Understanding Medicare: 8 Things You Should Know
Understanding Medicare can be difficult, especially if you’re new to receiving it or have never helped a family member navigate it.
Figuring out what kind of coverage you need and planning for the future are some of the things Medicare users have the most trouble figuring out. There’s a balance between having adequate coverage without having to pay too much out of pocket.
In this guide, we’ll cover things you should know about Medicare such as what it does, the different coverage options, and how to know if you have adequate coverage for your needs.
Medicare Isn’t That Old
Medicare is a single-payer healthcare system funded by the federal government. Funding comes from a variety of taxes such as payroll taxes and general revenue taxes.
The system was founded in 1966 as part of the Social Security Administration. Over the years, Medicare has expanded and evolved to meet the changing needs of patients.
As of 2016, 56.8 million people were enrolled in Medicare.
There Are Four Parts of Medicare
Medicare is comprised of four parts, each of which covers a different part of your healthcare coverage. They are simply called Parts A, B, C, and D.
Each part of Medicare covers different things such as hospital insurance, medical insurance, and prescription drugs.
When you sign up for Medicare, you are not automatically enrolled in all four of these parts. You will have to select which ones are relevant to your healthcare.
Part A and B Go Together
Parts A and B of Medicare are written to be stand-alone portions of healthcare but patients often sign up for them together given their complementary nature.
Part A covers some of the charges you incur when you’re admitted to the hospital. However, there are some things you might be charged for like doctors fees that Part A does not cover. The good news is Part B helps pay for those other fees.
Part B, along with Part A, is part of what’s known as Original Medicare. It helps cover any medical supplies and services that are necessary to treat you.
Part B helps cover preventative services, outpatient care, ambulance services, physical therapy, and durable medical equipment.
As we age, we are more susceptible to injury and illness. That’s why having both hospital insurance and medical insurance through Medicare can help in case you need to be admitted to the hospital.
Save Money By Signing Up for Part C
There are many patients who sign up for Parts A and B of Medicare. If you’re thinking you need both parts, consider Part C.
Part C is called Medicare Advantage, which is simply Part A and Part B provided by a private health insurer that’s contracted by Medicare.
Despite needing to pay for your Part B premiums, Medicare Advantage can potentially save you money depending on the pricing in your area. Part C plans can also open you up to additional coverage for dental and vision insurance.
There are several options for Medicare Advantage plans such as Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), and Medical Savings Plans (MSAs).
Get Part D If You Take Several Prescriptions
Depending on your health, you might also need to have a few prescription drugs. Some drugs are simply unaffordable without healthcare, and Original Medicare doesn’t cover prescription drugs.
Medicare Part D is relatively new when compared to Original Medicare. Part D only went into effect in 2006 to help meet the demand for prescription drug coverage.
Part D helps cover the cost of your prescriptions while also potentially protecting you from severe drug costs in the future.
You also don’t have to be on Medicare to use Part D. You can use it to supplement other healthcare plans like an employer’s health plan, COBRA, TRICARE, and more.
Want Supplemental Insurance?
When you sign up for Medicare, you’ll likely go one of two directions: Medicare Advantage (Part C) or Original Medicare (Parts A and B).
Original Medicare leaves gaps in your insurance which many consumers fill with Part D insurance and/or Medigap coverage. If you choose Original Medicare, you’ll likely want a supplemental insurance plan.
The cost of a supplemental plan will vary based on your area. Supplemental insurance can, in some cases, cover part of the cost of your copayments and monthly premiums for Original Medicare.
You can find out more about gaps in Medicare coverage with this Medicare supplement plans comparison chart.
Getting Medicare Immediately Isn’t Always Right
The Social Security Administration makes it incredibly easy for Americans to sign up for Medicare the moment they turn 65. You can actually apply to enroll three months in advance to ensure you have coverage when you turn 65.
However, if you’re still working or you’re covered under your spouse’s employer health plan, you might not want to sign up for Medicare just yet. That’s because you can potentially save money and keep good coverage by not needing to pay the Part B premiums.
There is a caveat here. Should you choose to defer Medicare, your current health plan must meet federal requirements. Once your existing coverage ends, you’ll be able to apply for Medicare without penalty during an open enrollment window.
Signing Up Is Easy
Signing up for Medicare is pretty easy and can be automatic for some people. Those who have been receiving social security benefits for up to four months before their 65th birthday will be automatically enrolled in Medicare.
When you enrolled automatically, the government assumes you want Part A and Part B. If you don’t want Original Medicare, you’ll need to contact them directly.
If you don’t qualify for automatic enrollment, you can sign up using an online application or by calling the Social Security Administration.
Understanding Medicare Doesn’t Need to Be Difficult
Hopefully, now you’ve realized understanding Medicare isn’t hard at all.
There are two main courses to choose – Original Medicare and Medicare Advantage. Depending on the plan you choose, you may or may not need supplemental insurance in the form of Medigap or Part D insurance.
As you get closer to enrolling for Medicare, discuss with your family if 65 is the right time in your life to enroll.
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