It is estimated that there are about 2.6 million people turning 65 every year in the United States and will become eligible to enroll in Medicare, the federal health insurance program that covers millions of Americans. But what exactly is Medicare and how does it work? In this article, we will answer these questions and more, and help you understand the basics of Medicare.
Medicare was first enacted in 1965 to help those who could not afford health or medical care in their retirement years, or who are totally disabled from certain diseases like end-stage renal disease. Today, Medicare covers about 62 million people, or nearly one in five Americans. Medicare is funded by payroll taxes, premiums, and general revenues, and is administered by the Center for Medicare & Medicaid Services (CMS), a federal agency within the Department of Health and Human Services. [i]
Medicare has four parts: Part A, Part B, Part C, and Part D. Each part covers different types of healthcare services and has different costs and benefits.[ii]
- Part A covers inpatient hospital care, skilled nursing facility care, hospice care, and some home health care. Most people get Part A for free if they or their spouse paid Medicare taxes for at least 10 years.
- Part B covers outpatient medical services, such as doctor visits, preventive care, lab tests, x-rays, mental health care, and some home health care. Most people pay a monthly premium for Part B based on their income.
- Part C, also known as Medicare Advantage, is an alternative way to get your Part A and Part B coverage through a private insurance company that contracts with Medicare. Medicare Advantage plans may also offer extra benefits that Original Medicare does not cover, such as vision, dental, hearing, or prescription drug coverage. However, Medicare Advantage plans may also have different rules, costs, and networks than Original Medicare.
- Part D covers prescription drugs that you get at a pharmacy. Part D is optional and is offered by private insurance companies that contract with Medicare. You pay a monthly premium for Part D and may also pay deductibles, copays, or coinsurance depending on your plan.
Here are some steps you can take to enroll in Medicare and find the best plan for you:
- Check your eligibility for Medicare. You are eligible for Medicare if you are 65 or older; under 65 with certain disabilities; or have end-stage renal disease (ESRD) or amyotrophic lateral sclerosis (ALS).
- Sign up for Medicare during your initial enrollment period (IEP), which is a seven-month period that starts three months before the month you turn 65 and ends three months after the month you turn 65. If you miss your IEP, you may have to pay late enrollment penalties or wait until the next general enrollment period (GEP), which runs from January 1 to March 31 each year.
- Decide whether you want Original Medicare (Part A and Part B) or Medicare Advantage (Part C). Compare the costs, benefits, rules, and networks of each option and choose the one that meets your needs and preferences best.
- If you choose Original Medicare, decide whether you want to add Part D (prescription drug coverage) or a Medigap (Medicare Supplement) policy to help pay for some of the costs that Original Medicare does not cover, such as deductibles, copays, coinsurance, and foreign travel emergency care. Compare the costs, benefits, rules, and networks of different Part D and Medigap plans and choose the ones that suit you best.
- Enroll in the plan(s) that you have chosen before the end of your IEP or GEP. You can enroll online through the Medicare Plan Finder tool, by phone at 1-800-MEDICARE, by mail using the enrollment form provided by the plan, or in person at a local State Health Insurance Assistance Program (SHIP) office.
- Confirm your enrollment and receive your plan information and card. Make sure you understand how your plan works and what you need to do to use it effectively. If you have any questions or concerns, contact your plan’s customer service or visit their website.
Medicare is a complex and confusing program, but it is also a valuable and essential one for many Americans. By understanding the basics of Medicare and how it works, you can make informed decisions about your healthcare coverage and find the best plan for you. Don’t wait until it’s too late – start planning today and enroll in the plan that addresses your needs before the deadline. If you want more helpful tips and advice on Medicare and other topics related to retirement, check out our resource page.
[i]https://www.verywellhealth.com/medicare-101-2614948
[ii]https://www.medicare.gov/basics/get-started-with-medicare/medicare-basics/parts-of-medicare
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