When you think of Medicare, you might have many questions. It is not out of the ordinary for Medicare to be confusing and a tad difficult to fully understand the different “parts” and “plans.” You have a 7-month initial enrollment period for Medicare. You have the option to enroll in Medicare three months before your 65th birthday or three months after. There are lots of different rules for each plan you enroll in, and thoroughly understanding what each plan offers is important to help you get the coverage you need.
What Are My Medicare Options?
Original Medicare: When someone says, “Original Medicare,” they are referring to Part A and Part B, the parts administered by the federal government.
- Part A: Look at this as your room and board when admitted as an inpatient at a hospital. Once admitted, you will have a $1,408 deductible per benefit period. If you have worked ten years in the U.S. and paid Medicare taxes, there’s no premium for Part A.
- Part B: This part covers outpatient services:
- Doctor visits
- Lab work
- Durable medical equipment
- Preventative services
The annual deductible as of 2020 is $198. Once you have met your deductible, Medicare will pay 80% of your services and you will be responsible for the remaining 20% with no cap on out-of-pocket expenses. The standard premium is $144.60 and there’s a late penalty if you don’t enroll when you’re first eligible.
Part D: This Part of Medicare is your voluntary drug coverage; it is not offered through Original Medicare. Medicare Part D is simply insurance coverage for your medication needs. You will need to apply for Plan D during your initial enrollment period or you may pay a late enrollment penalty. In 2020, Part D’s deductible can be as high as $435, and you will pay the network discounted price for your medications until you have met the deductible. Each insurance company sets its premiums, the average being $30/month.
Medicare Advantage: This type of plan is offered through private insurance companies. You will receive your Original Medicare along with Part D. You may have restrictions with these plans based on a provider network. If you were to go out of the network, do some investigating beforehand and make sure the doctor is willing to bill out of network. You will have a maximum out-of-pocket of $6,700 or lower for in-network services. The perks of an Advantage plan are the incentives they may offer, like a gym membership or vision/dental benefits. These benefits may change from year to year, so be sure to read your Annual Notice of Change.
Medicare Supplement: Also known as a “Medigap Plan,” this type of plan offers the fullest coverage against out-of-pocket spending under Original Medicare. A Medicare Supplement will pay after Medicare has paid. This will leave you little to no out-of-pocket payments. For example, if you were to have a doctor visit with Medigap Plan G – your Part B pays 80%, and your supplement covers your share. Monthly premiums are determined by the carrier and tend to be a little pricier compared to an Advantage plan.
Where Did Plan F Go?
As of 2020, Plan F is no longer available. Plan F and Plan C paid your Part B deductible, but new legislation changed the way plans can cover your Part B expenses. Plans that pay the Part B deductible can no longer be sold after January 1, 2020. If you were newly eligible for Medicare in 2019 and your initial enrollment period extends into 2020, you may still be able to buy Plan C or Plan F, but anyone who becomes eligible after the first of the year will not be able to buy them.
65 and Still Working?
If you continue to work full-time past 65 years old, your employer has 20 or more employees, and you are on your employer’s coverage, you can delay your Medicare enrollment. With that being said, unless you contribute to a health savings account, it is recommended to apply for Part A as the monthly premium is $0/month for most people (the extra coverage might come in handy).
If you decide to delay, be sure to get a Notice of Creditable Coverage from your employer so you can prove to the Social Security Administration that you do not owe late penalties. If you delay Medicare due to employer coverage, there will be a 63-day Special Enrollment Period when you retire to enroll in Part D. Although you will have eight months to enroll in Part B in this scenario, you should enroll as soon as possible so you aren’t left without coverage. There are no penalties if you work for a large employer past 65.
Retirement is an exciting time, so don’t let Medicare worries get you down. Take time to do a little research so you’re prepared to get the right plan for your needs when the time comes.