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What is Medicare?

Medicare is a federal health insurance program designed for only people who are 65 or older. People who are under 65 are not able to join Medicare, unless they have been on Social Security disability for more than 24 months, and have surpassed the waiting period for Medicare coverage. Additionally, people who can also benefit from this program are people with certain disabilities such as end-stage renal disease, and other permanent disabilities.

Similar to Social Security, Medicare is an entitlement program that most U.S. citizens become eligible for by working and paying taxes for a minimum period of time; which is typically 40 quarters (10 years). Most people join the Medicare program after turning 65 years old, or when they retire and leave their group health insurance.

The Foundation of Medicare Coverage is Comprised of Four Parts

“Original Medicare” consists of Part A and Part B. Together, they provide the foundation for your health insurance coverage.

1)  PART A • This is commonly known as hospitalization insurance. This mostly covers the cost of your time in the hospital (inpatient care), skilled nursing facility care, hospice care, home health care, and more.

2)  PART B • This helps cover your doctors visits and other services including: outpatient procedures, x-rays, lab tests, and preventative services.

3)  PART C • These plans are offered by private insurance carriers who have a contract with Medicare and are required to offer the same benefits as Original Medicare. You may enroll in this option to replace your “Original Medicare” (Part A and Part B). “Medicare Advantage Plans” are known as Part C. This combines Part A and Part B coverage.

4)  PART D • This is your prescription drug coverage. This is offered to everyone with Medicare. Most Part C plans cover prescription drugs; however, you may be able to add drug coverage to some plans, if they are not already included.

What is Original Medicare?

The foundation of Medicare is the comprised of two parts; Part A and Part B. The combination of these two parts creates what is know as “Original Medicare.“ Part A provides “hospitalization insurance”, which mostly assists with the cost of inpatient care, while Part B provides “medical insurance” for services including: doctors visits, outpatient procedures, x-rays, lab tests, and preventative services. 

Medicare Part A

What does it cover?

Medicare Part A is often referred to as “hospital insurance” since it covers your care while in a hospital. It will also cover some care in nursing facilities, assisted living, home health care, hospice and more.

In general, Part A covers:

  • Skilled Nursing Facility Care
  • Inpatient Care in Hospital
  • Nursing Home Care (as long as custodial care is not the only care you need or long-term care)
  • Hospice Care
  • Home Health Care

Medicare Part B

What does it cover?

Medicare Part B is also known as “medical insurance” and covers services such as doctors, x-rays, lab tests and other outpatient services.

In general, Part B covers:

  • Outpatient Care
  • Clinical Research
  • One-Time “Welcome to Medicare” Wellness Exam
  • Annual “Wellness” visit every 12 months
  • Laboratory Tests – X-rays, blood work, etc.
  • Ambulance Services
  • Durable Medical Equipment (DME) – Wheelchairs, walkers, hospital beds, home oxygen equipment, etc.
  • Prosthetics & Orthotics
  • Mental Health Care
  • Preventative Services

How Do I Enroll in Original Medicare?

It’s important to know that Part A & B are the only parts of Medicare you will need to enroll in via the Social Security office.

If you are receiving Social Security benefits at least (4) months before your 65th birthday, you will be automatically enrolled into Medicare Part A and Part B; and should receive your red, white & blue Medicare card in the mail about approximately (3) months prior to your birth month. 

If you are NOT receiving Social Security benefits, you will not be automatically enrolled, and will need to enroll through the Social Security office, when you turn 65.

 

MEDICARE HERO SUPER TIP • BEWARE OF PENALTIES!

If you fail to enroll in Medicare Part B during your enrollment window when you are first eligible to sign up, it’s important to know you will be subject to pay a late enrollment penalty. Your monthly premium may go up 10% for each 12-month period you should have had Part B, but didn sign up. In most cases, you’ll have to pay this penalty each time you pay your premiums, for as long as you have Part B. And, the penalty increases the longer you go without Part B coverage.

How Much Does Part A Cost?

PREMIUMS

Typically, there is no cost associated with Medicare Part A. As long as you (or your spouse) have worked and paid taxes for at least 10 years (40 quarters), you will be entitled to Part A at no cost. Often times, you will hear people refer to this also as “premium-free Part A”.

An easy rule of thumb is if you are eligible for Social Security benefits, then you should be eligible for Medicare Part A at no cost. If you have to buy Part A and paid taxes for at least 30-39 quarters, the standard Part A premium would be $259 in 2021. If you worked & paid taxes for less than 30 quarters, the standard Part A premium would be $471 in 2021.⁠

You usually don’t pay a monthly premium for Medicare Part A (hospital insurance) coverage if you or your spouse paid Medicare taxes while working. This is sometimes called “premium-free Part A.”
If you buy Part A, you’ll pay up to $471 each month in 2021.

Most people get premium-free Part A. You can get premium-free Part A at 65 if:

  • You already get retirement benefits from Social Security or the Railroad Retirement Board
  • You are eligible to get Social Security or Railroad benefits, but have not filed for them yet
  • You or your spouse had Medicare-covered government employment.

DEDUCTIBLES

Any expenses you incur while an inpatient in the hospital would fall under Part A of Medicare. You will have to pay a $1,484 annual deductible in 2021 before your Medicare Part A hospitalization coverage begins. Additionally, if applicable, you will be responsible for some cost-sharing for extensive hospital days. See the chart below for the exact breakdown in costs:

How Much Does Part B Cost?

PREMIUMS

You must pay a monthly premium for your Medicare Part B coverage. In most cases, people will pay the Part B premium of $148.50 per month in 2021, if you are already enrolled in your Social Security income benefits. In this case, Medicare will automatically deduct your Part B premiums from your Social Security check. However, there are some exceptions for some people to be aware of:

  • If you are NOT enrolled in SS, and have to buy Part A, you typically will be required to pay for a Medicare Part B, and pay monthly premiums for both. In this case, Social Security will bill you quarterly. 
  • If your annual income is greater than $88,000 (single) or $176,000 (married), then your premium will be higher. Reference the table below to find out how much your monthly premium will be based on your income bracket
  • AVOID PART B PENALTIES: It is important to know, that if you enroll late into Part B, your monthly premium may go up 10% for each 12-month period you should have had Part B. In most cases, you’ll have to pay this penalty each time you pay your premiums, for as long as you have Part B. And, the penalty increases the longer you go without Part B coverage. So it is important not to miss this initial enrollment window! 

Social Security will contact some people who have to pay more depending on their income. The amount you pay can change each year depending on your income. If you have to pay a higher amount for your Part B premium and you disagree (for example, if your income goes down), use this form to contact Social Security.