Medicare is a federal health insurance program that provides coverage for people who are 65 years or older or some people under 65 with certain qualifying disabilities and medical conditions.  The program serves U.S. citizens and legal permanent residents regardless of their income, health status, or medical history.

Medicare has four parts:

Medicare Part A provides coverage for hospital stays, skilled nursing facility stays, hospice care and some home health visits. 

Medicare Part B covers doctor visits, outpatient services, preventative services, and some home health visits.

Medicare Part C is also known as the Medicare Advantage program.  Beneficiaries can enroll in a private health plan such as an HMO or PPO and receive Part A, Part B and in most cases, Part D benefits, which often times provides enhanced benefits.  About one-third of all Medicare beneficiaries are enrolled in Part C plans. 

Medicare Part D covers outpatient prescription drugs that are provided by private plans that contract with Medicare.  This benefit helps pay for drug costs after a deductible is met and also offers catastrophic coverage in cases where there are extremely high drug costs. 

General Eligibility and Enrollment Information

 There are two groups of people who are eligible for Medicare:

People who are 65 years or older who are American citizens or who have been legal permanent residents of the United States for at least five continuous years.

People under 65 years of age who have certain qualifying medical conditions or disabilities.

Beyond these general requirements, there are also specific criteria that must be met as well.  In some cases, there may also be other special situations that will allow you to apply for Medicare before 65. 

To obtain the best coverage, you must pay attention to enrollment criteria for Medicare.  Annual open enrollment begins each year in October, but in some instances, you can also enroll during other times of the year.

Important deadlines and situations

If you already get Social Security or Railroad Retirement benefits, you will be contacted about enrolling in Medicare about three months before you turn 65.  You will automatically be enrolled in Medicare Part A and Part B if you live in any of the 50 states, Washington, D.C., the Northern Mariana Islands, American Samoa, Guam or the U.S. Virgin Islands.  Part B coverage requires you to pay a premium, and because of this you will be given the opportunity to opt out of it.

If you do not already receive Social Security or Railroad Retirement benefits, you can enroll in Medicare during what is known as an Initial Coverage Election Period.  Doing so will help you avoid any gaps in your healthcare coverage as well as helping you to avoid paying any enrollment penalties.

The Initial Coverage Election Period is seven months long and starts three months before the month you turn 65 years old and ends three months after your 65th birthday.

You can apply for Medicare before you turn 65 if you meet certain special situations:

  • You’re a disabled widow(er) between the ages of 50 and 65.
  • You work for the government and became disabled before turning 65
  • You or an immediate family member has permanent kidney failure
  • You had Medicare Part B coverage in the past but dropped coverage
  • You turned down Medicare Part B coverage when you first got Medicare Part A coverage.
  • You or your spouse worked for the railroad industry.

It should be noted that you can get Medicare coverage even if you don’t plan on retiring when you turn 65.

Other Important Medicare Enrollment Periods

In addition to the Initial Coverage Election Period, there are other enrollment periods that may affect you whether you are enrolling for the first time or making changes to your existing Medicare coverage.

Annual Open Enrollment Period.  Every year, current Medicare enrollees are given the opportunity to review their existing coverage and switch to a different plan for the following year.  The dates for this are October 15 through December 7.

General Annual Open Enrollment Period.  People who did not sign up for Part B at the required time can use the period of January 1 to March 31 each year to sign up.  If you do sign up during this period, your Part B coverage will not start until July 1 and you might have to pay a penalty as well. 

Special Enrollment Period for Part B.  You can enroll in Part B without penalty after 65 if you can show you had group health insurance from an employer that you or your spouse were working for since you turned 65.  This SEP runs 8 months from the time you or your spouse stopped working. 

Special Enrollment Period for Part D. You can delay enrolling in Part D drug coverage beyond age 65 if you have creditable drug coverage from another source.  This means Medicare considers the coverage you have to be equal what you can get with Part D. 

Annual Disenrollment Period.  People enrolled in Medicare Advantage Plans (Part C) and want to change to traditional Medicare can use the period of January 1 through February 14 to do so.  You can also use this period to enroll in Part D coverage as well.  In both cases, new coverage begins the first day of the month after you make your changes. 

There are also a number of other Special Enrollment Periods that are available in specific circumstances related to Medicare Advantage and stand-alone drug plans.  Check with Medicare directly to see if you qualify for one of these SEPs.

Medicare Part A

What it covers.  Also known as Medicare hospital insurance, Part A coverage may include inpatient hospital care, skilled nursing facility care, hospice and certain types of eligible home health care.  Coverage generally includes medically necessary services and equipment such as general nursing services, a semi-private room, and prescription drugs if they are required as part of your inpatient treatment. 

Part A covers hospice care if it is determined that you are terminally ill and have six months or less to live.  Hospice coverage includes doctor and nursing services, hospice aide services, physical and occupational therapy, prescription drug and some coverage for short-term respite care for caregivers. 

However, Part A does not cover long-term care, such as what you would get in a nursing home or long-term care facility.  It only covers facilities where help with personal care (bathing, eating, bathing) isn’t the only care you receive. 

Some home health services are covered and may include physical therapy, occupational therapy, and speech therapy services, among others. 

Coverage if you are under 65.  You can qualify for Medicare Part A benefits if you are under 65 and you have end-stage renal disease (ESRD), permanent kidney failure that requires either ongoing dialysis or a transplant or you receive disability benefits because you have Amyotrophic Lateral Sclerosis (ALS) which is also known as Lou Gehrig’s disease. 

In addition, you must have received disability benefits from Social Security or the Railroad Retirement Board for at least 24 months.  You are automatically enrolled in Part A and Part B after you get either of these disability benefits for 24 months, which do not need to be consecutive.  You can also qualify if you worked the required amount of time under Social Security, the Railroad Retirement Board or as a government employee, or you are the spouse or dependent child of someone who meets these requirements.

Part A Eligibility.  You are automatically enrolled in Part A at age 65 if you paid Medicare taxes while you were working and you did so for at least 10 years (40 quarters).  If your spouse qualifies for Part A benefits without a premium, then you may also be eligible for premium-free benefits based on his or her work history.  If you don’t meet work requirements, you can still sign up for Part A, but you will need to pay a monthly premium. 

You can also qualify for free benefits if you receive or are eligible to receive Social Security benefits or Railroad Retirement benefits.  This also applies if your spouse is eligible to receive either of these as well, even if the spouse is deceased or divorced from the person seeking coverage.

How Social Security credits impact coverage.  People can receive free Part A coverage if they work and pay taxes to earn enough Social Security credits.  Generally, 40 credits are required for free Part A coverage.  Each credit is equal to one quarter of a year of work that you earn $1,300 and pay taxes on.  If you earn more than 40 credits, then the overage does not apply to any additional benefits.  If you don’t meet the 40-credit minimum, then you will need to pay a monthly premium to be covered for Part A.  Your premium will depend on how long you have worked and how close you are to meeting the 40-credit requirement.  If you are required to pay for Part A coverage, then you will also be required to enroll in Part B and pay a premium for that as well.

Enrollment in Part A.  If you already get Social Security or RailRoad Retirement Board benefits, then in most cases you will automatically get Part A and Part B coverage start the first day of the month you turn 65 years old.  You will get a “Welcome to Medicare” package that will be mailed to you about three months before you turn 65.  This package will include your Medicare card, among other things.  You will also be asked if you want to keep Part B coverage since there is a premium associated with this. 

If you’re under 65 and disabled, you’ll automatically get Part A and Part B after you get disability benefits from Social Security or from the Railroad Retirement Board for 24 months. You’ll get the same welcome package about three months before you 25 month of disability benefits.  If you have ALS, you’ll automatically get Part A and Part B the same month your disability benefits begin. 

If you do not meet any of the requirements above, then you can sign up for Medicare benefits during your Initial Enrollment Period.  This is the 7-month period that begins three months before the month you turn 65 and ends three months after the month you turn 65. 

You can sign up from free Medicare Part A any time after your Initial Enrollment Period starts, but coverage will start six months back from the date you applied, but not earlier than the first month you were eligible for Medicare.

After your Initial Enrollment Period ends, you can sign up for Part A and Part B if you have to buy it during a Special Enrollment Period, as long as you meet certain requirements.  Be aware that you may face enrollment penalties or a gap in coverage if you go this route. 

If you don’t qualify for a Special Enrollment Period, you can sign up during the Medicare General Enrollment Period which takes place January 1 through March 31 each year.  Going with this option means you might have to pay higher premiums and your coverage will not begin until July 1 of the year you enroll. 

Medicare Part B

What it covers.  Part B covers doctor’s services, outpatient care, and services provided by labs and clinics.  Coverage extends to surgeries, lab tests, preventative services, doctor visits and medical supplies such as wheelchairs, etc.

Part B eligibility.  If you are eligible to enroll in Part A at no cost, you are eligible to enroll in Part B by paying a monthly premium.  If you don’t qualify for Part A at no cost, then you can qualify for Part B if you’re 65 years or older and a U.S. citizen or legal permanent resident who has lived in the United States continuously for five years immediately preceding the month you apply for Part B

Enrollment in Part B.  Part B enrollment typically takes place during an Initial Enrollment Period when a person also signs up for Part A.  However, if you fail to enroll in Part B at that time, there is also a General Enrollment Period that occurs between January 1 and March 31 each year.  If you sign up during this period, then your Part B coverage will not begin until July 1.  In some instances, you are automatically enrolled in Part B (see Part A enrollment above for details).  If you don’t sign up for Part B when you’re first eligible, then you could end up paying more for coverage as well as a late enrollment penalty. 

Part B costs.  There is a monthly premium for Part B coverage.  If your adjusted gross income is above a certain threshold, you may be required to pay a larger premium.  Part B premiums are generally taken directly out of Social Security or Railroad Retirement benefit checks, so most people will not have to concern themselves with paying a monthly bill. 

If you initially decide not to enroll in Part B coverage, then the monthly premium will increase by 10% for each 12 month period that you are eligible when you finally do enroll.  That penalty is permanent and you will end up paying it for as long as you have Part B coverage. 

After you meet your Part B deductible, you will normally pay 20% for all approved Medicare services as your share.  Be aware that there is no out-of-pocket limit for Part B and not all services you require may be covered. 

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Medicare Part C (Medicare Advantage)

What it covers.  Medicare Part C is also known as Medicare Advantage Plans and provides an alternative way to enjoy Part A and Part B benefits.  Medicare Advantage Plans are offered by private insurance companies who are approved by Medicare.  They must offer the same level of coverage as Part A and Part B.  Companies who provide insurance agree to follow Medicare’s rules regarding care and what is covered, but may provide those services differently and have different fee structures regarding out-of-pocket expenses.  The most common types Medicare Advantage Plans are Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs) and Private-Fee-for-Service (PFFS) plans.  In some instances, Medicare Advantage Plans may offer a higher degree of coverage that Part A and Part B, including services such as hearing, vision and dental benefits, among others.  Medicare Advantage Plans also offer drug coverage and include a yearly maximum for out-of-pocket amounts.  After that limit is reached, there are no charges for covered services.

Part C eligibility.  If you are enrolled in Medicare Part A and Part B, then you are eligible to enroll in Part C.  The only caveat is that you must make sure you live in an area where you will be eligible to enroll in Part C. 

Enrollment in Part C.  You can only enroll in Medicare Advantage Plans or make changes to what coverage you already have at certain times of the year.  Those periods include:

  • During your Initial Enrollment Period
  • The Annual Election Period which runs from October 15 through December 7 each year. 
  • Special Enrollment Periods which can take place when you move out of a service area or if you have another type of qualifying life event.

If you no longer want to be enrolled in a Part C plan, you can opt out during the Medicare Advantage Disenrollment Period between January 1 and February 14 each year.  If you opt out, you can only switch to Medicare Part A and Part B, but not a new Medicare Advantage Plan.

Part C costs.  Medicare Part C costs will vary depending on what levels of copayment or coinsurance costs are covered, as well as what overall services are covered.  You will need to do diligent side-by-side comparisons to determine what plan is best suited for your individual needs. 

Medicare Part D

What it covers.  Part D provides additional drug coverage to go with the coverage provided with Medicare Part A and Part B.  It typically provides a higher degree of coverage and limits out-of-pocket expenses.  Medicare Advantage plans may also provide drug coverage as well, but not in all cases.  Those that do are known as Medicare Advantage Prescription Drug Plans.  Part D is only available through private insurance companies that have been approved by Medicare.  Part D also covers some vaccines not covered under Part B.

Part D eligibility.  If you are eligible for Medicare Part A and Part B, then you are eligible for Medicare Part D.  You must live in the service area of the Part D plan that you want to enroll in. 

Enrollment in Part D.  You can enroll in Part D through a Medicare approved private insurance company.  This can take place during your Initial Enrollment Period, the Annual Election period from October 15 to December 7, and immediately following the General Enrollment Period between April to June 30.  You can also enroll at any time that you qualify for the Extra Help program

Part D costs.  Part D costs will vary from plan to plan because different insurance companies will provide various levels of coverage.  You will need to pay a monthly premium for Part D, plus a yearly deductible.  You will also need to make copayments or coinsurance which are paid after meeting the yearly deductible.  You will also have some minor costs if you are enrolled in Extra Help.  And, if you enroll in Part D late, you will pay an enrollment penalty as well.

Catastrophic coverage becomes available once you top out on your yearly out-of-pocket expenses.  This is about $5,000 per year and once you hit this limit, you automatically pay only a small copayment or coinsurance for the balance of the year. 

When you need help paying premiums

If you meet income and resource limits, Medicare may pay costs of prescription drug coverage through the Extra Help program.

In 2018, you can qualify for Extra Help if your annual income is no more than $18,210 or $24,690 for married couples.  You must also have no more than $14,100 in resources or $28,150 for married couples.  Resources include things such as money in a checking or savings account, stock and bonds and other financial assets.  Resources that do not count against the limit include your home, one car, a burial plot, up to $1,500 set aside for burial expenses, furniture and other household and personal items. 

Some people automatically qualify for Extra Help.  If you have Medicare and have full Medicaid coverage, you get Supplemental Security Income benefits or you get assistance from your state Medicaid program paying Part B premiums, then you qualify. 

Under Extra Help, costs are no more than $3.35 for each generic drug and $8.35 for each brand-name covered drug. 

If you don’t qualify for Extra Help you may still be able to seek relief at the state level for drug prices.  Many states provide State Pharmacy Assistance Programs (SPAP) to help low-income individuals with a disability or a medical condition to pay for prescription drugs.  Contact your state’s Medicaid office or your State Health Insurance Assistance Program to learn more. 

Medicare Savings Programs help low-income individuals with some of the co-payment costs for Medicare. This might include Medicare Part A and Part B premiums, copayments, coinsurance, and deductibles. 

When you are eligible for a Medicare Savings Program, you are also automatically qualified for participation in the Extra Help program as well. 

There are four types of Medicare Savings Programs:

Qualified Medicare Beneficiary (QMB) Program.  Pays for Medicare Part A and Part B premiums and cost-sharing expenses.  You must be eligible or currently enrolled in Medicare Part A to qualify for this program. 

Specified Low-Income Medicare Beneficiary (SLMB) Program.  If you earn slightly more than the maximum for the QMB program, then you may qualify for this program instead which helps with Medicare Part B premiums.  It does not pay other cost-sharing expenses.

Qualifying Individual (QI) Program.  If you don’t qualify for QMB or the SLMB program, then you should apply to this program.  It helps with Part B premiums and automatically qualifies you for the Extra Help program.  Funding is limited and benefits are available on a first-come, first-served basis. 

Qualified Disabled and Working Individuals (QDWI) Program.  This is different from the other three programs and only pays for Medicare Part A premiums. 

Benefits vary by program, but all of them, except the QDWI Program help pay for Medicare Part B premiums.

These programs are run by state Medicaid agencies, so qualifying for each program may vary from state to state.  All are based on your resources and income.  Assets such as money in checking and savings account, stocks, bonds, IRAs and so forth are counted as resources.  Your home, one car, a burial plot and burial expenses up to $1,500, furniture and household items are excluded. 

To apply for one of the Medicare Savings Programs, you need to visit your Medicaid office or go to Medicare’s website for more information. 

How do Medicaid and MediGap work with Medicare

Medicare does not always provide full healthcare coverage for all services in all instances.  This can create gaps in coverage.  However, there are programs in place to fill these gaps through supplemental coverage if an individual is not already covered by a spouse’s health insurance or through retiree benefits.

Medicaid is specifically designed to help low-income families pay for long-term medical and custodial care and is jointly funded by the federal government and run by state governments.  As such, coverage may vary from state to state. 

Federal law does require states to provide certain mandatory benefits but gives states leeway with other optional benefits.  Mandatory benefits include inpatient and outpatient hospital services, physician services, lab and x-ray services, home health services, and others.  Option benefits may include prescription drugs, physical therapy, occupational therapy, and other related services. 

Medicaid assists, eligible low-income adults, children, pregnant women, the elderly and people with disabilities. 

Medicaid is different from Medicare in that it is an assistance program while Medicare is an insurance program.  There are no age restrictions and it is based strictly on income.  Patients pay little, if anything, for services they receive. 

Go here to access an online application and get more details about Medicaid benefits.

Medigap is supplemental health insurance sold by private companies.  It helps to pay for healthcare costs not covered by Medicare, such as copayments, deductibles and coinsurance.  In addition, it may also pay for services that are not covered by Part A or Part B at all.  It effectively bridges the gap in coverage.  To qualify for a Medigap policy, you must already be enrolled in Medicare Part A and Part B.  You cannot purchase a Medigap policy if you have a Medicare Part C Advantage Plan. 

You will need to pay a monthly premium for a Medigap policy and the costs will vary depending on the types of benefits in your policy and what various companies may charge for the same coverage.  It will pay to shop for the best Medigap policy if you are considering this kind of coverage.  Medigap policies are usually purchased during an individual’s initial enrollment period.  If you attempt to purchase a policy after the fact, a Medigap policy may cost more. 

For more information

For general information regarding Medicare, go to agency’s website located here.

To check and see if you are eligible for Medicare, or to calculate premiums you might have to pay, call Medicare’s customer service at 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048, 24 hours a day/ 7 days a week. You can also call Social Security at 1-800-772-1213 between 7 a.m. and 7 p.m., Monday through Friday. TTY call 1-800-325-0778.

There is also online Eligibility and Premium Calculator on the Medicare website that you can access as well, by going here.

Medicare maintains a comprehensive list of providers on its website. You can find out what services are offered, make provider comparisons, and get tips and information to help make the best possible informed decisions regarding your Medicare coverage.