As you approach the golden age of 65, your mailbox will become stuffed with Medicare brochures and advertisements from every insurance company under the sun. The overload of solicitations can become overwhelming. Trying to understand the different Medicare enrollment periods, Medicare parts, and costs can be confusing.
To help you understand the basics of Medicare, here is a Medicare 101 guide for 2021.
Many seniors take out Social Security benefits before they are eligible for Medicare. If you receive Social Security at least four months before your 65th birthday month, you will be automatically enrolled in Medicare Part A and Part B. If you do not take out Social Security before you’re eligible for Medicare, you must enroll yourself in Medicare during your Initial Enrollment Period (IEP).
The IEP begins three months before your 65th birthday month and ends three months after, totaling seven months. For example, if you are turning 65 on April 6th, your IEP begins on January 1st and ends on July 31st. During this time, you will enroll in Part A and Part B through the Social Security office. You can apply either in person, over the phone, or fill out an application online.
Medicare is divided into parts: Part A covers inpatient care, and Part B covers outpatient services. Medicare Part A and Part B come from the United States government. However, you will want to consider purchasing a Part D plan from a private insurance carrier for prescription drug coverage.
Take note that if you fail to enroll in Part A, Part B, and Part D during your Initial Enrollment Period, you will be charged a late enrollment penalty.
You can think of Medicare Part A as your room and board while being inpatient inside the hospital. Part A covers a semi-private room, three meals a day, medications administered to you, lab services, and medically necessary lab services.
Medicare Part A also covers services after your inpatient stay, such as hospice, skilled nursing, medical social services, and physical therapy. Medicare only covers short-term care and not long-term care. Therefore, Medicare will not cover your stay at a nursing home or living facility.
Medicare Part B covers any medically necessary service at an outpatient facility. For example, Part B provides coverage for durable medical equipment, doctor’s visits, some chiropractic care, ambulance rides, select vaccinations, and much more.
There are certain scenarios where Part B provides coverage at a hospital, such as outpatient surgery, chemotherapy, and emergency room visits. Medicare Part B does not cover routine dental, vision, and hearing services, as well as prescription medications.
While Medicare Part A and Part B are insurance through the federal government, Medicare Part D plans are sold through private insurance carriers or a Medicare broker.
Medicare Part D is strictly insurance for prescription medications, but it can cover certain vaccinations as well. Every Part D plan has a drug formulary that shows what drugs your plan covers. However, Medicare requires all Part D plans to cover at least two drugs in each therapeutic class.
Part D plans also cover almost all drugs in these six categories: antipsychotics, anti-cancer medications, antidepressants, anticonvulsants, HIV/AIDS drugs, and immunosuppressants.
Many seniors believe Medicare is free due to paying Medicare taxes throughout their careers. Although you likely have paid into Medicare for quite some time, Medicare still comes with a cost.
The good news is, if you have worked 40 quarters, which is ten years, in the United States and paid payroll taxes, you will have a $0 premium for Medicare Part A. But, if you have between 30 to 39 quarters, you will pay $259 per month for Part A in 2021. If you do not have any work history and are eligible for Medicare, your monthly premium would be $471 in 2021.
When you are admitted to the hospital, you will be subject to the Part A deductible, which is $1,484 in 2021. After you have paid the deductible, Medicare Part A will cover up to 60 days in full while you are an inpatient.
Medicare Part B has a premium you will pay regardless of work history. In 2021, the standard Part B premium is $148.50. However, if you are in a high-income bracket, you will pay more for Part B. The annual Part B deductible is $203 in 2021. Once you have met the Part B deductible, Part B will cover 80% of your Medicare-approved services. So, you will pay a 20% coinsurance for Medicare-approved services for the rest of the year.
Since private insurance companies sell Medicare Part D plans, the Part D premium can vary. For example, you may find a plan as low as $10 in your area, but another plan can be over $100. However, similar to Part B, you can be subject to a higher Part D premium if you are in a high-income bracket.
Whenever you pay for your prescriptions at the pharmacy, your cost-sharing will go towards the Part D deductible. In 2021, the Part D deductible is $445. You may find a plan with a deductible lower than $445. However, a carrier cannot increase your deductible past $445.
Medicare can be overwhelming when you first enter the Medicare maze. Once you fully understand your Initial Enrollment Period, Medicare parts, and costs, the maze can begin to be easier to navigate. Many experienced Medicare brokers are well versed in Medicare and sell Medicare supplements to help with Medicare expenses. For more information, contact a well-established Medicare broker today.