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Getting Started With Medicare: How Can You Prepare?
Most Americans reaching age 65 achieve a significant milestone: Medicare eligibility. Launched in 1965, Medicare is a national health insurance program created and administered by the U.S. government and funded primarily via payroll taxes. Prior to its inception, over half of Americans, 65 or older, had no health insurance.
The program started with coverage for hospital stays (Part A) and other medical expenses like doctor fees (Part B). These two parts, known as "Original Medicare," operate as a "fee-for-service" system where a provider (e.g., hospital or doctor) gets paid for each service delivered.
Over the years, Congress added additional Medicare components. Among these were:
Medicare also covers certain people under 65 who are disabled and those who suffer from End-Stage Renal Disease or ALS (amyotrophic lateral sclerosis.)
Beyond knowing these basic facts, how can those under 65 prepare for Medicare?
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Medicare = Mandatory?
Most everyone wants health insurance. It's especially significant for those 65 and older who will have increasing health needs along with a reliance on retirement income and savings to make ends meet. So, assuming you're not independently wealthy, signing up for Medicare makes sense.
It makes so much sense that the U.S. government considers Medicare sign-up mandatory. Even private health insurers support mandatory sign-up. For people with separate health coverage, insurers require policyholders 65 and older to also sign up for Medicare, so the insurers don't have to cover 100% of health claims.
However, knowing when and how to sign up for Medicare depends on the answers to these four questions:
If not, the only way to receive Medicare benefits before age 65 would be in some cases of disability or being afflicted with amyotrophic lateral sclerosis (ALS) or end-stage renal disease (ESRD). Otherwise, reaching age 65 triggers the requirement to sign up for Medicare Parts A and B with some nuances that clarify depending on answers to the following questions.
If you are retired or working but not covered by an employer plan, then you would be required to sign up for Parts A and B. Otherwise, go to Question 3.
Medicare has different rules depending on the size of the company offering health insurance. For companies with fewer than 20 employees, signing up for Parts A and B is mandatory at age 65. This is because Medicare pays first, and the company's insurance pays second for these small plans. (Determining which plan pays first or second is called coordination of benefits.) For employers with 20 or more employees, go to Question 4.
Medicare aims to deliver a certain level of health insurance coverage. If the health insurance provided by a 20+ employee organization does not provide that benefit level, then you need to sign up for Parts A and B because Medicare will need to pay first. Conversely, if the health insurance plan meets the minimum requirements, it is considered to provide creditable coverage. The organization needs to provide a document confirming creditable coverage to be used when signing up for Medicare.
So, if sign-up is mandatory, what's the process?
Automatic Sign-up: Medicare and Social Security
Social security and Medicare are different programs. Yet, most people don't realize that when they sign up for social security benefits, they also are automatically enrolled at age 65 for Medicare Part A and Part B. Since Part A is free for most people, this usually causes no issues. However, Part B requires a monthly premium payment, so enrollees can opt out of it as long as they are covered by another qualified health plan.
Note: About a half-million Americans receive retirement benefits through the Railroad Retirement Board instead of social security. In these cases, Medicare rules apply the same as social security.
Also, since people can delay signing up for social security benefits until age 70, those reaching age 65 need to pay attention to mandatory Medicare sign-up for at least Part A. Failure to do so may incur costly penalties.
Medicare Sign-up Penalties
When eventually signing up for Medicare, enrollees can present documentation from the employer or union confirming creditable coverage. It pays to find out ahead of time if the organization indeed provides such coverage. For example, any coverage provided by an organization with less than 20 employees is not considered creditable by Medicare.
Some people may delay signing up for Medicare because they cannot afford the premiums, deductibles, copays, or coinsurance. However, several alternatives are available to help pay these costs, like Medicaid, the Medicare Savings Program, and the Extra Help program that helps with Part D prescription drug expenses.
Even those who are not automatically signed up still need to go through the Social Security Administration (SSA) to enroll in Medicare. The reason is that SSA will affirm Medicare eligibility. The four ways to sign up through SSA are:
Enrollment Windows
Medicare has three enrollment windows.
Part D Enrollment
Medicare Part D covers prescription medications, but unlike Parts A and B, it is optional. However, delaying enrollment may result in permanently higher premiums.
Part D coverage, offered only through Medicare-approved private insurers, can be obtained in either of two forms:
Both types of drug coverage charge premiums and have deductibles, copays, and coinsurance rules. To learn about Part D options and how to sign up, use the Medicare Plan Finder or call 1-800-MEDICARE.
Medigap
For those who enroll in Original Medicare (Parts A and B), there are costs for deductibles, copays, and coinsurance. In addition, there is no limit on out-of-pocket expenses. These "gaps" can be costly, so private insurance companies offer Medicare Supplement Insurance, otherwise known as Medigap coverage. These plans have premiums above and beyond other Medicare premiums but cover some of the gaps in Original Medicare coverage, including, in some cases, capping out-of-pocket expenses. However, Medigap is only available to supplement Original Medicare and cannot be used with Medicare Advantage Plans.
Click here or the button below to find a Medicare Insurance plan with TopLine Financial Credit that fits your needs.
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