The Basics of Medicare

11-29-2016Health Care

Medicare is a federal system of health insurance for people over 65 years of age and for certain younger people with disabilities.  Medicare pays for much of the cost of hospital stays and doctor’s office visits for people age 65 and older.  But what does that mean and what do you need to know?

  • There are different parts to Medicare:
    • Medicare Part A is hospital care.  Most people don't pay a premium for Medicare Part A.  Medicare Part A has a $1,316 deductible if you are hospitalized, and additional costs apply if your hospital stay exceeds 60 days.
    • Medicare Part B is medical insurance that covers doctor's visits and outpatient services.  The standard Medicare Part B premium is $134 per month in 2017, but it is primarily new enrollees and those who haven’t yet claimed Social Security who will pay this amount.  Most Social Security recipients will pay $109 per month for Medicare Part B in 2017 because Medicare premiums are prevented by law from increasing faster than Social Security payments for existing recipients. Premium costs are also higher for retirees with a modified adjusted gross income above $85,000 for individuals and $170,000 for couples.  There is a $183 Medicare Part B deductible in 2017, after which you will be charged 20 percent of the Medicare-approved amount for most services. There’s no annual limit on out-of-pocket expenses.
    • Medicare Advantage Plans or Medicare Part C are an alternative to traditional Medicare offered by private insurance companies, typically with different premiums and restrictions.
    • Medicare Part D covers prescription drugs.  Medicare Part D premiums vary depending on the plan you select.  Medicare beneficiaries can make changes to their Medicare Part D prescription drug coverage each year during the open enrollment period from Oct. 15 to Dec. 7. This is a good time to check that the medications you use will continue to be covered at an affordable price and to switch plans if they won’t.
  • You can first sign up for Medicare during the seven-month window around your 65th birthday. Coverage can start beginning the month you turn 65. If you fail to sign up during this initial enrollment period, you could be charged a higher premium for the rest of your life.
  • If you delay Medicare enrollment due to group health insurance through your current job, sign up for Medicare within eight months of leaving the job or the coverage ending to avoid the penalty.
  • Medicare provides many preventive care services without any cost-sharing requirements, including flu shots and mammograms. Beneficiaries are also eligible for a free wellness doctor's visit once each year. However, tests performed during the wellness visit could result in additional charges outside of the preventative care visit.
  • Retirees must choose between an average of 22 Medicare Part D prescription drug plans, which each have different covered medications, premiums and copays. The covered medications and their costs also change annually, so it’s a good idea to evaluate plans each year during the open enrollment period.
  • A Medigap plan will pay for some of traditional Medicare's out-of-pocket costs. Remember to purchase a Medigap policy during the six-month period when you're 65 or older and enrolled in Medicare Part B. You could be charged significantly higher premiums or denied coverage if you try to buy a policy after that point.
  • Medicare is primarily funded by employees and employers each paying 1.45% of the worker’s wages into the Medicare system.  Self-employed workers contribute 2.9 percent of their income.  People who earn more than $200,000 as individuals and $250,000 for couples pay an additional 0.9 percent tax.

https://www.medicare.gov/ is the official U.S. Government website for Medicare.

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