Almost 60 million Americans have enrolled in Medicare. Yet a large percentage of the population still has very little understanding of what Medicare is, how it works, or what to expect from the program.
Sometimes it is confused with Medicaid. Other times, potential enrollees misunderstand the various plans available to them under Medicare and their differences. These misconceptions can lead to serious differences between expectations and reality.
Here are the Medicare facts every American needs to know.
What Is Medicare?
Medicare is a health insurance program established and run by the federal government. It consists of four parts:
- Hospital coverage (Part A)
- Medical insurance (Part B)
- Medicare Advantage plans (Part C)
- Prescription drug coverage (Part D)
Medicare is sometimes confused with Medicaid. Both programs are overseen by the same governing agency, but they serve different populations. Medicaid serves low-income Americans of all ages and individuals with qualifying disabilities.
Who Is Medicare For?
To qualify for Medicare, Americans must be:
- 65 years of age or older
- Diagnosed with a qualifying disability
- Suffering from End-Stage Renal Disease (ESRD)
There are no income limits involved in Medicare eligibility. Very high-income applicants may pay higher fees under the program, but can still enroll.
How Does Medicare Work?
At its most basic, the Medicare program works like this:
- Seniors apply for Medicare when they turn 65
- Applicants with enough credits receive free Part A coverage
- Applicants without enough credits must purchase Part A coverage
- Interested applicants can then buy into Parts B, C, and D
- Medicare then works like any standard medical insurance plan
Medicare enrollees pay deductibles and copays, and their Medicare insurance plan picks up all other covered costs when they receive medical care. Medicare can be “stacked” with private insurance plans for additional coverage.
At first glance, this seems straightforward. As the saying goes, however, the devil is in the details.
Enrollees’ expectations often do not match the reality of the Medicare program. For many enrollees, the disparities begin at enrollment.
Medicare Enrollment
Age is a baseline eligibility factor for Medicare enrollment. Many Americans see the program’s age limit and assume that it means they can enroll in Medicare any time after they reach the mandatory minimum age.
This is not true.
In fact:
- Anyone who begins receiving Social Security at age 65 must enroll in Part A coverage
- Seniors who fail or refuse to enroll in Part A cannot receive SS benefits and must repay any benefits they have already received
- Seniors have a seven-month window of time within which they can enroll for Part B
- Anyone who does not enroll during that window cannot enroll until the next Open Enrollment period
- Enrollees who miss their initial enrollment window must pay hefty penalties when they do enroll in Part B
One’s initial enrollment period (IEP):
- Starts three months before their birthday the year they turn 65
- Includes their birth month
- Ends three months after their birth month
So, for example, if you were born in June your window would be from March to September.
Medicare Plans
The second aspect of enrollment that often does not meet enrollees’ expectations is choosing coverage. Many enrollees assume that Medicare is a single, cohesive plan that covers everything they need.
In reality, this is not how the program works.
First, different aspects of medical care and insurance are covered by different parts of the Medicare program. Applicants must enroll in each part to get comprehensive coverage. Even then, like commercial insurance plans, Medicare does not cover all medical costs.
Copays and deductibles apply. Access to prescription drugs can depend on program formularies. Enrollees may need to purchase Medigap insurance or Part C Medicare Advantage plans to get coverage for:
- Long-term care facilities
- Vision care services
- Dental care services
- Hearing care services
- Foot care services
- Alternative care services such as chiropractor visits
Medicare Costs
The next aspect of Medicare that often does not match enrollees’ expectations is cost. Most Americans assume that Medicare is free. Medicare premiums, however, can be complex.
Individuals earn credits toward Social Security and Medicare by paying SSA taxes during their working years. In some cases, individuals’ credits may be paid for by a working spouse or parent. For most individuals with enough credits at the time of enrollment, Part A coverage is free.
Enrollees without enough credits must pay monthly premiums for Part A coverage. All enrollees must pay for coverage under Parts B, C, and D. They must also pay:
- Copays and deductibles
- For services not covered by Medicare
- For additional coverage where needed
Medicare deductibles and copays can run as high as 20 percent of the cost of care.
Low-income enrollees may qualify for reduced rates or for dual coverage under Medicare and Medicaid. High-income enrollees may face special surcharges on their monthly premiums up to $428 per month.
Out of Country Care
Enrollees are also responsible for the full costs of their care should they seek medical attention outside the United States. Medicare will not reimburse enrollees for costs related to care received “out of network.” This can potentially lead to staggering bills should enrollees experience a medical emergency while traveling.
This can also create an expensive and unwelcome decision for seniors living out-of-country. If they enroll in Medicare when they become eligible, they must pay monthly fees for insurance they cannot use. If they do not enroll when they become eligible, they must wait for an open enrollment period and pay heavy penalities when they return to the United States.
Disability Coverage
There are also disaparities between expectations and reality for individuals with disabilities who enroll in Medicare. First and foremost, these discrepancies start with eligibility.
According to many leading healthcare sources, Americans with qualifying disabilities often assume that they become eligible for coverage when they are diagnosed. This is not true.
Instead, Americans with qualifying disabilities may face a waiting period of up to 24 months after diagnosis before they are eligible for Medicare. Any medical costs they incur during that time are their responsibility or that of their existing insurance provider.
Similarly, even very young Americans diagnosed with qualifying disabilities are required to have accumulated a certain number of SSA credits to be eligible for enrollment. If they do not yet have those credits they may be forced to keep working and acquire them or pay higher premiums to get Medicare coverage.
Other Key Medicare Facts
The more that enrollees get beyond the Medicare definition and into the details, the more surprises they may find.
For example, when Americans enroll in Medicare they lose the ability to pay into health savings accounts (HSA). They can continue to take money out of existing accounts per standard HSA terms until their accounts are empty. But they can no longer receive the tax benefits of paying into those accounts.
Similarly, enrollees may be surprised to discover that Medicare premiums are not static. Premiums can increase over time as the result of cost-of-living increases. These increases may take effect right away or may kick in after a delay depending on your SSA benefits.
On the other hand, Medicare enrollees may find that they gain unexpected benefits. For example, Medicare pays for weight-loss programs and services for some enrollees, which standard health care plans often do not.
The takeaway? It is important to carefully review your options when selecting a Medicare plan to ensure that you get the right coverage for your needs.
Enrolling in Medicare
The easiest way to get Medicare explained in-depth and to find the right coverage is to use the tools and services available from reliable providers like MedicareWire.com.
For the average American, the Medicare system is too complex to sift through alone. The stakes, meanwhile, are far too high to risk guessing or picking the wrong option.
Getting help from a qualified and experienced advisor can make choosing the right coverage a quick and painless process. Advisors can assist enrollees in:
- Understanding complicated medical and policy jargon
- Predicting their actual needs and costs
- Comparing and contrasting Medigap and Medicare Advantage plans
- Ensuring that those with special needs have the coverage they require
- Finding the best prices on each type of coverage
Americans who know they’ve chosen the right plan can enjoy confidence and peace of mind. They’ll also get the most bang for their bucks.
Protect Your Health
Learning how to navigate the medical insurance system is an important part of taking care of your health and wellness. Now that you’ve got the Medicare facts you need, explore other ways to boost your health and quality of life by exploring the other great articles in the Health section of our blog.