By: Kevin R. Albaum, Esq.
Medicare is government health insurance that is administered by the Centers for Medicare and Medicaid Services (“CMS”). As a general rule, anyone is who is sixty-five (65) years old and is either a U.S. citizen or a permanent resident (who has lived in the United States at least 5 years) may receive Medicare health insurance coverage. Additionally, individuals under age sixty-five (65) who have been receiving Social Security Disability benefits for 24 months may also be eligible for Medicare benefits. In the typical scenario, a person becomes first eligible to enroll in Medicare three (3) months before their 65th birthday and then has seven (7) months after their initial eligibility date to enroll in Medicare coverage options discussed below.
Medicare consists of 5 different types of coverages as follows:
Part A- Hospital Coverage: This coverage pays for room and board in the hospital or skilled nursing care (for a short period of time). Cost: In most instances, there is usually no premium as long as you or your spouse has worked 10 years in the U.S.
Part B- Outpatient Coverage: This coverage pays for things like lab work, doctor visits, surgeries, medical equipment, etc. Parts A and B combined are considered “Original Medicare”. Cost: The premium is generally $134 per month unless you are a “high-income earner”, in which case the premium may be higher. If you are already receiving Social Security retirement benefits, the premium may be deducted automatically from your monthly benefits.
Part C- Medicare Advantage Plans: Medicare Advantage Plans or “MA Plans” are an alternative to a combination of Original Medicare (Parts A and B). These “all-inclusive” plans are administered through private insurance companies instead of the government-run Original Medicare. They were created to provide a lower-cost alternative to Original Medicare, and MA Plans often create cost savings by offering the subscriber lower premiums along with higher shares of costs as you need medical services. There are a variety of these plans offered. Most of them are either Preferred Provider Organization Plans (“PPOs”) or Health Maintenance Organization Plans (“HMOs”). These PPOs and HMOs have health care providers “in network”, and you may be required to use in-network providers if you want to keep your co-pays and deductibles low for medical services. The benefits offered by the different plan options vary in coverage and cost, but they are required to provide at least the same level of coverage as Original Medicare. MA Plans may also offer other options for dental, vision, drug coverage and some other benefits.
Part D- Prescription Drug Coverage: If you choose Original Medicare, you will likely also want to also enroll in a prescription drug coverage plan. A prescription drug plan will be purchased from a private insurance company and will enable you to purchase prescription drug prices for much lower than retail prices. Cost: The average national premium is averages $35 per month for a Part D plan. The Medicare website allows you to search and compare available Part D plans in the region where you live. Before you choose a Part D plan, it is recommended to carefully examine the company’s formulary drug list under the plan to make sure it provides for your current drugs. If the drug is not provided under the plan, you may be subject to a higher price.
Medigap Coverage a/k/a Supplemental Plans: Medigap plans cover what Medicare Parts A and B do not cover, such as deductibles, coinsurance, copays, foreign travel emergencies, etc. The point of Medigap coverage is to pay a monthly premium to avoid being hit with an astronomically large bill as medical needs occur. Medigap plans are on average more expensive than MA Plans. because Medigap plans offer more inclusive coverage. Under Medigap plans the subscriber may not be required to pay co-pays for certain medical services. The subscriber may also have more freedom to choose providers than if they were in a MA Plan with in-network restrictions.
A retired person without any employer coverage should either have a MA Plan (from a private insurance company) that covers hospital coverage, outpatient coverage, and prescription coverage or a combination of Part A and Part B (from the Government) and Part D and a Medigap plans (from private insurance companies).
Each year there is an annual election period when you can switch your Medicare Insurance options. That period begins October 15th and ends December 7th of each year. This means that during this period you can switch MA plans, switch prescription and Medigap plans. If you miss enrolling for Medicare when first eligible, there is another general enrollment period from January 1st through March 2st1 each year. During this period, you may have to pay a late-enrollment penalty (unless you qualify for an exception such as having your employer’s insurance end).
What if I am still working?
If you are sixty-five (65) years old and still working, you will likely have options between Medicare coverage and employer insurance. You can either keep your employer insurance and incorporate Medicare coverage as well or you can drop your employer insurance and obtain solely Medicare coverage. You decide when to leave your employer’s health insurance to join Medicare. It is illegal for your employer to force you to choose Medicare versus remaining on the employer’s health insurance coverage.
If you work for an employer with 20 or more employees, your employer insurance will be primary and Medicare will be secondary coverage. Part A is free if you worked 10-plus years Therefore, there would be no reason not to enroll in Part A upon turning age sixty-five (65). Part B has a premium of around $134 a month, so it may make sense to contact CMS and delay enrolling in Part B if your employer insurance coverage is sufficient for outpatient services. Part D also has a premium, and therefore, if your employer insurance has suitable prescription drug coverage, you may wish to delay enrolling in Part D. Once you retire and are sixty-five (65) and older, your employer’s insurance plan will mail you a credible coverage letter allowing you to enroll in Parts B and D without any penalty.
If you work for an employer with less than 20 employees, Medicare is your primary insurance coverage when you become eligible to apply you will need to enroll in Medicare Parts A and B and your employer coverage will become secondary coverage. In this case, people often decide to drop their employer coverage (if it is not paid for by the employer) and have Medicare only. If you elect to keep your employer coverage, however, you need to consider whether your employer’s insurance offers suitable drug coverage. If so, you may wish to delay enrolling in Part D until you retire as you are required to only enroll in Parts A and B in this scenario.
Kevin Albaum is an attorney in the Elder Law Practice at Clark, Campbell, Lancaster & Munson, P.A. Questions can be submitted online to firstname.lastname@example.org.