Retirement and Health Insurance: Understanding Medicare

view all - hide all

What is Medicare?

Medicare, also sometimes referred to as Original Medicare, is a federally funded health insurance plan for the following:

1. People 65 or older
2. People under 65 with certain disabilities
3. People of any age with End-Stage Renal Disease (ESRD)

Medicare has 4 parts:

1. Medicare Part A (hospital insurance) helps cover inpatient hospitals stays, skilled nursing facilities, hospice and home health care. Part A is free for most people.
2. Medicare Part B (medical insurance) helps cover doctors’ services, lab work, outpatient care, durable medical equipment and other medical services. There is a monthly premium for Part B that many people have automatically deducted from their Social Security checks.
3. Medicare Part C (Medicare Advantage plans) are health plans like HMOs and PPOs run by Medicare-approved private insurance companies. Medicare Advantage plans include Part A and Part B benefits, and may also include extra benefits like vision, hearing and fitness. Many plans also include Medicare Part D prescription drug benefits, sometimes for an extra cost.
4. Medicare Part D (prescription drug coverage) helps cover the cost of prescription drugs. Coverage is available through Medicare-approved private insurance companies. It can either be a stand-alone prescription drug plan (PDP) or a Medicare Advantage prescription drug plan (MA-PD) that combines medical and drug coverage.

When can I get Medicare?

Most people qualify for Medicare when they turn 65, and some get Part A and Part B automatically.

1. If you are already getting benefits from Social Security or the Railroad Retirement Board (RRB):

        You will automatically get Part A and Part B starting the first day of the month you turn 65. If your birthday is on
        the first day of the month, Part A and Part B will start the first day of the month prior.

        You will receive your Medicare card in the mail three months before your 65th birthday. If you decide you don’t
        want Part B coverage, follow the instructions on the card and send the card back. If you keep the card, you
        keep Part B and will pay Part B premiums.

1. If you are still working and are not already getting Social Security or RRB benefits — and want Part A or Part B — you will need to sign up.

        You should contact Social Security at 800-772-1213 (TTY 1-800-325-0778) or www.socialsecurity.gov/retirement
        about three months before your 65th birthday to sign up for Medicare. You can sign up for Medicare even if you
        do not plan to retire at age 65. There are specific timeframes around Medicare enrollment, and the rules can be
        very strict. You need to know the differences between your Part B Initial Enrollment Period and a Part B Special
        Enrollment Period.

What is the Part B Initial Enrollment Period?

When you first become eligible for hospital insurance (Part A), you have a seven-month period — your Initial Enrollment Period — to sign up for medical insurance (Part B). Your Initial Enrollment Period consists of:

1. the three months before the month you turn 65
2. the month you turn 65
3. the three months after the month you turn 65

For coverage to begin the first day of the month you turn 65, you must enroll before your birth month. You must have Medicare Part B if you plan to get supplemental (Medigap) coverage or enroll in a Medicare Advantage plan.

IMPORTANT: If you do not enroll in Medicare Part B during your Initial Enrollment Period, you have another chance each year to sign up during a General Enrollment Period from January 1 through March 31 (with coverage starting July 1). However, your monthly Part B premium increases 10% for each 12-month period you were eligible for, but did not enroll in, Medicare Part B. Part B Penalty Calculator

Besides qualifying for Medicare, what else should I consider?

Social Security! While you can start collecting Social Security retirement benefits at 62, the full retirement age is 66 if you were born between 1944 and 1955.

If you continue to work past 65, employers with 20 or more employees must offer workers who are age 65 or older the same health benefits they provide for younger employees. If you are covered under your or your spouse’s employer, that plan becomes your primary health insurer and Medicare may pay some of the remaining expenses. If you do not accept coverage from your employer, Medicare will be your primary health insurer.

What does Medicare pay?

This chart shows what you would pay for services if you have no coverage other than Medicare.  Premiums, coinsurances and deductibles are based on 2013 Medicare Part A and Part B rates.

 

SERVICE	YOU PAY
MEDICARE PART A (Hospital)
Hospital First 60 days of an admission 61st to 90th day 91st to 150th day** Beyond 150 days	You pay $1,184* each benefit period. Medicare covers the rest. You pay $296* a day. Medicare covers the rest. You pay $592* a day. Medicare covers the rest. You pay 100% of expenses.
Skilled Nursing Facility Care First 20 days 21st to 100th day Beyond 100 days	You pay nothing. Medicare covers 100%. You pay $148* a day. Medicare covers the rest. You pay 100% of expenses.
MEDICARE PART B (Medical and Doctor Charges)
Medical Expenses In or out of the hospital and outpatient treatment, such as physician services, medical and surgical services and supplies, physical and speech therapy, diagnostic tests and durable medical equipment	You pay a $147*** annual deductible, then 20% of Medicare-approved charges.
Clinical Laboratory Services Blood test for diagnostic services	You pay nothing. Medicare covers 100%.
Other Benefits Under Medicare
Benefits for Medically Necessary Emergency Care Received in a Foreign Country (except in some parts of Canada and Mexico)	You pay 100% of expenses.
Preventive Services	Costs will vary. Health reform legislation eliminated out-of-pocket cost sharing for most Medicare-covered preventive and screening services. You will also be covered for an Annual Wellness Visit.
Outpatient Prescription Drugs	Costs will vary based on the Part D plan and benefit level you select.

 

 * These are the 2013 copays and deductibles for Medicare Part A (Hospital and Skilled Nursing Facility

care) and may change on January 1, 2014.

** After 90 consecutive days of hospitalization, Medicare benefits are paid from a one-time lifetime reserve

of 60 additional days that are not renewable each benefit period.

*** This is the 2013 deductible for Medicare Part B and may change on January 1, 2014.

 

When planning for retirement you need to ask yourself:

·   Could I afford to pay Medicare’s $1,184 Part A deductible out of my own pocket if I had to go into the hospital?

·   What would a prolonged hospital stay do to my retirement savings?

·   Would I be better off with a private insurance plan designed to help fill Medicare’s gaps?

What are my options for covering health care costs?

You can rely on Medicare (Part A & Part B) for your health care coverage, but it may not be enough. Medicare has deductibles and coinsurances, with no limit on out-of-pocket spending, and you are responsible for the gaps. It DOES NOT COVER most prescription drugs; routine vision and hearing services; eyeglasses (except after certain cataract surgeries); emergency services outside the U.S.; and certain other services.

You can:

Keep in mind that you must have Medicare Part A and Medicare Part B to enroll in a Medicare Supplement or Medicare Advantage plan.

What is the difference between a Medicare Advantage and a Medicare Supplement plan?

A Medicare Advantage plan is a Medicare insurance plan that replaces and in most cases enhances Part A and Part B. It combines the benefits of both Part A and Part B and in most cases adds a few extra benefits. Prescription drug coverage (Part D) may be included in a Medicare Advantage plan. Medicare Advantage plans can be Health Maintenance Organization (HMO) plans, Preferred Provider Organization (PPO) plans, or Private Fee-for-Service (PFFS).

A Medicare Supplement plan also sometimes known as a Medigap plan is designed to help pay some of the health care costs (“gaps”) that Original Medicare does not cover, like copayments, coinsurance, and deductibles. If you have Original Medicare and you buy a Medigap policy, Medicare will pay its share of the Medicare-approved amount for the covered services and the Medigap policy pays its share (in whole or in part). In other words a Medicare Supplement plan helps to offset the out-of-pocket expenses that Original Medicare does not cover. Prescription drug coverage (Part D) is not included in a Medicare Supplement plan and has to be purchased separately.

A Medicare Presciption Drug plan also sometimes known as a PDP, adds drug coverage to Original Medicare, Medicare Supplement plans, some Medicare Cost Plans, some Medicare Privite Fee-For-Service plans and Medicare Medical Savings Account plans. You can also recieve prescription drug coverage (Part D) along with all your Part A and Part B coverage through a Medicare Advantage plan. Medicare Advantage plans with prescription drug coverage are sometimes called MA-PDs.

Medicare Advantage plans, Medicare Supplement plans, and Prescription Drug plans are offered by private insurance carriers.

What are some other resources I should consider in researching my options?

Social Security Administration (SSA): 800-772-1213 (TTY: 800-325-0778)

www.ssa.gov

Medicare: 800-633-4227 (TTY 877-486-2048)

www.medicare.gov

Massachusetts Office of Medicaid: 617-210-5000