Understanding your Medicare options
Medicare was designed with the idea that the vast majority of Americans would eventually receive a uniform level of coverage and care once they became eligible. And recipients do receive a basic level of care, but that basic level is riddled with coverage gaps.
To figure out how you can fill those gaps, you’ll need to have a basic understanding of the following plans:
Original Medicare: What is Original Medicare?
Original Medicare was signed into law on July 30, 1965.
Original Medicare consists of Part A (hospital insurance) and Part B (medical insurance).
Part A provides a broad coverage of inpatient expenses.
Part B covers medically necessary services– including physician and nursing fees, x-rays, diagnostic tests, blood transfusions, chemotherapy, renal dialysis, and some vaccinations– and also preventive services.
Original Medicare is just that: the components of the Medicare program signed into law by President Lyndon B. Johnson on July 30, 1965.
Sometimes called “traditional Medicare,” Original Medicare is the fee-for-service program in which the government pays directly for the health care costs you incur. The coverage allows you to see a doctor anywhere in the country (as long as the doctor accepts Medicare).
When it became law, Medicare consisted of two parts– and they’re the same two parts providing coverage to millions of Americans 45 years later:
Medicare Part A– hospital insurance
Medicare Part A is called “hospital insurance” because it provides broad coverage of inpatient expenses, including not only hospital visits, but inpatient care in skilled nursing facilities, hospice care, and home health services. The coverage is typically free if you’re 65 and you or your spouse paid Medicare taxes during the years you worked.
In general, Part A covers:
• Hospital care
• Skilled nursing facility care
• Nursing home care (as long as custodial care isn’t the only care you need)
• Home health services
Premium-free Part A
If you are already receiving Social Security or Railroad Retirement Board benefits, the government automatically enrolls you in Medicare Part A at no cost when you reach 65. Look for your Medicare card to automatically arrive in the mail three months prior to your 65th birthday (or the 25th month of a disability, as you become eligible for Medicare after two years of being disabled and receiving Social Security Disability benefits).
Individuals who are not automatically enrolled in Medicare Part A have a seven-month window of time to enroll, beginning three months prior to the month they turn 65.
If you’re not eligible for premium-free Medicare Part A and you wait to enroll after the seven-month window surrounding your 65th birthday, you’ll be subject to additional premiums for Part A (most people are eligible for premium-free Part A, but if you or your spouse haven’t paid at least ten years of payroll taxes, you ‘d have to pay for Medicare Part A).
Regardless of age, individuals suffering from ALS receive their Medicare Part A card through the mail the month their disability benefits begin. People with end-stage renal disease (kidney failure) are also eligible for Medicare coverage, but must apply for it– enrollment is not automatic.
What is covered by Medicare Part A
*Inpatient care in hospitals that provide critical care, including a semi-private room (unless a private room is medically necessary), meals and prescription drugs. (Not included: private-duty nursing, a TV or phone in the room).
*Inpatient facilities for rehabilitation and hospitals providing long-term care.
*Inpatient care in a nursing facility where skilled but not long-term care is offered.
*Hospice care and home health care services when medically necessary (home health care includes
*intermittent skilled nursing, physical therapy, speech-language pathology, some medical supplies, and equipment).
*Inpatient care in a religious nonmedical health care institution.
*Blood– If no free blood bank blood is available, Part A pays for patient’s blood after the enrollee pays for the first three units.
*Inpatient mental health care in a psychiatric facility (limited to 190 days in the enrollee’s lifetime).
Part A premiums
If you buy Part A, you’ll pay up to $422 each month in 2018. If you paid Medicare taxes for less than 30 quarters, the standard Part A premium is $422. If you paid Medicare taxes for 30-39 quarters, the standard Part A premium is $232.
In most cases, if you choose to buy Part A, you must also:
Have Medicare Part B (Medical Insurance).
Pay monthly premiums for both Part A and Part B.
Contact Social Security for more information about the Part A premium.
Some people automatically get Medicare Part A (Hospital Insurance).
Medicare Part A pays the majority of the Medicare-approved charges for inpatient health care services. However, you must reach a deductible for each benefit period ($ 1,340 in 2018) before coverage kicks in, and there are flat dollar coinsurance charges that apply to extended hospital stays. If you’re in the hospital more than 60 days, you’ll pay $335 per day coinsurance for days 61 through 90. If you’re hospitalized for longer than 90 days, you have 60 lifetime “reserve days” that you can use– during those days, you’ll pay $670 per day (again, these are all 2018 amounts; they generally increase from one year to the next). Once the reserve days are used up, Medicare doesn’t pay any additional charges during that benefit period (a benefit period begins on the day you’re admitted to the hospital, and ends when you’ve been out of the hospital for 60 days). It’s rare for beneficiaries to be hospitalized more than 60 days, but not unheard of– which is why a Medigap supplement is an important part of full medical coverage in retirement
Medicare Part B– medical insurance
While Part A basically covers inpatient services, Medicare Part B is also referred to as “medical insurance” because it covers medically necessary services– including physician and nursing fees, x-rays, diagnostic tests, blood transfusions, chemotherapy, renal dialysis, and some vaccinations– and also preventive services. Enrollees pay a monthly Part B premium, but your other costs depend on whether you’re enrolled in Medicare Part A, or in another Medicare health plan.
Medicare Part B picks up– to a large extent– where Medicare Part A leaves off, covering many of the outpatient services and products not covered by the “hospital insurance.” Part B coverage pays for a broad range of medically necessary services not covered during inpatient treatment, including ambulance services, certain surgical procedures, mental health care, physical therapy, transplants, urgently needed care and more.
In addition, Part B covers preventive medical services, including diagnostic tests (such as MRIs, CT scans, EKGs, and x-rays) and a host of screenings (such as Pap tests, HIV screening, glaucoma tests, hearing tests, diabetes screening and colorectal cancer screenings). Part B also pays the costs of durable medical equipment such as wheelchairs, hospital beds, and oxygen equipment.
Medicare Part B coverage pays for a broad range of medically necessary services not covered during inpatient treatment.
Part B also covers preventive services, including diagnostic tests and a host of screenings.
For 2018, most enrollees’ Part B premium is $134 a month or $130 a month, depending on their situation.
Enrollees who receive treatment during the year must also pay a Part B deductible, which is $183 in 2018.
Failing to enroll in Medicare Part B during your open enrollment could raise your Part B premium later on.
If you have health insurance through your employer, or through your spouse’s employer, you may want to delay enrollment in Part B.
How much is Part B premium for 2018
The standard Part B premium amount is $134 (or higher depending on your income). However, some people who get Social Security benefits will pay less than this amount ($130 on average).
Medicare Part B enrollees with income above $85,000 ($ 170,000 for a married couple) pay higher premiums than the rest of the Medicare population. The 2017 high-income premiums for Part B coverage range from $187.50/ month to $428.60/ month and those premiums remain unchanged for 2018. But the income levels for the various brackets are changing, which means that people with unchanged income might find themselves in a higher Part B premium bracket in 2018, as the adjustment will result in more enrollees paying the highest premiums. The change will only affect Medicare beneficiaries with income above $107,000 ($ 214,000 for a married couple), but premiums could increase substantially for people who are bumped into a higher bracket as a result of the changes.
The highest bracket (i.e., with the highest Part B premium) will now apply to those with income above $160,000 ($ 320,000 for a married couple), whereas the highest bracket didn’t apply in 2017 until an enrollee’s income reached $241,000 ($ 428,000 for a married couple).
What are Part B deductible and coinsurance?
$183 per year. After your deductible is met, you typically pay 20% of the Medicare-approved amount for most doctor services (including most doctor services while you’re a hospital inpatient), outpatient therapy, and durable medical equipment.
Can I delay Part B enrolment?
If you have health insurance through your employer, or through your spouse’s employer, you may want to delay enrollment in Part B. You’ll need to check with your employer or HR department to make sure that your employer-sponsored coverage will pick up where Medicare A leaves off, but assuming it does, you may want to delay enrolling in Medicare Part B, since it has a premium.
As long as you enroll in Part B either while you (or your spouse, if your coverage is through your spouse’s employer) are still employed, or within eight months of the end of employment, you’ll be able to enroll in Part B without any penalty. This is regardless of what time of year it is, and regardless of how long ago you turned 65.
If your employment ends, you may be eligible to continue your employer-sponsored coverage via COBRA. But coverage under COBRA does not have the same protections as far as access to Part B and the ability to enroll without a penalty. Once your employment ends, you’ve got eight months to sign up for Part B (regardless of what time of year it is, and without a penalty). You can have COBRA coverage during that eight months if you wish. But once it’s been more than eight months since your employment ended, you no longer have open access to Medicare Part B, even if you’re still covered under COBRA.
Once it’s been more than eight months since your employment ended, the details above about late enrollment in Part B apply. You’ll only be able to sign up for Part B between January 1 and March 31 (with coverage effective July 1), and late enrollment penalties can be applied to your premium. This is something to keep in mind if you elect COBRA once your employment ends; if your COBRA runs out in the middle of the year (and you haven’t yet enrolled in Part B) you won’t have access to Part B at that point– you’ll have to wait until the following January– March enrollment period, with coverage taking effect in July and a late enrollment penalty that will apply to your Part B premium for the rest of your life.