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What is Medicare?
Medicare is a program approved by the U.S. government and offers health insurance for persons aged 65 and above. People with end-stage renal disease or disabilities also qualify for the program. There is Original Medicare, which includes health coverage (Part A) and medical coverage (Part B). There is also Part C (Medicare Advantage), which is an alternative to Original Medicare.
Besides, you can buy a separate Medicare drug plan, or Part D, to help cover prescription medications. You can also go for Medigap, which is a Medicare Supplement Insurance plan to help cover out-of-pocket costs, such as copays and coinsurance.
How Does Medicare Work?
Here are how different parts of Medicare work.
Health coverage covers hospital care, which includes hospice care, skilled nursing home, and inpatient hospital stays. This part of Medicare work also covers some home healthcare services. Generally, Part A is free if you worked and paid Medicare taxes for at least a decade. If you are ineligible for premium-free health coverage, you can go ahead and buy it. Medicare taxes vary from one individual to another, making premiums for 2023 to be either $278 or $506 per month.
Medical coverage covers ambulance services, doctors’ services, medical supplies, outpatient medical care, and durable medical equipment (such as walkers and wheelchairs). Medical coverage also covers preventive services, such as mental healthcare and annual wellness visits or flu shots. Even if you did not use your medical coverage for that month, you are still expected to pay a monthly premium. Although monthly premiums for 2023 are generally $164.90, they may be more depending on your level of income.
Medicare Advantage is approved by Medicare and sold by private insurance companies. It typically includes Parts A, B, and D. Moreover, Part C may cover services that Parts A and B do not, and some of these services are vision care, dental care, and hearing services. Another thing about Part C plans is that they normally have lower out-of-pocket costs compared to Parts A and B. The monthly premium for Medicare work Advantage varies based on the plan you pick.
Part D covers prescription drug costs that include several vaccines. What’s more, Part D has a monthly premium that can vary based on many different factors, like income. If you do not choose a drug plan when you first get Medicare and later purchase Part D, you will also pay a penalty on a monthly basis for as long as you have Part D.
If you choose original Medicare, then going for Medigap (Medicare Supplement) can help offer coverage to some of your out-of-pocket costs. Medigap plans are purchased from private insurance carriers and are normally named with letters, like Plan K. Furthermore, they are standardized according to the rules of Medicare. It is important to note that each lettered Medigap plan has the same benefits regardless of the carrier that sells it. You should also note that while plans can be the same, their prices can range widely depending on the insurance company offering them.
How Do I Apply for Medicare?
You will automatically be enrolled in Medicare Parts A and B on the first day of the month you turn 65 if you already receive Railroad Retirement Board (RRB) benefits or Social Security. However, you will have to apply for Medicare if you will not be getting RRB benefits or Social Security by the time you turn 65. Ideally, you will be given a seven-month window to apply for Medicare, starting three months prior to the month you turn 65. This is referred to as the Initial Enrollment Period (IEP).
The Social Security Administration carries out some checks to determine whether you qualify for premium-free Medicare Part A.
Aside from the IEP, you may qualify for a special enrollment period (SEP), which takes place in certain situations, like losing group health insurance or losing Medicaid eligibility. Moreover, there is a general enrollment period, which starts on Jan. 1 and ends on Mar. 31 of every year. You can enroll in health coverage and medical coverage during the general enrollment period. However, this is considered late enrollment; hence, your premiums for Parts A and B are likely to be higher compared to if you had enrolled when you were first eligible.
Pay attention to deadlines to avoid late enrollments. Additionally, Medicare advises that you start weighing your options three months prior to your birthday month.
Knowing how Medicare works is important since it increases your chances of choosing a suitable plan. Medicare consists of different Parts, such as A, B, C, and D. Parts A and B make up original Medicare, whereas, Part C is an alternative to Parts A and B and is normally purchased from private insurance companies. Part D, on the other hand, covers prescription drug costs; hence, you can buy it separately for more convenience. Furthermore, there is a Medigap policy, which is recommended if you opt for original Medicare. Medigap, or Medicare Supplement, covers some of your out-of-pocket costs.