Medicare Basics for New Retirees

by Shelley | Jul 2, 2024 | Healthy Aging

The Medicare program was signed into law by President Lyndon Johnson in the summer of 1965. It is designed to provide health insurance to adults aged 65 and over, as well as younger people with disabilities. But the program actually dates back to President Teddy Roosevelt and President Harry Truman.

Roosevelt included Medicare in his presidential campaign platform in 1912. In 1945, Truman unsuccessfully fought for a national health insurance program with a special focus on coverage for older adults and people with disabilities. It wasn’t until President Johnson’s term when Congress actually enacted the necessary legislation and the program kicked off in 1966. President Truman and his wife, Bess, were the first two people to enroll in Medicare.

Today, Medicare gives retirees greater financial security. But it can be confusing for those about to enroll in the program. Let’s take a look at some of the basics you’ll need to know to get started with Medicare.

Medicare 101 for New Enrollees

First, it helps to understand how the Medicare program is organized. There are four parts and each is assigned a different letter: A, B, C, and D. Here’s a quick overview of each:

• Medicare Part A: Often referred to as the “hospital benefit,” part A covers part or all of hospital stays, short-term rehabilitation at a skilled nursing center, hospice care, and skilled home health services.
• Medicare Part B: Medicare Part B is designed to cover two primary types of care: medically necessary services and preventative services. That could include doctor visits, outpatient therapy, mental health treatment, laboratory testing, cardiac rehab, mammograms, flu shots, and more.
• Medicare Part C: This part of Medicare is comprised of Medicare Advantage plans. Through these replacement plans, private insurance companies contract with Medicare to provide health care coverage to seniors. These plans may have lower out-of-pocket costs and may even include prescription drugs.
• Medicare Part D: If you opt for traditional Medicare instead of a Medicare Advantage plan, you can sign up for prescription drug coverage under Medicare Part D. In most cases, you need to sign up for drug coverage at the time you enroll in Medicare. If you don’t, you’ll pay a penalty when you decide to sign on. Use the Medicare Plan Finder to explore drug plan options in your zip code.

Answering Commonly Asked Questions About Medicare

If you are like most adults preparing to sign up for Medicare, you have many questions. Here are the answers to two of the most common.

Q: How much does Medicare cost?

A: Because most seniors (or their spouse) pay into Medicare through their employer, Part A of the benefit is usually free. But there is a monthly premium for Part B coverage and, if you opt for it, Part D. In 2024, Medicare Part B is $174.70 per month. While Part D pricing varies, the average monthly cost for basic benefit coverage in 2024 is $34.50.

Q: Does Medicare pay 100% of an enrollee’s health care expenses?

A: Unfortunately, like all health care plans, Medicare has deductibles and limits. The exception may be if you choose a Medicare Advantage Plan that doesn’t have deductibles. Adults who select traditional Medicare might want to consider purchasing what is known as Medigap insurance. It helps pay for those expenses Medicare doesn’t. 2024 Choosing a Medigap Policy can help you learn more.

Finally, if you need more clarification between Medicare Parts A and B, this article might be of interest. It covers everything from coverage and costs to open enrollment.

How Does Medicare Part A Differ from Part B?

by Shelley | Nov 13, 2023 | Healthy Aging

Medicare is the nationwide insurance program for individuals who have qualifying disabilities and seniors. For many of the over 61,000 people who participate in Medicare and their loved ones, the benefit remains confusing. The program has several parts ranging from A to D, and each one covers a different type of care.

Medicare Part A versus Medicare Part B

Medicare Parts A and B cover a broad range of services. People often have trouble distinguishing the benefits of one part of the program from another, especially these two. An easy way to keep them straight is to think of A as hospital/inpatient insurance and B as medical insurance.

Part A of the Medicare benefit covers:

• Part or all of a hospital stay (fewer deductibles and co-pays)
• Short-term rehabilitation in a skilled nursing center
• Home health care services
• End-of-life hospice care

By contrast, Medicare Part B helps pay for physician office visits and other types of preventative care and screenings. For example, most people qualify for a diagnostic colonoscopy every ten years, along with annual prostate screenings, mammograms, and flu shots. It also might pay for durable medical equipment and other outpatient services.

Costs Associated with Medicare Parts A and B

While Medicare Part A is free for most people who worked at least ten years or had a spouse who did, there are other costs Medicare recipients incur. The first is a $1,600 annual deductible.

The following costs apply to hospital and mental health facility stays:

• There is no coinsurance for the first 60 days (once the deductible for the year is met).
• From day 61 through 90, a coinsurance rate of $400 per day will apply.
• After day 90, a Medicare recipient will incur an $800 per day coinsurance for a total of 60 “lifetime reserve” days. Once the 60 lifetime reserve days are exhausted, the patient is then responsible for all costs.

For a stay at a skilled nursing facility, the first 20 days do not require a Medicare co-pay. From day 21 to day 100, a coinsurance of $200 is required for each day. Beyond 100 days, the patient is then responsible for all costs.

Unlike Medicare Part A, Part B has a premium. In 2023, the monthly premium for Part B is $164.90. Most seniors pay this amount, but those with incomes of $97,000 or higher might pay more.

Medicare Part D Benefit

One last thing to be aware of is the Medicare Part D benefit. Older adults who don’t take any prescription medications often ask if and why they need to enroll in Medicare Part D. This part of the benefit covers prescriptions. While most beneficiaries aren’t required to sign up, you will have to pay a monthly penalty if you do enroll after the Initial Enrollment Period ends.

The penalty is currently 1% of the monthly premium ($32.74 in 2023) multiplied by the number of months you didn’t have creditable prescription coverage. This penalty is why financial planners often suggest people sign up for a Part D plan when they first enroll for Medicare.

Learn about Medicare Open Enrollment

Fall is the one time of year when Medicare recipients can make changes to their existing coverage. Open enrollment runs from October 15^th through December 7^th every year. If this is the first time you or a senior loved one is navigating this period, you might find this article to be of interest.