Introduction to Medicare

Medicare is a Health Insurance Program for people age 65 or older, some disabled people under age 65, and people of all ages with End-Stage Renal Disease (permanent kidney failure treated with dialysis or a transplant). If you find the government’s website (here) overwhelming, jump to this useful page to see plans available to you. It will give you a list of choices. The good news is that this Fall (2011) Medicare will begin a new five-star ranking of these plans. One more thing: Medicare does not cover dental, nor eyewear, nor hearing aids.

To back up a bit, normally you will be contacted by letter several months before you turn 65. If you don't receive anything, contact Social Security three months before your 65th birthday since they will make the final decisions on your Medicare eligibility (your Medicare premiums will be deducted directly from your Social Security checks). If you don't sign up, your premiums might be higher when you eventually do apply.

The goal is for you to have received your Medicare card by your 65th birthday and it is essential to sign up for Part A. I have summarized other key points below but if you want to read much the same thing from a provider, try Kaiser Permanente's - here - which is one of the easiest to follow. Regrettably, getting the most for your money with Medicare is a challenge and many elderly choose policies that do not cover everything they need and they underestimate the hidden costs.

Medicare Part A covers hospital and other inpatient care (but generally not long term care). Sign up for this one automatically. It is free (no premiums) for those eligible, if you (or your spouse) have worked at least 10 years. If you didn’t do that, you may be able to buy into the program.

Medicare Part B helps cover doctor visits and other outpatient treatment. It now costs around $100-130 a month (I asked a few friends for what they pay) and it could cost a little more if your modified adjusted gross income is above $85K for individuals or $170K for married couples (these ceilings stay the same though 2019). If you have group coverage already you can always wait to sign up for Part B. When your coverage ends, or your employment ends, whichever comes first, you should sign up quickly (there is an 8-month enrollment period). You need to have been clearly working for that company during that time. If you delay and do not sign up at the right time, penalties can recur for many years – your premiums go up! Check this out carefully.

Remember Medicare does not pay for everything - there are deductibles and co-insurance. Enrollees must pay a $1132 deductible for every hospital stay and hundreds of dollars more for long hospital stays. They must pay 20% of the bills for medical equipment such as wheelchairs and non-hospital procedures such as kidney dialysis, physical therapy or outpatient surgery. Those costs can climb rapidly, which is why co-insurance (a supplemental plan like Medigap) is a good idea. You need to be enrolled in A+B to buy Medigap. For example, Medigap might pay the balance of mammogram costs not covered by Medicare, but it would not cover anything that Medicare does not cover in the first place. Low-income individuals can qualify for Medicaid - it covers all the costs not covered by Medicare. Worth noting: lab work, MRIs, CAT-scans are fully covered (unfortunately this drives up utilizations and costs).

Medicare Part C, or Medicare Advantage, is an overlay on top of A+B. Almost everyone gets A+B, but if you join an Advantage plan, it usually includes more benefits than you get with A+B such as prescription drugs, often has no premiums or deductibles, and has limited co-pays. In exchange, you can only see their doctors and need referrals for some services such as specialists. An example is SecureHorizons by United Healthcare. In short, stay in-network and it will cost less than it would if you simply had A+B.

Medicare Part D covers drug costs. Enrollment occurs at the same time as for Parts A and B. Drug coverage is tied to the area the beneficiary lives in. You can’t move to a different state and expect it to follow you because your coverage will be dropped. The average plan charges about $30 a month at the moment.