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ABC Senior Plans

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Medicare

Original Medicare

Original Medicare, also known as Part A and Part B, is managed by the federal government and provides Medicare-eligible individuals with coverage for and access to doctors, hospitals, or other health care providers who accept Medicare. Part A includes hospital coverage, as well as some short term post-hospital care. Part A does not cover long-term care. Part B is your medical insurance, including doctor visits, laboratory testing, and some preventative care. Part A and Part B do not include certain services, such as dental services. In addition, they do not cover Prescription drug plans. If you are on Original Medicare, you will need to sign up for a Part D plan in order to receive prescription drug coverage.

Original Medicare is a fee-for-service plan, meaning that the person with Medicare usually pays a fee for each service. Medicare pays its share of an approved amount up to certain limits, and the person with Medicare pays the rest.

How much does Part A cost?

Most beneficiaries will pay nothing for Medicare Part A. We all pay taxes during our working years that are specifically for our future healthcare coverage during retirement. These taxes go to offset the cost of Part A later on. As long as you have worked for 10 years (40 quarters) in your lifetime in the United States, you will generally pay nothing at all for Part A. If you or your spouse have not worked 10 years in the U.S., the monthly premium for part A is up to $413/month in 2017. People with less than 40 quarters work experience but more than 30 quarters can get a pro-rated premium.

How much does Part B cost?

The majority of Americans will pay the standard monthly amount set by the government. In 2017, this is $104.90/month for most people but is $134 for people new to Medicare. However, you may owe more if your income is above a certain level.

If you enroll late into Part B, you may also have to pay a penalty for life. It’s important not to miss your enrollment window whenever you retire and lose access to your employer group health insurance.

You will pay a percentage of the costs of your medically-necessary Part B services. Generally, these costs are:

  • the annual Medicare Part B deductible (in 2017, this is $183)
  • 20% of the remaining costs, with no limits or cap
  • any excess charges that a provider or facility may charge beyond what Medicare reimburses

Alternatives to Original Medicare

As mentioned previously, the costs of Part A and B can be high, and they provide limited coverage. In addition, there is no out-of-pocket maximum for Original Medicare. This is the most you have to pay for covered services in a plan year. After you spend this amount on deductibles, copayments, and coinsurance, your health plan pays 100% of the costs of covered benefits. Because there is no out-of-pocket maximum, there is no limit to what you will spend out of pocket for your health coverage. Furthermore, no Prescription Drug Plan is included in Parts A and B of Medicare.

There are two main ways in which you can protect yourself against catastrophic medical spending. Medicare supplements are available for purchase to cover the parts that A & B don’t. If you need a more affordable option, Medicare Advantage plans are a great option to get your A & B benefits through a private health insurance plan at very little cost. Medicare Advantage Plans often include drug coverage as well.

Medicare Part A

Part A covers hospital care, providing you with affordable inpatient care. It also covers post-hospital care, such as skilled nursing facility care, hospice care, and home health care.

Part A does not cover long-term care, such as extended stays in a nursing home. Individuals can consider purchasing long-term care insurance if this is something they want to plan for.

When do I enroll in Medicare Part A?

Enrolling in Medicare Part A is automatic for some people, particularly those already taking Social Security income benefits. When this happens, you’ll open your mailbox 2 – 3 months before you turn 65 and find your card waiting for you. You’ll want to keep your eye on the mail for your card. It is a red, white and blue card printed on heavy card stock. It is okay to laminate the card when you receive it so that it will stay in good shape over the years of being in your wallet or purse.

If you are not already receiving Social Security income benefits or Railroad Retirement income benefits yet when you turn 65, then you will need to actively sign up for Part A.

How much will I pay for Part A?

Most beneficiaries will pay nothing for Medicare Part A. We all pay taxes during our working years that are specifically for our future healthcare coverage during retirement. These taxes go to offset the cost of Part A later on. As long as you have worked for 10 years in your lifetime in the United States, you will generally pay nothing at all for Part A.

Medicare Part A Costs

Under Medicare Part A beneficiaries usually do not have to pay monthly premiums for Medicare Part A coverage if your spouse or you have paid Medicare taxes while working. This is sometimes called premium-free Part A.
If you buy Part A, you will pay up to $426 each month but, most people will get a premium-free Part A. You will receive premium-free Part A at 65 if you meet the following requirements:

  • You or your spouse had Medicare-covered government employment
  • You already get retirement benefits from Social Security or the Railroad Retirement Board.
  • You’re eligible to get Social Security or Railroad benefits but haven’t filed for them yet.

If you are under 65, you can get premium-free Part A if:

  • You have End-Stage Renal Disease (ESRD) and meet certain requirements.
  • You got Social Security or Railroad Retirement Board disability benefits for 24 months.
  • In most cases, if a person chooses to purchase Part A, they must have Medicare Part B (Medical Insurance) and they must pay monthly premiums for both.

Medicare Part B

Part B is optional and includes medical Insurance for outpatient services. Among these are doctor’s visits, laboratory testing, and advanced imaging such as MRI or CT scans. Part B also covers preventive care including flu shots, colonoscopies, mammograms and more. Finally, Medicare Part also covers more expensive services like radiation or chemotherapy for cancer, surgeries, medical equipment, and even dialysis for failing kidneys.

How much does Part B cost?

To receive Part B benefits, a monthly premium must be paid. In 2021, most people pay a standard monthly amount of $148.50 which is set by the government. However, you may owe more if your income is above a certain level. You may also face a penalty if you enroll late into Part B.

How do I sign up for Part B?

Applying for Medicare Part B can be done online, over the phone or in-person at your local Social Security office. After you apply, it will take 2 – 3 weeks before your card will arrive, so you should plan to apply several weeks prior before you will need the coverage.

What is my cost-sharing under Medicare Part B?

You will pay a percentage of the costs of your medically-necessary Part B services. Generally, these costs are:

  •  the annual Medicare Part B deductible (in 2017, this is $183)
  •  20% of the remaining costs, with no limits or cap
  •  any excess charges that a provider or facility may charge beyond what Medicare reimburses
  • What is most significant is the 20% that you will owe for outpatient medical care. For services like surgeries or chemotherapy, your expenses can add up to thousands of dollars. There is no reason for you to be subject to these expenses when there are supplemental coverage options available for any budget. There are two main ways in which you can protect yourself against catastrophic medical spending. Medicare supplements are available for purchase to cover the parts that A & B don’t. If you need a more affordable option, Advantage plans are a great option to get your A & B benefits through a private health insurance plan at very little cost.

 

Medicare Part C

Part C, also known as Medicare Advantage Plans, includes all benefits and services covered under Part A and Part B.  It is run by Medicare-approved private insurance companies and is an alternative to original Medicare. To receive Part C benefits, you must be enrolled in Part A and B. Medicare Advantage plans usually include Medicare prescription drug coverage (Part D) as part of the plan.

Stages of Medicare Part D Plan

  1. Annual Deductible – in 2017, the allowable deductible is $400. Plans may charge the full deductible, a partial deductible, or waive the deductible entirely. You will pay the network discounted price for your medications until your plan tallies that you have satisfied the deductible. After that, you enter initial coverage.
  2. Initial Coverage – during this stage of Part D drug coverage, you will pay a copay for your medications based on the drug formulary. Each drug plan will separate its medications into tiers. Each tiers has a copy amount that you will pay. For example, a plan might assign a $7 copay for a Tier 1 generic medication. Maybe a Tier 3 is a preferred brand name for a $40 copay, and so on. The insurance company tracks the spending by both you and the insurance company until you have together spent a total of $3700 in 2017.
  3. The Coverage Gap – after you’ve reached the initial coverage limit for the year, you enter the coverage gap. During the gap, you will still generally have significant discounts for generic medications. You will pay only 40% of your brand name medications, and 51% of generics. (This is so much better than in 2006 when many people had to pay 100% of their drugs in the gap.) Your gap spending will continue until your total out of pocket drug costs have reached $4,950 in 2017.
  4. Catastrophic Coverage – after you’ve reached the end of the coverage gap, your plan will kick in to pay 95% of the costs of your formulary medications for the rest of the year. This feature in Part D drug plans helps you limit your potential spending if you have expensive medications.

 

It’s important to note that Medicare itself tracks your True Out of Pocket Costs (TrOOP) for each year. This can protect you from paying certain costs twice. For example, if you pay the deductible on one plan, and then later switch to a different Medicare Part D plan because you moved out of state, your new plan will already see that you have paid the deductible for that year. The costs for coverage gap and catastrophic coverage work the same way.

Part D drug plans also have changes from year to year. Your plan’s benefits, formulary, pharmacy network, provider network, premium and/or co-payments/co-insurance may change on January 1st of each year. Medicare gives you an annual election period during which you can change your plan if you desire to do so.

Two Ways to Get Medicare

Option 1: Original Medicare

One way to receive Medicare benefits is to enroll in Original Medicare, or Parts A and B. Original Medicare is managed by the federal government and provides hospital and medical insurance. However, because there is limited coverage, no out-of-pocket maximum, and no Prescription drug plan included, there are other alternatives in order to receive coverage. One of these alternatives is enrolling in a Medicare Advantage Plan.

If you decide to stay with Original Medicare, you can enroll in a Medicare Supplement plan in order to cover the costs that Original Medicare does not. For prescription needs, you can also enroll in a Part D plan to cover drug costs.

Option 2: Medicare Advantage Plans

Medicare Advantage Plans, or Part C of Medicare, include all benefits and services covered under Part A and Part B. It is run by Medicare-approved private insurance companies and is an alternative to original Medicare. To receive Part C benefits, you must be enrolled in Part A and B. Medicare Advantage plans usually include Medicare prescription drug coverage (Part D) as part of the plan.

If you have a Medicare Advantage Plan, you cannot enroll in a Medicare Supplement Plan. However, if your Medicare Advantage Plan does not include drug coverage, you can enroll in a separate Part D plan.

Initial Enrollment Period

For most people, enrolling in Medicare Part A is automatic. However, there are several instances where you may have to manually enroll in Medicare Part A and/or Part B during your Initial Enrollment Period (IEP), the seven-month period that begins three months before you turn 65, includes the month of your 65th birthday and ends three months later.

Some situations where you would enroll in Medicare during your initial enrollment include:

  • If you aren’t receiving retirement benefits:
    • If you are not yet receiving retirement benefits and are close to turning 65, you can sign up for Medicare Part A and/or Part B during your IEP. If you decide to delay your Social Security retirement benefits or Railroad Retirement Benefits (RRB) beyond age 65, there is an option to enroll in just Medicare and apply for retirement benefits at a later time.
  • If you do not qualify for retirement benefits:
    • If you are not eligible for retirement benefits from Social Security or the RRB, you will not be automatically enrolled in Original Medicare. However, you can still sign up for Medicare Part A and/or Part B during your IEP. You may not be able to get premium-free Medicare Part A, and the cost of your monthly Part A premium will depend on how long you worked and paid Medicare taxes. You will still have to pay a Medicare Part B premium.

General Enrollment Period

If you did not enroll during the IEP when you were first eligible, you can enroll during the General Enrollment Period. The general enrollment period for Original Medicare is from January 1 through March 31 of each year. Keep in mind that you may have to pay a late enrollment penalty for Medicare Part A and/or Part B if you did not sign up when you were first eligible.

Special Enrollment Period

You may choose not to enroll in Medicare Part B when you are first eligible because you are already covered by group medical insurance through an employer or union. If you lose your group insurance, or if you decide you want to switch from your group coverage to Medicare, you can sign up at any time that you are still covered by the group plan or during a Special Enrollment Period (SEP).

Your eight-month special enrollment period begins either the month that your employment ends or when your group health coverage ends, whichever occurs first. If you enroll during a SEP, you generally do not have to pay a late enrollment penalty.

The Special Enrollment Period does not apply if you’re eligible for Medicare because you have ESRD. Please also keep in mind that COBRA and retiree health coverage are not considered current employer coverage and would not qualify you for a special enrollment period.

When to Apply for Medicare

Medicare is separate from your application for Social Security income benefits. People age into Medicare at age 65, regardless of whether they are taking retirement income benefits yet. If you are a citizen age 65 or older and need medical insurance, you are entitled to enroll in Medicare.

Most people enroll in Part A at 65. If you are still working and wish to stay on your employer’s group health plan, you can also delay your enrollment into Part B until later. Your group plan likely has outpatient benefits already built-in, so you may not need Part B until you retire.

When to apply for Medicare varies based on whether you still have access to other health insurance coverage. Check with your agent for guidance if you are unsure. Next, we’ll look at how to sign up for Medicare.

How to Apply Online

Social Security offers you a quick online application for Medicare that can be completed in fewer than ten minutes. You do not have to be receiving income benefits to get Medicare. Just visit the social security website at www.ssa.gov and follow the links to apply for Medicare.

How to Apply by Phone

Applying for Medicare by phone is just as easy as applying online. Contact Social Security at 1-800-772-1213 and tell the representative that you wish to apply for Medicare. Sometimes you will be helped immediately. If the volume of calls is high, Social Security will schedule a telephone appointment with you to take your application over the phone.

How to Apply in Person

Some people prefer to apply for Medicare in person at a local Social Security office. This can be a convenient option if you are very close to turning 65 and need to get your application processed quickly.

Visit the social security website to search for the office nearest you. When you meet with a representative, ask for a printout which shows that you have applied for Medicare Part A & B. This form will give you all the information you need to move forward with your Medicare supplement application and/or Part D drug plan.

When will I get my Medicare card? 

In most cases, you will receive your Medicare card about 3 weeks after you apply. If you are already receiving Social Security benefits when you turn 65, your enrollment into Medicare is automatic. Your card will just show up in your mailbox about 2 months before you turn 65.

Applying for Medicare is just your first step. Medicare does not cover all of your medical costs. There is significant financial exposure to you in the deductibles and coinsurance that you must pay. Working with an expert insurance agent will help you to identify Medicare supplemental insurance coverage that suits you.

Medicare vs. Medicaid

Medicare is generally for people who are older or disabled, whereas Medicaid is a state-administered program for low-income and disabled U.S. citizens and legal aliens. Although many of the coverage details are determined by individual states, each state must provide certain services, such as specific hospital and doctor services.

It’s possible to be eligible for both Medicare and Medicaid. If you think you might qualify, you need to fill out a Medicaid application. If you do qualify, Medicaid can help pay for your Medicare premiums, deductibles, and/or coinsurance.

Medicare Basics

Medicare is a federally funded program available to most U.S. citizens and permanent legal residents who have lived continuously in the country for five years or more and are age 65 or older.

People younger than 65 may also be eligible for Medicare if they:

  • Have received at least 24 months of Social Security disability benefits or a disability pension from the Railroad Retirement Board (RRB).
  • Have permanent kidney failure and need routine dialysis or a kidney transplant.
  • Have amyotrophic lateral sclerosis (Lou Gehrig’s disease).

To qualify for premium-free Medicare Part A, you or your spouse need to have worked at least 10 years and paid Medicare payroll taxes while working. Medicare Part B has a premium that most people pay. To cover additional costs or provide more health-care services, you may enroll in a Medicare Prescription Drug Plan (Part D) or a Medicare Advantage plan (Part C). Medicare Advantage plans and Medicare Prescription Drug Plans are offered by private Medicare-approved insurance companies, and costs, coverage details, and availability may vary among plans.

Medicaid Bacis

Medicaid is jointly funded at the state and federal levels. Medicaid supports low-income individuals and families by covering costs associated with both medical and long-term custodial care for those who qualify. Some of the benefits covered under Medicaid overlap with Medicare, such as inpatient and outpatient hospital care and doctor services. However, depending on the state, Medicaid may also offer coverage that is not included under Original Medicare, such as personal care, optometry services, and dental services. Also, the service providers (such as hospitals and doctors) available to people using Medicaid are often different than those available to people using Medicare.

Eligibility for Medicaid is means-based, and the program has strict income eligibility requirements that vary from state to state. The Affordable Care Act expanded Medicaid eligibility levels in some states beginning on January 1, 2014. For more information on current qualification requirements, individuals should call their State Medical Assistance (Medicaid) office or visit Medicaid.gov.

Outlined below are further differences between Medicaid and Medicare.

What is Medicare? 

Medicare is health insurance for people 65 or older, people under 65 with certain disabilities, and people of any age with End-Stage Renal Disease (ESRD) (permanent kidney failure requiring dialysis or a kidney transplant).

How do you qualify? 

Medicare eligibility begins for most people at age 65. Individuals who have been entitled to Social Security disability for at least 24 months also qualify.

Many people confuse their Medicare Eligibility date with their Social Security date. They are different. A person can apply for full retirement income benefits at age 66. However, this does not affect the age at which they qualify for Medicare. Everyone who has worked at least 40 quarters (10 years) in the United States during their lifetime can qualify for Medicare at age 65.

If you are already receiving Social Security or Railroad Retirement Benefits, then you will also automatically receive Part A and Part B starting the first day of the month you turn 65. If you’re automatically enrolled, you will receive your Medicare card in the mail 3 months before your 65th birthday, or the 25th month of disability benefits.

If you are not receiving Social Security or Retirement Benefits, or if you have End-Stage Renal Disease, you will need to sign up for Part A. There are many ways to do so, whether in person at your local social security office, over the phone, or online. To learn more, please visit this page. If you are not automatically enrolled, and are eligible to sign up for Part A, you can enroll anytime once your Initial Enrollment Period starts. You can only sign up for Part B during your initial enrollment period, general enrollment period, or special enrollment period. These enrollment periods are discussed in further detail on our “Medicare Enrollment Periods” page.

Eligibility for Medicare Part A

Eligibility for Medicare Part B

You are eligible for Medicare Part B at age 65 as well. However, you must pay a monthly premium for Part B. This provides for your outpatient benefits such as doctor visits, lab work, surgery fees, and more. Check out our Part B page for more on what Part B covers.

Some people turning 65 still have health insurance through an employer. They can delay their enrollment into Part B in favor of their group health insurance without fearing a late penalty.

If you delay enrollment into Part B, consult with an insurance agent who specializes in Medicare. He or she can explain the special election periods which you must use later on so that you won’t be subject to a late enrollment penalty.

You are eligible for Medicare Part A at age 65 if you or your spouse has legally worked for at least 10 years in the U.S. During those years, you paid taxes toward your Part A hospital benefits. This is why most Americans pay no Part A premiums when they become eligible for Medicare. Part A mainly covers your hospital stays.

If you have not worked the required 10 years, Part A may be available for you to purchase. Contact Social Security to find out the cost. If you must purchase Part A, the coverage will cost over $400/monthly. In some cases, however, there are partial premiums for people who have worked over 30 but less than 40 quarters.