Understanding the Basics of Medicare Enrollment

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September 10, 2018
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Understanding the Basics of Medicare Enrollment

 

At some point in your working life, especially early in your career, you probably looked at your paycheck and wondered why a portion of your money is going to Medicare. Medicare is one of the federal programs that is funded by your FICA* payroll tax deductions, and it provides health insurance for people age 65 or older, certain people under 65 with disabilities, and people of any age with certain medical conditions such as End-Stage Renal Disease and ALS, also known as Lou Gehrig’s disease.

With healthcare becoming increasingly more expensive and employees staying in the workforce longer to retain their insurance, it’s important to understand how Medicare works and how you should prepare for it as you near age 65. The Initial Enrollment Period lasts seven (7) months and it:

  • Begins three months before the month you turn 65
  • Includes the month you turn 65
  • Ends three months after the month you turn 65

When considering Medicare coverage, there is a choice between Original Medicare and Medicare Advantage.

  1. Original Medicare encompasses Part A (hospital insurance) and Part B (medical insurance).
  • It’s recommended that everyone enroll in Part A upon turning 65, even if they have health insurance from an employer. Because most people have paid Medicare taxes throughout their working years, there is no monthly premium for Part A.
  • There is a premium for Part B to cover doctor’s visits and medical tests, and this premium varies according to income and the timing in which you enroll. In most cases, if you don’t enroll in Part B when first eligible, you may experience a delay in getting Medicare coverage in the future, and you may pay a late enrollment penalty for as long as you have Part B.
  • Original Medicare allows you to see any doctor who accepts Medicare insurance.
  1. A Medicare Advantage plan is considered Part C.
  • Part C includes all the benefits and services covered under Parts A and B.
  • These plans are administered by Medicare-approved private insurance companies that follow rules established by Medicare.
  • You may need to use providers that participate in the plan’s network.
  • These plans may offer benefits and services not covered under Original Medicare, such as vision, hearing, or dental, but may incur an extra cost for them.
  • Most Medicare Advantage plans include prescription drug coverage, which would eliminate the need to enroll separately in Medicare Part D.

If selecting the Original Medicare option, enrolling in Part D may help cover the cost of prescription medications, which is not covered under Parts A and B. The drug plans included in Part D are approved by Medicare and must follow established rules set by Medicare.

Enrollment in Medicare Parts A and B can be automatic for some individuals. For instance, if you already receive benefits from Social Security, you will automatically be signed up for Parts A and B starting the first day of the month you turn 65. If you’re approaching age 65 but not receiving Social Security benefits, you will need to sign up for Medicare. You can begin the process three (3) months before your 65th birthday by contacting www.medicare.gov or www.socialsecurity.gov. To find out if you qualify for automatic enrollment, and for a wealth of other information about the Medicare program, consult the Medicare & You handbook that is published annually by the Department of Health and Human Services.

Fortunately, it’s not necessary to re-enroll in Medicare each year. However, there is an annual open enrollment period, so you have an opportunity to review your health and prescription plan coverage and make changes if desired.

The Medicare & You handbook is a valuable resource for anyone preparing for Medicare enrollment, or for anyone seeking information on behalf of a loved one who is or will be a participant. The handbook will help you to understand how Medicare works with other forms of medical insurance you may have. It’s also important to remember that Medicare does not cover everything. For example, following are a few items and services that are excluded from Medicare coverage:

  • Most dental care
  • Eye examinations related to prescription glasses
  • Dentures
  • Cosmetic surgery
  • Hearing aids and exams for fitting them

The above items may, however, be covered if you choose to enroll in a Medicare Advantage plan. Be sure to read the handbook thoroughly to obtain a clear understanding of what this program has to offer. If you still have questions, the handbook identifies a number of resources that you can call toll-free.

Medicare enrollment is an essential milestone that most Americans will face. It can seem intimidating, but it doesn’t have to be. If you keep in mind the basic timeframe by which you must enroll and familiarize yourself with the various “parts” that comprise Medicare, you will have a good foundation for getting started, and don’t hesitate to contact Medicare directly for any assistance you may need.

 

Sources:

  1. medicare.gov

 

*FICA refers to the Federal Insurance Contributions Act and it constitutes a payroll tax directed at employers and employees alike to fund two federal programs known as Social Security and Medicare.

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