It is three months before your 65th birthday. A package arrives from the U.S. Department of Health and Human Services. Inside is a red, white and blue card with your name on it.
Congratulations! You are officially a senior citizen.
Welcome to Medicare, the largest health insurance service in the U.S., with more than 44 million beneficiaries.
Medicare is divided into four parts: Part A and Part B (the original Medicare plan); Part C (private insurance sold under the Medicare Plan); and Part D (prescription drug coverage).
Parts B, C and D will be discussed in a future article.
Medicare Part A covers hospital stays, skilled nursing facilities such as rehab centers, hospice care for six months or less, skilled home health care such as physical therapy, and certain durable medical equipment such as wheelchairs.
Typically, Part A is premium free because most people have paid Medicare taxes for at least 40 quarters (ten years) while in the work force.
- If you paid these taxes for 30-39 quarters, your monthly premium will be $233.
- If you paid them for less than 29 quarters, your monthly premium will be $423.
- For each hospital stay there is a deductible of $1,024 for up to a 60-day stay before Medicare begins paying its share.
- If your stay is longer than 60 days there is a co-pay of $256 per day for 61 to 90 days.
- If you stay out of the hospital for at least 60 days, the benefit clock resets. Then you are subject to the same deductible and co-pay as stated above if you are hospitalized again.
- If your stay is longer than 90 days (which is rare) you have 60 “Lifetime Reserve Days.” These days can be used only once in your lifetime, and the co-pay is $512 per day, until you have used them up.
These deductibles and co-pays amount to considerable out-of-pocket expenses. That is why many people purchase “Medicare Supplement Insurance” or “Medigap.” Medigap plans are private health insurance policies designed to work with Parts A and B.
Typically, enrollment in Parts A and B is required to purchase a Medigap policy, and the policy must be identified clearly as “Medicare Supplement Insurance.” These policies cover only one person; each spouse must purchase it for himself or herself. Each policy offers the same basic benefits; usually the only difference is the cost.
Here are some other things to know about Medicare:
- What if you already have health insurance when you turn 65? If your health insurance is a group plan with over 200 participants, such as Local 802’s plan, it will stay your primary plan as long as you remain eligible. This means that claims would go through the Local 802 plan before they went through Medicare. But if you have no hospitalization coverage through Local 802, that coverage would go through Medicare Part A.
- Once your Medicare card arrives, you are not actually covered by Medicare. You have to enroll. You have up to three months after your 65th birthday to choose an option or to opt out completely. If you do nothing, you will be enrolled automatically on your birthday. It is possible to opt out of Medicare, but there’s almost no reason to do so unless you plan to purchase a Medicare Advantage (Part C) Plan, which I will discuss in a future article. Also, if it turns out that you have to pay Medicare premiums (see above), you may also enroll anytime during the general enrollment period, which is Jan. 1 to March 31 of each year. Coverage would begin on July 1.
- Your Medicare card may actually arrive earlier than age 65 if you are disabled or if you need dialysis or a kidney transplant and are receiving disability payments from Social Security. You will be automatically enrolled in Medicare 24 months after you start receiving disability, or in the first month of payments if you have Amyotrophic Lateral Sclerosis (ALS), or Lou Gehrig’s Disease.
Keep that little card safe, and enjoy your golden years.