Although understanding Medicare can seem like a daunting task, it’s important to know how the program works. Doing so will help you prepare ahead of time and ensure you have all the necessary information to make informed coverage decisions. Here are six reasons to learn about Medicare.
1. No Surprise Costs
You may be surprised to learn that Medicare is not free, so you’ll want to anticipate what your costs may be. You will likely have to pay monthly premiums for the different parts of Medicare. The cost of Medicare in 2022 has increased slightly compared to last year.
Part A is $0 monthly if you worked in the U.S. for at least ten years (40 quarters) and paid Medicare taxes during that time. If you don’t meet this requirement, you will either have to pay $499 or $274 depending on the amount of work quarters you have. The standard monthly premium for Part B in 2022 is $170.10, but you may pay more if your income is over a certain amount.
Your exact costs will also depend on the other coverage you sign up for, including a Part D plan, Medicare Supplement plan, or Medicare Advantage plan. The prices and out-of-pocket expenses for these plans vary based on different factors.
2. Understand the Parts of Medicare
Knowing the different parts of Medicare will help you understand your coverage and how it works. Medicare has four main components: Part A, Part B, Part C, and Part D.
Part A covers inpatient hospital care, skilled nursing facility stays, home health care, and hospice care. Part B covers your outpatient services, including lab work, surgeries, and more.
Part C, also known as the Medicare Advantage plan program, is an alternative way to receive Part A and Part B benefits from a private insurance company. Advantage plans typically include drug prescription coverage as well. Part D is coverage for drug prescription medications.
3. Enrollment Windows
There are different Medicare enrollment periods for a variety of situations. However, your Initial Enrollment Period (IEP) is the one you’ll likely want to focus on when first signing up for Medicare.
Your IEP is a 7-month long window for you to enroll in Original Medicare Part A and Part B through Social Security. This enrollment period starts three months before your 65th birthday month and ends three months after. If you miss your IEP, you will likely be subject to lifelong late enrollment penalties, so you don’t want to miss this enrollment window. However, if you have creditable coverage past 65, then you can delay Medicare with no penalty.
4. Different Plan Options
Knowing your plan options before signing up for Medicare can help make the enrollment process more manageable. Once you are enrolled in Part A and Part B, there are two main options to consider.
The first option is to enroll in a Medicare Supplement plan, also known as a Medigap plan. A Medigap plan helps cover your portion of cost-sharing expenses after Medicare has paid its part for approved services. Without a Medigap plan, you could be responsible for a substantial amount of medical costs.
The second option is to sign up for a Medicare Advantage plan. These plans are considered all-in-one plans as they often include built-in Part D coverage.
The right option for you will depend on your budget, lifestyle, preferences, and more.
5. Working Past 65
If you plan to work past 65, you may be able to delay all parts of Medicare. However, your ability to delay Medicare depends on the size of your employer.
If you are actively working for an employer with 20 or more employees and are covered under your employer’s insurance, you can delay Medicare with no penalty. However, if you work for a company with less than 20 employees, you likely want to sign up for Medicare during your IEP to avoid penalties.
6. Non-Covered Services
Although Medicare does cover medically necessary health services, it does not cover everything. For example, Medicare does not cover long-term or custodial care in most cases. Cosmetic procedures are usually not covered by Medicare either unless it’s related to a medical condition.
Medicare also does not offer routine dental, vision, and hearing coverage. You may consider enrolling in a separate plan for these needs.
Learning about Medicare is a great way to prepare ahead of time, so you’re ready to go when the time comes. Without having a basic understanding of Medicare, you may miss out on important information that can save you time and money.