Over 50 years ago, half of all Americans over 65 had no health insurance. Today, that number is closer to 2%, according to The Commonwealth Fund. This significant change is in no small part thanks to Medicare coverage for individuals 65 and over. According to 60% of America, Medicare is working well. Strongest advocates among that 60% are the seniors, 80% of whom feel Medicare serves seniors well.
Whether you’re new to Medicare, yet to enroll, or have been covered by the federal health insurance plan for years now, here are the seven most important things to know about Medicare:
- The four parts of Medicare
Medicare is divided into three parts: Part A, Part B, Part C and Part D. Part A covers hospital and in-patient care. Part B covers doctor’s visits and outpatient care. Part C is an alternative medical insurance offered through private insurance companies. The premiums for Part C coverage will vary, as will the restrictions and coverage. Lastly is Part D, which is for prescription medications.
On your 65th birthday, a seven-month window opens during which you can enroll in Medicare. According to federal law, you are guaranteed coverage if you enroll during this period. An insurance company cannot deny you coverage during this period and they are required to provide you with the best rate, regardless of your current health condition.
There are two other times during which you can enroll outside of this open enrollment period: if you lose coverage or if you join Medicare and subsequently drop it within 12 months. In the case of the former, your window is reduced to 63 days, however. In both cases, you are guaranteed enrollment as you are during open enrollment.
Outside of these windows, the insurance companies are not federally required to provide you coverage. Nor are they limited in the premium they charge. As such, it’s in your best interest to take full advantage of open enrollment if you’re considering coverage.
For most, Medicare Part A has no premium. For Part B, premiums vary. In 2015 it was $104.90 with the exception of retirees whose modified adjusted gross income exceeded $85,000 for individuals or $170,000 for couples. Part D premiums also vary by plan.
- Free services
Preventative care is always free with Medicare. In 2013, around 37 million beneficiaries received free preventative care. The services provided ranged from flu shots to screenings for cancer, diabetes, and other chronic diseases. These preventative measures and screenings are among the most important medical treatments you can receive in retirement. According to The Commonwealth Fund, the U.S. is the nation with the highest rates of chronic health conditions among its population. An estimated 87% of older Americans have at least one chronic condition; as many as 68% have two or more.
- Coverage of prescription medications
There are 30 different Plan D options to choose from. Each one will cover different medications and offer different premiums and copays. These medications and payments change each year, so when it comes time to enroll, be sure to shop around for the plan that best fits your needs. Rest assured that changes can be made to your Part D plan each year during open enrollment from October 15 to December 7.
- What you pay out of pocket
Once the deductible is reached – – in 2015, the Part B deductible was $147 and the Part A deductible was $1,260 for hospitalizations no longer than 60 days – – Medicare insurance covers 80% of all approved medical costs. So you’re responsible for 20% of your medical costs over the deductible, with no cap on how much that could amount to. This is the scary part of Medicare where coverage can fall short: no matter how much 20% of your medical care amounts to, you are responsible for covering it. The good news is there are supplemental insurance options that can help keep your out of pocket costs down.
- Getting more coverage
Medicare Supplement Insurance, also called Medigap, provides coverage where traditional Medicare stops. Medigap can help reduce out of pocket costs by covering a portion of the 20% left to beneficiaries to pay. Medigap is purchased during the same enrollment period as traditional health coverage and must be bought through a private insurance company.