you move into a skilled nursing home, or you move back into the country after living abroad.
5-Star Special Enrollment Period – December 8 through November 30
If a Medicare Advantage plan with a 5-star quality rating is available in your area, you can use this enrollment period one time and switch from your plan to a 5-star plan. Medicare ratings are based on overall performance by providers and customer satisfaction.