If you’ll be turning 65 soon, along with another candle on your cake, you’ll be eligible for a nice gift from American taxpayers like yourself called Medicare. You’ll also begin receiving lots of offers for supplemental insurance, also called Medigap coverage. Before you make any decisions, arm yourself with some basic facts.
What is Medicare?
Medicare was signed into law by President Lyndon Johnson in 1965 to help America’s senior citizens pay for basic healthcare. Under some circumstance, coverage was expanded to include some younger people with disabilities and anyone with end-stage kidney disease. In 2003, President George Bush added prescription drug coverage to the program. All citizens over 65 and some younger in certain circumstances are eligible. However, you cannot have Medicare if you still receive healthcare coverage from an employer or union, and dropping private coverage in favor of Medicare may not be your best option.
Medicare Coverage Alphabet
Original Medicare consists of Part A and Part B. Part A typically covers hospitalization, skilled nursing facility care, certain types of nursing home care, hospice and home health services. Part B covers doctor visits, services to prevent an illness or detect it in an early stage, and services and supplies needed to diagnose or treat a medical condition.
Part C, also called Medicare Advantage, is offered through private insurers via an HMO or PPO network as an alternative to Original Medicare. It covers doctor and hospital services. Some plans also cover prescription drugs. You cannot have Plan C and Original Medicare. You must choose one or the other.
Part D plans are private plans approved by Medicare to help people with Original Medicare pay for prescription drugs.
If you or your spouse paid Medicare taxes during your working career, Part A is premium-free. If you didn’t pay into it, the current monthly premium can be as much as $407 for Part A.
Part B premiums are assessed based on your income, factored from your federal return two years’ prior to applying for Medicare. For most people, the premium is currently $104.90 per month, plus a $147 per year deductible. If you are also receiving Social Security benefits, your Part B premiums will be deducted from your check.
Part C and Part D monthly premiums vary by plan.
What Medicare Doesn’t Cover
Medicare is a big help, but it doesn’t pay for everything. You may also have to cover the costs of copays, coinsurance and deductibles. Medicare does not cover routine vision care or dental services. For help with the costs not covered by Original Medicare, you can purchase supplemental coverage, also called Medigap, from a private insurer.
Medigap insurance is sold by private insurers and is only available if you’ve chosen Original Medicare Parts A and B. I you opted for Medicare Part C (Medicare Advantage), you cannot buy a Medigap policy. Nor can you usually buy a Medigap plan if you’re under 65 and receiving Medicare because of a disability although some exceptions do exist. There are 11 standard Medigap policies offered in most states. They consist of lettered plans A through K and K through N, and each has a different set of benefits to fill various gaps in your Original Medicare Parts A and B coverage.
Medigap insurance can cover part or all of costs such as the deductible and coinsurance for a hospital stay, your part of a Part B doctor bill and hospice care coinsurance. It does not cover vision care, dental care, glasses or hearing aids, prescription drugs of Part D out-of-pocket expenses.
Learn more about Medicare, Medicare Advantage and Medigap or to speak with knowledgeable Medicare insurance agent here.