Qualifying and Applying for Medicare
At this point in your life, you may be thinking longingly about retirement. Or maybe you’re dreading the idea of retiring. In either case, medical insurance is an issue that may have crossed your mind. Or maybe you think Medicare will take care of everything, just like your current medical plan. Well, maybe not.
Medicare is confusing for most people. For at least a year before you turn 65, your mailbox will be stuffed with ads from insurance companies suggesting you need their Medigap policy. The HR folks at work may drop hints that you would be better off on Medicare than on the company plan. You may be thinking they’re both right. But how do you know? Here’s what you need to know to decide.
When can you sign up for Medicare?
You must sign up for Medicare during the three months before or the three months after you turn 65, unless you are still working and covered by other insurance. COBRA coverage does not count. If you have certain illnesses or disabilities, you can sign up for Medicare at any age.
If you are collecting social security, you are automatically enrolled for Part A, which is usually free. You may have to sign up for Part B, which requires you to pay a premium for coverage. Don’t worry about the “parts”. We’ll cover them in a minute.
If you miss the sign up window, you may have to go without medical coverage or pay a higher premium. Don’t miss the window.
If you are covered by other credible insurance during that six-month window around your 65th birthday, you have two months after coverage ends to sign up without penalty. Again, COBRA doesn’t count as coverage, so be very careful not to miss this window.
Part A is free for most people.
• Hospital care
• Care in a skilled nursing facility
• Nursing home care as long as you need medical care
• Hospice care
• Home health services
Part B requires a premium of about $105 per month.
• Medically necessary and preventive services
• Clinical tests
• Durable medical equipment
• Mental health care (inpatient and outpatient)
• Partial coverage of hospitalization costs
Part C or Medicare Advantage
These are private insurance policies that cover all Medicare services plus some additional services that vary by policy. Medicare pays part of the premium and you pay the rest. Make sure the additional coverage is worth the additional premium.
Part D is for prescription drug coverage. You may get it as part of your Medicare Advantage plan or you can get it from Medicare as part of original Medicare. There is a fee for Part D coverage. Not all plans provide the same coverage. Everyone covered by Medicare has the option for prescription drug coverage. If you don’t sign up when you are first eligible, you will pay a penalty for late enrollment. You can avoid the penalty if you can show that you had “credible coverage” during the time you were not enrolled.
Medigap is the name for supplemental insurance coverage. These policies are sold by private insurance companies. They cover things like copayments, deductibles and coverage outside the United States.
You must have both Medicare Parts A and B to be eligible for Medigap. Your Medigap policy premiums are in addition to the Medicare Part B premiums. You and your spouse must have your own Medigap policy, because they only cover one person. Medigap policies do not cover prescription drugs unless they were issued before 2006.
Most policies don’t cover long term care, dental or vision care, hearing aids, glasses or private nursing care.
Medicare Medical Savings Account
These plans are similar to health savings accounts. The payments your insurance company and Medicare make to the MSA can be used for most medical expenses except drugs covered under Part D. A Medicare medical savings account may allow you to pay for items that Medicare doesn’t cover such as glasses or to pay deductibles. There are also high deductible plans that only begin once you have passed a high threshold of expenses. In either case, funds left over at year end remain in the account for future use.
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