What is Medicare?
If you or your spouse have worked in the U.S., you may have noticed certain taxes come out of your paycheck. Those taxes include the Federal Income Tax, Social Security tax, and Medicare tax. When you pay Medicare taxes for at least 40 quarters or ten years, you will qualify for premium-free Part A once you become eligible for Medicare. However, there is more to Medicare than just Part A. There are enrollment windows, penalties, parts, and plans. Researching and navigating through Medicare can be a challenging task to take on. Here is what you need to know to help you understand Medicare.
The Medicare Program
The federal government officially signed Medicare into law in 1965. Medicare was created as a national health insurance program for those 65 and older. Over the years, those with specific disabilities could qualify for Medicare before age 65.
Today, U.S. citizens and those with permanent residency for at least five years will qualify for Medicare at 65. Although, many become eligible before 65 due to receiving Social Security Disability Income for at least 24 months, having Amyotrophic Lateral Sclerosis, or End-Stage Renal Disease and need a transplant or dialysis. Once you find out whether you qualify for Medicare or when you qualify, you will want to begin researching Medicare coverage and what it includes.
What Coverage Does Medicare Offer?
Original Medicare consists of two parts that every beneficiary can enroll in once eligible. There is Part A and Part B.
Medicare Part A
Medicare Part A provides your inpatient hospital coverage. The coverage includes a semi-private room, daily meals, medications, and lab work. Additionally, after being an inpatient, Medicare Part A will offer some coverage with skilled nursing facility care, home health care, and hospice once you are out of the hospital.
In 2022, there is a Part A deductible of $1,556 per benefit period. However, it is essential to know that Medicare does not cover your costs at 100%. You will have cost-sharing for your services.
Medicare Part B
Medicare Part B offers coverage on outpatient medical services. These services include doctor visits, physical therapy, tests, procedures, treatment, durable medical equipment, surgeries, and more. The Part B deductible in 2022 is $233. It is an annual deductible, so you only have to satisfy it once per year.
After you meet the deductible, Medicare pays 80% of the cost for Part B services, and you must pay the remaining 20%. There is no cap on Part B costs, so you will pay 20% of all services no matter how much they are.
Additional Plans to Keep in Mind
Since Medicare does not cover all costs for services, you can enroll in a Medicare Supplement plan or Medicare Advantage plan. Both types of plans are quite different from one another. A Medicare Supplement will be secondary to Original Medicare. At the same time, an Advantage plan is an alternative way to receive your Medicare benefits, so you would not use Medicare when enrolled in your Advantage plan.
Medicare Part D
Original Medicare does not cover retail prescriptions. If you choose to keep Original Medicare, you will want to enroll in a Part D plan for coverage. If you fail to enroll in a Part D plan and you do not have creditable drug coverage, you will be penalized each month you go without coverage.
Additionally, if you enroll in a Medicare Supplement, you will want to consider a Part D plan because the Supplement plan will only cover Part A and Part B services. If you enroll in an Advantage plan with drug coverage included, you will not need a Part D plan.
Medicare can be a significant change for many people who’ve been on employer coverage for most of their lives. However, several resources are available to help walk you through what you need to know about Medicare. You can also contact a Medicare broker to help you with your options!