Medicare is a federal health insurance program for people aged 65 and over, and for those with specific health conditions.
Those eligible for Medicare receive help paying for healthcare costs through Medicare’s different plans.
A person may like to carefully consider Medicare information to find out how they can benefit from the range of coverage options available.
This article explores the Medicare basics, different plans, how a person can qualify and enroll, and where to find help and support.
We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:
- Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
- Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this comes to 20%.
- Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
Medicare is a government-funded healthcare program that serves people aged 65 and over, as well as individuals with specific health conditions.
Qualifying health conditions include amyotrophic lateral sclerosis (ALS) and end stage renal disease (ESRD).
If a person receives Social Security disability benefits or benefits from the Railroad Retirement Board (RRB), they can receive Medicare coverage after 24 months.
Medicare has different parts that provide coverage for inpatient hospital care, outpatient medical services, and prescription drugs.
Medicare Part A is inpatient insurance that covers stays in a hospital, psychiatric unit, or skilled nursing facility. It may also cover home health care and hospice care.
Visits to an emergency room are not covered by Part A unless a person is required to stay in the hospital overnight or longer.
In 2020, a person must pay an annual deductible of $1,408 per benefit period and a copayment may also apply.
Is Part A premium-free?
Some people pay a monthly premium for Part A, but for most, it is premium-free.
The monthly premium will not apply if a person:
- was employed and paid Social Security taxes for at least 40 calendar quarters of work
- receives or are eligible for RRB
- is married to someone who qualifies for premium-free Part A
- was a federal employee after December 31, 1982
- was a state or local employee after March 31, 1986
If none of these criteria apply, an individual must pay a monthly premium for Part A.
The cost depends on the amount of Social Security taxes someone has paid.
If a person or their spouse worked 30–39 quarters, the premium is $252, but if they have worked less than 30 quarters, the premium is $458.
Medicare Part B covers outpatient services that a person may need to treat a health condition.
Coverage includes visits to a primary care physician, some therapeutic services, and diagnostic tests.
It also covers durable medical equipment, and some preventative services, such as shots.
Part B covers a minimal amount of prescribed medications, but drugs that a healthcare professional must administer in their office or another outpatient setting are typically covered.
In 2020, the Part B annual deductible is $198. A 20% coinsurance is then applicable to covered services.
Premiums are dependant on a person’s income. If an individual has an annual income of less than $87,000, they will pay the standard monthly premium of $144.60.
These costs are correct in 2020, but they usually change each year.
Private insurance companies administer Medicare Part D policies.
Part D plans cover the costs of brand name and generic prescription drugs.
A person can choose to have Part D as a standalone policy alongside original Medicare, or they can include Part D coverage within a Medicare Advantage bundled plan.
What is a formulary?
Each Part D plan has a formulary, which is a list of the drugs that the plan covers. Formularies can differ depending on the company administering the policy or the type of plan offered.
The plans divide prescription drugs by cost and place them into different levels, or tiers, on their formularies.
Formularies have to include at least one of the most commonly prescribed medications and will usually have a generic and branded version listed.
Part D costs
Part D costs consist of monthly premiums, deductibles, copayments, or coinsurances, but the amount will depend on which plan an individual chooses, as well as their location.
Private insurance companies administer Medicare Advantage plans, which are also known as Medicare Part C. These bundled plans are an alternative to original Medicare and generally also include prescription drug cover.
Medicare Part C plans have to offer at least the same level of coverage as original Medicare. Many plans also offer additional benefits such as vision, dental, hearing care, and fitness services.
When a person enrolls in a Medicare Advantage plan, they will still have to pay the original Medicare premiums for Part B and, if applicable, Part A. These costs are paid directly to Medicare.
There may also be a Medicare Advantage premium that would be payable directly to the private insurer administering the plan, although some premiums are $0.
Annual deductibles, copayments, and coinsurance may apply, but the amounts vary according to the plan provider.
According to the Kaiser Family Foundation, the 2020 average monthly premium cost for all Medicare Advantage plans is $25.
Medigap plans are there to help with the out-of-pocket costs associated with original Medicare.
The policies are administered by private insurance companies, and cover expenses such as:
- excess charges
Some plans include other benefits, including up to 80% coverage for emergency care that may be needed when traveling internationally.
It is not possible to have a Medigap plan at the same time as a Medicare Advantage plan, and it is illegal for anyone to sell a Medigap policy to someone with Medicare Advantage unless they are switching back to original Medicare.
A person can enroll in Medicare at several points during the year, including:
- Initial enrollment period (IEP): The IEP lasts for 7 months, beginning 3 months before an individual’s 65th birth month.
- General enrollment period (GEP): The GEP runs from January 1–March 31 every year. Individuals may have a late-enrollment penalty because they did not enroll during the IEP.
- Open enrollment period (OEP): The OEP runs from October 15–December 7 each year. During this period, people can change between Medicare plans to best suit their needs.
- Special enrollment period (SEP): Events such as a divorce or moving to a new area can trigger a SEP, which usually have late-enrollment penalties waived.
Individuals can enroll with Medicare by visiting the Social Security website or by calling Medicare on 800-633-4227.
Sometimes, enrollment in Medicare parts A and B is automatic, and takes place when:
- a person is turning 65 within the next 4 months and has been receiving disability benefits
- an individual has received disability benefits for 24 months
- a doctor has diagnosed a person with ALS or ESRD
If an individual is not satisfied with their Medicare coverage, they may change or switch plans during the OEP.
A person may change from original Medicare to a Medicare Advantage plan or switch between different Medicare Advantage plans.
Original Medicare covers a person anywhere in the United States, as long as the hospital or doctor accepts Medicare.
Some Medicare Part D plans offer national coverage with a network of pharmacies. Other plans only have pharmacies in certain states and regions.
Medicare Advantage coverage varies. For example, in an HMO plan, a person must use a specific network of providers, and costs will be higher if using out-of-network services.
If an individual is planning to travel outside of their usual home-state, they may consider checking their coverage with their plan provider.
The government provides Medicare information, guidance, and support through several channels, including:
Medicare provides healthcare cover for U.S. citizens aged 65 and older or to those with qualifying disabilities. Original Medicare consists of Part A, hospital insurance, and Part B, outpatient medical insurance.
People with original Medicare can also purchase a Medicare Part D plan to cover prescription drugs.
Medicare Part C, also known as Medicare Advantage, is a bundled plan that usually includes coverage for prescription medication, as well as some additional benefits.
The Medicare website and SHIP program provide helpful Medicare information for those looking for further advice.