Those who are reaching age 65 may find it helpful to begin researching Medicare and understand how it works. Medicare is health insurance from the U.S. government for those aged 65 years and older. However, many citizens qualify for Medicare earlier due to a disability. If you are new to researching Medicare, you should become familiar with your future healthcare coverage since there are Medicare costs and supplements to purchase. Continue reading to learn more about Medicare supplements and the different Medicare plan options.
If you have received Social Security Disability Income for at least 24 months, you will be automatically enrolled in Medicare Part A (inpatient coverage) and Part B (outpatient care). However, if you have not received Social Security benefits, you must enroll yourself in Medicare through the Social Security office. There is a specific time you will want to apply for Medicare Parts A and B to avoid a late enrollment penalty.
The time most beneficiaries apply for Medicare is during their Initial Enrollment Period (IEP). The IEP is a seven-month-long window that begins three months before your 65th birthday month and ends three months after. If you fail to apply for Medicare during this time and are not covered by creditable coverage from a large employer, you should enroll in Medicare during your IEP.
According to Forbes, 10.6 million seniors aged 65 and older were in the workforce in 2020. Many of these hardworking seniors delay Medicare due to having large employer insurance. If you work for a large employer with 20 or more employees and are covered by their health insurance, you can delay all parts of Medicare without being hit with a late enrollment penalty. You can still enroll in Medicare while staying on your group health plan. In this case, your large employer insurance will be primary, and Medicare will pay as secondary insurance.
Now, if your employer has less than 20 employees, you will need to enroll in Medicare Part A and Part B during your IEP to avoid a late enrollment penalty. You can still stay on your work’s insurance plan, but Medicare would be your primary insurance, and your group health plan would pay as secondary.
It’s common for seniors to apply for Medicare and think the government pays their premiums and deductibles. Unfortunately, this is far from true. However, there is a chance you will have a $0 premium for Medicare Part A.
Those who worked 40 quarters (ten years) in the U.S. and paid payroll taxes will have a $0 premium for Part A since your payroll taxes funded that premium. But, if you have only 30-39 quarters, you will pay a pro-rated monthly premium of $274. People with less than 30 quarters will pay the total Part A premium of $499 in 2022.
In 2022, the Part A deductible is $1,556 per 60-day benefit period. Therefore, if you are admitted to the hospital, you are responsible for the Part A deductible (unless you have a plan that supplements the deductible).
No matter your work history, you will pay the standard Part B premium, which is $170.10 per month in 2022. However, if you are in a high-income bracket, you will pay more monthly for Medicare Part B. Social Security determines your Part B premium by looking at your tax returns from two years ago. If you find yourself with a higher Part B premium and no longer make the same income from two years prior, you can file an appeal.
The annual Part B deductible is $233 in 2022. You will pay this deductible for your outpatient services, such as doctor’s visits, durable medical equipment, ambulance rides, etc. Once you meet the Part B deductible, Medicare Part B will cover 80% of your Medicare-approved services. You will then be responsible for the 20% coinsurance for your outpatient services, and no, there is not an out-of-pocket maximum. Therefore, many beneficiaries purchase an additional Medicare plan for cost-sharing help.
Additional Medicare plans to purchase
Private insurance carriers, or Medicare brokers, sell Medicare Supplements and Medicare Advantage plans. These two plans are very different from one another, but they can help with your out-of-pocket costs for Medicare-approved services.
A Medicare Supplement, also known as a Medigap plan, is secondary coverage to Medicare Part A and Part B. Medicare Supplements do not have network restrictions, making it easier for you to travel and receive your healthcare services from anyone who accepts Medicare across the country. When doctors accept Medicare, they must accept your Supplement plan no matter the plan type or carrier you purchased the plan from.
Ten standard Supplement Plans are available in most U.S. states. Each plan covers a different set of health benefits, and the plans are standardized. For example, you could purchase a Plan G from Carrier X and find that Plan G from Carrier Y has the same exact benefits. The only difference between the two plans would be the monthly premium since the premium is based on multiple factors, such as your age, gender, zip code, carrier, and more.
Medicare Advantage plans (Part C) work differently than Medicare Supplements. Whenever you purchase a Medicare Advantage plan, you will get your Part A, and Part B benefits from the private insurance carrier instead of the government. The private insurance carrier you purchase an Advantage plan from will set your cost-sharing amounts for your healthcare services and a network of doctors and pharmacies you can visit for your care.
Many seniors favor Advantage plans due to their low premiums and added benefits. In 2022, you can find Advantage plans as low as $0 per month. However, you will likely have higher cost-sharing amounts throughout the year. Medicare Advantage plans can also include added benefits, such as dental, vision, or hearing. However, carriers are not required to include these benefits, and they can be taken away in the upcoming year.
Medicare can be overwhelming when you turn 65 years old and aren’t familiar with your Medicare enrollment period, costs, and the additional plans that are available to you. You may find it beneficial to work with a reputable Medicare broker representing multiple companies to ensure you are in the most cost-effective plan in 2022.