What Exactly Is Medicare And What Are Its Components
Medicare is the federal health insurance program for people 65 and over, and it plays an important role in covering your health care costs as you age. Medicare also covers some people under 65 who have received disability benefits.
Medicare has four parts: A, B, C and D. You must pay the federal government a premium for Medicare Part B, and possibly other parts of Medicare the amount depends on your income. These premiums are separate from the premiums you pay to UC. See below and medicare.gov/your-medicare-costs for more information.
Part A covers hospital care, skilled nursing and hospice care and home health services. Most people dont pay a premium for Part A because you or your spouse or ex-spouse have worked full-time for 10 years and paid for it through Medicare taxes.
Part B covers outpatient medical services. Everyone enrolled in Medicare must pay a monthly premium to the federal government for Part B. For those with higher incomes, this premium is indexed to your modified adjusted gross income.
Part C is another term for Medicare Advantage, a type of Medicare-approved plan offered by private insurance companies that combines Medicare Parts A, B and D benefits. If you enroll in a Medicare Advantage plan, Medicare pays your insurance company a set amount and the company approves and pays for your care.
Am I Eligible For Medicare
To receive Medicare, you must be eligible for Social Security benefits.
Part A Eligibility
Most people age 65 or older are eligible for Medicare Part A based on their own employment, or their spouse’s employment. Most people have enough Social Security credits to get Part A for free. Others must purchase it.
You are eligible for Medicare Part A if you meet one of the following criteria:
- You are eligible for Social Security or Railroad Retirement benefits, even if you do not receive those benefits.
- You are entitled to Social Security benefits based on a spouse’s, or divorced spouse’s work record, and that spouse is at least 62 years old.
- You have worked long enough in a federal, state, or local government job to be eligible for Medicare.
If you are under 65, you are eligible for Medicare Part A if you meet one of the following criteria:
- You have received Social Security disability benefits for 24 months.
- You have received Social Security benefits as a disabled widow, divorced disabled widow, or a disabled child for 24 months.
- You have worked long enough in a federal, state, or local government job and meet the requirements of the Social Security disability program.
- You have permanent kidney failure that requires maintenance dialysis or a kidney transplant.
- You are diagnosed with ALS or Lou Gehrig’s disease.
Part B Eligibility
If you are eligible for Part A, you can enroll in Medicare Part B which has a monthly premium.
Will I Need To Prove My Age?
Should I Sign Up For Medical Insurance
With our online application, you can sign up for Medicare Part A and Part B . Because you must pay a premium for Part B coverage, you can turn it down.
If youre eligible at age 65, your initial enrollment period begins three months before your 65th birthday, includes the month you turn age 65, and ends three months after that birthday.
If you choose not to enroll in Medicare Part B and then decide to do so later, your coverage could be delayed and you may have to pay a higher monthly premium for as long as you have Part B. Your monthly premium will go up 10 percent for each 12-month period you were eligible for Part B, but didnt sign up for it, unless you qualify for a “” .
If you dont enroll in Medicare Part B during your initial enrollment period, you have another chance each year to sign up during a general enrollment period from January 1 through March 31. Your coverage begins on July 1 of the year you enroll. Read our publication for more information.
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Deductibles And Hospital Coinsurance
With Medicare Part A, youll also pay a deductible and coinsurance costs for each benefit period. In 2022, these costs are:
- $1,556 deductible for each benefit period
- $0 coinsurance for days 1 through 60 in each benefit period
- $389 daily coinsurance for days 61 through 90 in each benefit period
- $778 daily coinsurance for days 91 and beyond in each benefit period
Each day beyond day 90 is considered a lifetime reserve day. You have up to 60 of these days to use in your lifetime. Once youve used all of your lifetime reserve days, you must pay all the costs for the rest of your stay.
Benefit periods reset once youve been out of inpatient care for 60 days or when you begin inpatient care for a new condition.
If you have trouble paying for these costs, you can apply for a Medicare savings program. These state programs help cover the costs of your Medicare deductibles and coinsurance.
Original Medicare And Part D Irmaa
If you receive a Medicare bill for Part B premium and Part D IRMAA costs, you may pay it in these ways:
- Medicares Easy Pay system lets you pay your Part A or Part B premium electronically. You can pay manually or set up automatic payments to be taken directly from a checking or savings account.
- You can pay with a debit card or credit card by writing your card number directly on your bill and mailing it in.
- You can pay with a check or money order.
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Sign Up: Within 8 Months After Your Family Member Stopped Working
- Your current coverage might not pay for health services if you dont have both Part A and Part B .
- If you have Medicare due to a disability or ALS , youll already have Part A coverage.
Avoid the penalty & gap in coverageIf you miss this 8-month Special Enrollment Period, youll have to wait to sign up and go months without coverage. You might also pay a monthly penalty until you turn 65. The penalty goes up the longer you wait to sign up. How much is the Part B late enrollment penalty?
Medicare Part D Premiums
Your Part D Premium will depend on the plan you choose. Just like with your Part B coverage, youll pay an increased cost if you make more than the preset income level.
In 2022, if your income is more than $91,000 per year, youll pay an IRMAA of $12.40 each month on top of the cost of your Part D premium. IRMAA amounts go up from there at higher levels of income.
This means that if you make $95,000 per year, and you select a Part D plan with a monthly premium of $36, your total monthly cost will actually be $48.40.
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The Parts Of Medicare
Social Security enrolls you in Original Medicare .
- Medicare Part A helps pay for inpatient care in a hospital or limited time at a skilled nursing facility . Part A also pays for some home health care and hospice care.
- Medicare Part B helps pay for services from doctors and other health care providers, outpatient care, home health care, durable medical equipment, and some preventive services.
Other parts of Medicare are run by private insurance companies that follow rules set by Medicare.
- Supplemental policies help pay Medicare out-of-pocket copayments, coinsurance, and deductible expenses.
- Medicare Advantage Plan includes all benefits and services covered under Part A and Part B prescription drugs and additional benefits such as vision, hearing, and dental bundled together in one plan.
- Medicare Part D helps cover the cost of prescription drugs.
Most people age 65 or older are eligible for free Medical hospital insurance if they have worked and paid Medicare taxes long enough. You can enroll in Medicare medical insurance by paying a monthly premium. Some beneficiaries with higher incomes will pay a higher monthly Part B premium. To learn more, read .
When To Pay For Original Medicare
If you have original Medicare and arent yet collecting Social Security, youll receive a bill from Medicare either monthly or once every 3 months in these cases:
- If you dont have premium-free Part A, youll receive a monthly bill for your Part A premium.
- If your income exceeds a certain amount, youll receive a monthly bill for your Part D income-related monthly adjustment amount surcharge.
- If you have only Part B, the bill for your Part B premium will be sent quarterly and will include the cost of 3 months worth of premiums.
These bills are paid in advance of coverage. For example, if you applied for Medicare to start in August, youll receive a bill in July for your August, September, and October Part B premiums.
If you also pay for Part A or a Part D IRMAA surcharge, the bill you receive in July will be for Augusts premium.
If youre already collecting Social Security or RRB benefits, your monthly Medicare premium will be automatically deducted from your benefit amount.
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Frequently Asked Questions About Medicare
Were answering frequently asked questions about Medicare in case youve forgotten some of the details since you enrolled, or youre under 65 and still learning about Medicare and how it works with UC-sponsored plans. You can learn more about Medicare at medicare.gov. Keep this background in mind when you consider your health plan choices during Open Enrollment in the fall. Even if youre happy with your current plan, its always a good idea to understand all of your options.
Can I Decline Medicare Altogether
Medicare isnt exactly mandatory, but it can be complicated to decline. Late enrollment comes with penalties, and some parts of the program are optional to add, like Medicare parts C and D. Medicare parts A and B are the foundation of Medicare, though, and to decline these comes with consequences.
The Social Security Administration oversees the Medicare program and recommends signing up for Medicare when you are initially eligible, even if you dont plan to retire or use your benefits right away. The exception is when you are still participating in an employer-based health plan, in which case you can sign up for Medicare late, usually without penalty.
While you can decline Medicare altogether, Part A at the very least is premium-free for most people, and wont cost you anything if you elect not to use it. Declining your Medicare Part A and Part B benefits completely is possible, but you are required to withdraw from all of your monthly benefits to do so. This means you can no longer receive Social Security or RRB benefits and must repay anything you have already received when you withdraw from the program.
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What Is Medicare Easy Pay
Medicare Easy Pay automatically deducts your Medicare premium from a designated checking or savings account. Youll still get a Medicare Premium Bill in the mail, but it will say, This is not a bill. It will serve as a statement letting you know that your premium has automatically been deducted from your bank account.
If you prefer to not have your Medicare premiums automatically deducted, there are a few other ways you can pay:
- You can sign onto MyMedicare.gov and pay your premiums online with your credit card or debit card.
- If you receive Social Security benefits, you can have your Medicare premiums deducted from your benefits.
- If you prefer to pay by check or credit card, you can return your Medicare bill with a check or credit card number by mail.
Using Medicare Easy Pay will save you time and prevent you from accidentally forgetting to pay your premiums.
Is Medicare Supplemental Insurance Free
People with traditional Medicare can take out a Medicare supplement insurance or Medigap to help them fund out-of-pocket costs and some additional services that original Medicare does not cover.
These policies are not free, but they can help reduce costs for Medicares copayments, deductibles, and coinsurances.
Private health insurance companies offer these plans for a monthly premium.
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What Happens If I Dont Pay My Part B And/or Part D Premiums To Medicare
You could end up paying more for medical coverage, and you may lose your UC-sponsored medical plan altogether. If you drop Medicare Part B and/or Part D, you will be temporarily enrolled in the non-Medicare version of your current UC-sponsored plan, which is more expensive than the Medicare-coordinated plan, and it may cost you more in medical claims costs. Any Part B Reimbursement previously paid to you by UC will end, so your pension payment may decrease. You may also be subject to additional costs, including bills from UC for the Part B payments paid to you when you were not enrolled, a non-refundable $419.60 monthly offset to cover higher non-Medicare costs to the university and permanent late enrollment penalties from Medicare when you re-enroll.
If you are having financial difficulty in paying your Medicare Part B or D premiums, there are Medicare Savings Programs to help you. Visit Medicare.gov/talk-to-someone or call 1-800-633-4227 for the number and location of your Medicare office.
How Much Does Medicare Cost
Original Medicare is divided into Part A and Part B .
- Part A helps pay for inpatient hospital care, some skilled nursing care, home health care and hospice care.
- Part B helps pay for doctor services, outpatient hospital care, durable medical equipment, home health care not covered by Part A, and other services. Medicare was never intended to pay 100% of medical bills. Its purpose is to help pay a portion of medical expenses. Medicare beneficiaries also pay a portion of their medical expenses, which includes deductibles, copayments, and services not covered by Medicare. The amounts of deductibles and copayments change at the beginning of each year.
Part A – Monthly Premium
If you are eligible, Part A is free because you or your spouse paid Medicare taxes while you were working. You earn Social Security “credits” as you work and pay taxes. For each year that you work, you earn 4 credits.
You are 65 or older, and you receive or are eligible to receive full benefits fr om Social Security or the Railroad Retirement Board
You are under 65, and you have received Social Security disability benefits for 24 months You are under 65, and you have received Railroad Retirement disability benefits and you meet Social Security disability requirements You or your spouse had Medicare-covered government employment You are under 65 and have End-Stage Renal Disease
Medicare Part A Premiums
Most people will pay nothing for Medicare Part A. Your Part A coverage is free as long as youre eligible for Social Security or Railroad Retirement Board benefits.
You can also get premium-free Part A coverage even if youre not ready to receive Social Security retirement benefits yet. So, if youre 65 years old and not ready to retire, you can still take advantage of Medicare coverage.
Part A does have a yearly deductible. In 2022, the deductible is $1,556. Youll need to spend this amount before your Part A coverage takes over.
Have You Or Your Spouse Worked For At Least 10 Years At Jobs Where You Paid Medicare Taxes
Generally, youre first eligible to sign up for Part A and Part B starting 3 months before you turn 65 and ending 3 months after the month you turn 65.
Avoid the penalty If you dont sign up when youre first eligible, youll have to wait to sign up and go months without coverage. You might also pay a monthly penalty for as long as you have Part B. The penalty goes up the longer you wait to sign up. How much is the Part B late enrollment penalty?
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Who Is Eligible For Ssi
You can qualify for SSI if you:
- are over 65
- are legally blind
- have a disability
As with all Social Security benefits, youll also need to be a United States citizen or legal resident and have limited income and resources. However, to apply for SSI, you dont need work credits.
You can receive SSI in addition to SSDI or retirement benefits, but it can also be a standalone payment. The amount you receive in SSI will depend on your income from other sources.
Social Security Disability Insurance is a type of Social Security benefit for those with disabilities or health conditions that prevent them from working.
The Lowdown On The Best And Most Cost
Thomas J Catalano is a CFP and Registered Investment Adviser with the state of South Carolina, where he launched his own financial advisory firm in 2018. Thomas’ experience gives him expertise in a variety of areas including investments, retirement, insurance, and financial planning.
We publish unbiased product reviews our opinions are our own and are not influenced by payment we receive from our advertising partners. Learn more about how we review products and read our advertiser disclosure for how we make money.
Planning for retirement includes obtaining appropriate and affordable healthcare coverage. In that respect, for Americans 65 and older, any conversation about healthcare must include Medicare. Eligibility at age 65 means that health insurance becomes more affordable.
When you retire, its important to understand how Medicare works and how you can get the best and most cost-effective coverage. Many retirees wonder how to determine whether they need all four parts of Medicare. Questions about Medicare costs, supplemental insurances, and enrollment periods often arise as well.
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