Introduction to Medicare
Medicare is a federal health insurance program created in 1965, the same year I was born!
Its beneficiaries are people 65 years of age or older, certain younger people with disabilities, and people with End-Stage Renal Disease (ESRD). The Centers for Medicare and Medicaid Services (CMS) is in charge of Medicare, which is a division of the U.S. Department of Health and Human Services (HHS).
As you become eligible for Medicare, its coverage plays an important role in your medical cost, but it doesn’t cover 100% of your bills, and you’ll get to decide on how to cover those coverage gaps.
Medicare, similar to Social Security, is an entitlement program. As a U.S. citizen, you earn the right to enroll in Medicare by working and paying your taxes for at least 40 quarters. You might be able to enroll in Medicare even though you didn’t work 40 quarters, but you might have to pay more.
How Will I Enroll?
If you are receiving Social Security benefits once you reach 65, you will automatically be enrolled in Original Medicare (Parts A and B), but you’ll have the right to disenroll in Part B. Part A covers hospital costs and Part B covers doctor visits. Original Medicare is the traditional fee-for-service program offered by the federal government.
You can also enroll in a Medicare Advantage Plan offered by private insurance companies contracted by Medicare. If you want Prescription Drug Coverage (Part D), you must enroll it yourself. Although Part D enrollment is “optional” we recommend that you get it, because if you don’t have creditable coverage, the penalties can be quite high.
If you’re not receiving Social Security benefits, you may need to enroll through the Social Security Administration website. Typically, there is a 7-month window around your 65th birthday (3 months before you turn 65, the month of your birthday, and another 3 months after) for you to enroll, to avoid permanent penalties. If you want coverage from a Medicare Advantage Plan or Medicare Supplement Plan (Medigap), that 7-month window will also apply.
The open enrollment period for Medicare Supplement plans is different. It’s 6 months from the date of your Part B enrollment.
After enrolling, you will receive a Medicare card in the mail. It looks similar to the image above. If you’re automatically enrolled, you’ll get your Medicare card in the mail 3 months before your 65th birthday or your 25th month of receiving Social Security disability benefits.
This card shows that you have Medicare health insurance. It shows whether you have Part A, Part B or both, and also shows the date your coverage starts.
Your card has a unique 11 digit Medicare Beneficiary Identifier (MBI). Starting in 2020, the old cards that included a Social Security number can no longer be used.
You can find your MBI number by:
- Looking on their newly issued Medicare Health Insurance Card – The
MBI format is still 11 characters long, contains numbers and uppercase
letters, and is unique to each person with Medicare. It will be
clearly different from the HICN. The MBI has 11 characters, like the
HICN, which can have up to 11. MBIs are numbers and upper-case letters.
We’ll use numbers 0-9 and all letters from A to Z, except for S, L, O,
I, B, and Z. This will help the characters be easier to read.
- The MBI will contain letters and numbers. Here’s an example: 1EG4-TE5-MK73
- The MBI’s 2nd, 5th, 8th, and 9th characters will always be a letter.
- Characters 1, 4, 7, 10, and 11 will always be a number.
- The 3rd and 6th characters will be a letter or a number.
- Calling the Medicare helpline at 1-800-633-4227 – Beneficiaries will be able to view and print their new Medicare card from mymedicare.gov or call 1-800-MEDICARE for a replacement card. If a beneficiary has not yet received his/her new Medicare card, he/she must contact 1-800-Medicare to update their home address to ensure another card can be mailed to the correct address.
- Logging into their mymedicare.gov account – To make it easier for you to get your Medicare patients’ MBIs after their new Medicare card has been mailed and when they don’t or can’t give you their MBIs, you can use your MAC’s secure portal to look up MBIs. To find MBIs in the portal, your Medicare patients must give you their first name, last name, date of birth, and SSN. If your Medicare patients don’t want to give you their SSN, they can log into http://www.mymedicare.gov to get their MBI.
Only show your Medicare card to doctors, pharmacists, other health care providers, your insurers, or people you trust to work with Medicare on your behalf.
How Will You Receive Coverage?
Medicare has four parts: Part A, Part B, Part C, and Part D. Each part covers different services:
Medicare Part A
Part A, known as hospital insurance, covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care. You don’t have to pay a monthly premium for Part A because if you have worked for 10 years (40 quarters) and have paid sufficient Medicare taxes, you’ll be eligible for premium-free Part A. If not, then you must pay monthly premiums for Part A.
Medicare Part B
Part B, covers certain doctors’ services, outpatient care, some medical supplies, preventive services, and range of services such as x-rays, diagnostic tests, and renal dialysis. Unlike Part A, Part B requires a premium. In 2019, the standard premium was $135.50 per month. However, if you are a high-income earner, you might pay more due to IRMAA. The higher your income is, the higher your premium is. Social Security sets the standards on the cost of Part B and can change yearly.
If you are low income, you might qualify for Medicaid, which can cover the Part B premium along with other help, such as help pay for medications.
Medicare Part C
Part C, also called Medicare Advantage, is a health plan offered by private health insurance companies. Although it technically doesn’t replace Parts A and B, it replaces how you use those benefits. If you opt for Part C or Medicare Advantage, you’ll put your Original Medicare card away and won’t use it while you’re on the Medicare Advantage Program. You’ll be subject to the rules of the private insurance company, while limiting your maximum out-of-pocket expenses for medical care, and potentially getting additional benefits not covered by Original Medicare.
The cost of Medicare Advantage plans varies by the carrier, the plan selected, and county of residence. As I mentioned before, Medicare Advantage is an alternative to Original Medicare (Parts A and B). But before you can get it, you must be enrolled in both Parts A and B.
Some Medicare Advantage plans have low or even no monthly premiums, but take note that you still have to pay for Part B. The advantage of Part C is that it may include benefits that Original Medicare doesn’t cover, like routine vision, hearing, dental care, and also prescription drugs (Part D) and it also has an annual out-of-pocket cap on medical care (not prescription drugs).
Medicare Part D
Original Medicare doesn’t come with Part D. You’ll need to enroll in a stand-alone Medicare Prescription Drug plan to get coverage, or obtain a Medicare Advantage Plan that includes it. Most states have dozens of drug plans to choose from, the best way to find out which plan suits you is by contacting your Medicare Insurance Agent, or by using the Medicare.gov plan finder.
A Medicare Supplement Plan (Medigap) is an additional health insurance policy that you purchase to help the out-of-pocket cost of Original Medicare (Parts A and B). So, you must have Original Medicare to purchase a Medigap policy. There are currently 10 different standardized Medicare Supplement Plans offered, each providing different combinations to help with the Medicare costs. Take note that Plan C and Plan F will no longer be available starting January 1, 2020. This change will not affect everyone. If they are already enrolled in Plan F or Plan C, they can continue their coverage under that plan. They can also continue to enroll in these first-dollar coverage plans after they are discontinued, as long as they become Medicare eligible prior to 2020. These plans are only being discontinued to those who are newly eligible for Medicare after 2020.
I don’t recommend the non-standardized Supplement plans such as the Innovative and “Extra” plans. You can find out why by reading my article or watching my video The Downside of Innovative Plan F.
Not Covered by Medicare
Even though Medicare has a wide range of coverage, not everything is covered. Here’s a list of expenses that Medicare doesn’t cover:
|Not Included in Original Medicare (not a comprehensive list)|
|Hearing aids and fitting exams|
|Eye exams and eyeglasses|
|Most dental care|
|Medical care overseas|
What is Medicaid?
People can confuse Medicare and Medicaid. Medicaid is a federal and state government-funded program that covers low-income people, while Medicare coverage doesn’t depend on your income level. Medicaid also covers nursing home care and personal care services, but Medicare doesn’t. Medicaid recipients must be U.S. citizens or qualified non-citizens and may include low-income adults, their children, disability status, or pregnancy.
Individuals who have Original Medicare received a red, white, and blue Medicare card. If you choose to obtain a Medicare Advantage Plan, you will still have the Original Medicare card but you won’t use it for services.
Understanding your Medicare coverage is very important. Who you get them from and how you get your benefits may affect where you get your care and your out-of-pocket costs. Our friendly, licensed insurance agents are here to help you find a plan that matches your needs. Best yet we explain the options available and everything you need to know. Help is just a phone call away. Call us today at (866) 445-6683 or drop us a message HERE for a no-cost consultation.