Important Things to Know About Medicare
Medicare is a complicated program and it changes all the time. Depending on when you start your research, you may begin the enrollment process before you fully understand how the program operates. And that’s okay. In fact, sometimes it’s better to understand a few important things about Medicare when you first enroll rather than trying to figure it all out at once.
Here are some of the most important things to know about Medicare before you enroll.
You sign up for Medicare Part A and Part B first
Medicare Part A and Part B make up Original Medicare. You’ll need to have these parts in order to get supplemental coverage. Medicare Part A covers your inpatient needs, while Part B covers your outpatient care. If you or your spouse aren’t working past age 65 for a large employer with employer-provided healthcare, you should enroll in Original Medicare when you’re first eligible.
Original Medicare comes with premiums and cost-sharing. However, 99% of Medicare beneficiaries qualify for premium-free Part A by the time they reach enrollment. To be eligible for premium-free Part A, you or an eligible spouse must have worked in the United States while paying FICA taxes for at least 40 quarters (10 years).
Although you pay for Part A during your working years with the Medicare tax, Part B isn’t covered. You will have a monthly Part B premium once you enroll. Most people pay the standard Part B premium each year. However, those with higher incomes may pay an additional Income-Related Monthly Adjustment Amount (IRMAA) with their Part B premium
In addition to premiums, you will have deductibles, copays, and coinsurances. As you access your Part A and Part B benefits, you’ll be responsible for these cost-sharing expenses in most cases.
You can enroll in other parts of Medicare if you wish
Medicare also has Part C, Part D, and Medicare Supplement plans. While there aren’t any options when it comes to Original Medicare (Part A and Part B), you do have options when it comes to the rest of Medicare.
Medicare Part C plans, more commonly referred to as Medicare Advantage plans, are an alternative way to get your Part A and Part B benefits. These are private insurance plans; your plan provides your Medicare benefits and pays your health care claims. However, you must still be enrolled in Part A and Part B to have a Medicare Advantage plan.
Medicare Part D plans provide your prescription drug benefits. You’ll either have a Part D plan through your Medicare Advantage plan or through a standalone Part D if you’re enrolled in Original Medicare. While Part D is technically optional, you can be penalized for late enrollment.
Medicare Supplement plans, commonly referred to as Medigap plans, supplement your Original Medicare and help cover the cost-sharing expenses under Part A and Part B. You pay a separate monthly premium for Medigap.
If you’re worried about budgeting for health care expenses, you’ll either want a Medicare Advantage plan or a Medigap plan. These plans offer very different benefits and coverage, so be sure to think through your options carefully before you enroll.
You have designated enrollment periods for each part
There are designated enrollment periods for Medicare. Your Initial Enrollment Period is a seven-month period beginning three months before your 65th birthday month. You can enroll in Original Medicare, Medicare Advantage, and/or Medicare Part D during your IEP.
Your next enrollment period is your Medigap Open Enrollment period, which starts the day your Part B becomes effective. This is a one-time event and often, your only chance to enroll in a Medigap plan without having to answer health questions. Although there are several other enrollment periods, these two periods are the most important during your first year of Medicare.
Everyone’s Medicare journey is different. You and your spouse or best friend may choose completely different paths and plans—you should always choose the coverage that works best for you. So, pay attention to your options before you enroll so you don’t miss out on the coverage you need.
Danielle Roberts is a Medicare expert and the co-founder of Boomer Benefits, a licensed insurance agency that helps baby boomers navigate their entry into Medicare in 48 states. She is the author of the best-selling book 10 Costly Medicare Mistakes You Can’t Afford to Make, which helps beneficiaries avoid critical but all too common Medicare pitfalls.