Medicare 101
What is Medicare?
Medicare is a federal medical insurance, established by Congress in 1965, for individuals who are ages 65 and older, disabled, or suffering from unique ailments such as End Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD), Black Lung, and other applicable illnesses. Medicare currently serves more than 44 million enrollees and is funded through the Hospital Insurance Trust Fund and the Supplementary Medical Insurance Trust Fund.
Explanation of the Different Parts of Medicare
- Medicare Part A
covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care - Medicare Part B
covers medical insurance needs such as doctors’ services, outpatient care, medical supplies, and preventive services. - Medicare Part D
adds prescription drug coverage to specific Medicare plans. Provided by private companies. - Medicare Part C
(Medicare Advantage Plans) Private companies provide coverage through a contract with Medicare (the reason why some plans are $0 premium) to provide Parts A&B. May also include Part D coverage.
Who is eligible for Medicare?
Anyone who meets the general eligibility requirements mentioned above should contemplate and evaluate their need for Medicare as a medical insurance option. In addition, eligibility for Medicare requires that an individual is:
- an U.S. citizen or permanent legal resident for five continuous years.
- eligible for Social Security benefits with at least forty quarters of payments contributed to the system.
Typically, Medicare should be applied within four months prior to turning age 65, during the disability application process, or after an individual no longer has a group health plan through current employment.
The Right Steps to Take
1. Make a list of your prescriptions.
Document all of your necessary prescriptions and treatments. Then spend some time researching the various types of Medicare policies available where you live and which ones include your prescriptions and treatments.
2. Document past healthcare expenses.
Keeping a record of several years’ worth of healthcare expenses will help you project which types of healthcare you might need and how much they will cost. While you may only require a little bit of healthcare now, it is a possibility that as you age, your healthcare needs will increase.
3. Know which Medicare package best suits your needs.
There are two main Medicare packages to consider: Original Medicare and Medicare Advantage.
- Original Medicare is a fee-for-service program, where beneficiaries can obtain care from any participating provider. Original Medicare includes Part A (hospitals) and Part B (doctors, outpatient, and medical equipment) coverage. You can supplement this with Medigap, state-regulated insurance that covers several things Original Medicare does not. It’s worth noting that people with Original Medicare almost always buy stand-alone Part D (prescription drug) coverage.
- Medicare Advantage plans are sold by private insurers and must offer coverage as good as Original Medicare, though in most cases Medicare Advantage plans offer more inclusive coverage. Some Medicare Advantage plans also offer vision and dental coverage and include Plan D coverage. These plans offer care through their own networks of hospitals, doctors, and other healthcare providers.
4. Understand that Medicare’s Premiums are scaled based on your household income.
For most families, the standard Medicare Premiums will apply, but for others, you may be subject to higher premiums. However, it is important to note that there are ways to request your Medicare premiums to be reduced in some circumstances.
With these four things in mind, applying for Medicare should be less of a hassle and make it easier to transition into your new healthcare coverage.