How does Medicare work?
Medicare is a federal health insurance program that provides benefits to American citizens and permanent legal residents (of at least five continuous years) aged 65 and older, or who have a qualifying disability or illness. Most people are automatically enrolled into Original Medicare, Part A and Part B, when they become eligible; however, some people need to manually enroll in Medicare. Medicare Part A is hospital insurance; Medicare Part B is medical insurance.
You may want to take a look at these Medicare plan options.
- Medicare Advantage (Medicare Part C) gives you a way to get your Original Medicare coverage through a private, Medicare-approved insurance company instead of directly through the government. Medicare Advantage plans provide all your Medicare Part A and Part B benefits other than hospice care, which Part A still covers. But many Medicare Advantage plans include extra benefits, such as routine dental and vision services. And most Medicare Advantage plans include prescription drug coverage, letting you get all your Medicare benefits through a single plan. You still need to continue paying your Medicare Part B monthly premium, besides any premium the Medicare Advantage plan might charge.
- If you stay with Original Medicare, be aware that prescription drugs aren’t covered in most situations. Medicare Part D offers prescription drug coverage through private, Medicare-approved insurance companies. You may want to consider adding a stand-alone Medicare Prescription Drug Plan.
- If you decide to stay with Original Medicare, another option you may have is to sign up for a Medicare Supplement (Medigap) insurance plan to help pay for Original Medicare’s out-of-pocket costs. Different Medigap plans pay for different amounts of those costs, such as copayments, coinsurance, and deductibles.
Availability and costs of Medicare plan options may vary from one insurance company to another, and from one geographic area to another.
Do I Need Medicare Part A or Part B If I Am Still Working?
This depends on your situation. If you’ve worked at least 10 years (40 quarters) under Medicare-covered employment and paid Medicare taxes during that time, you qualify for premium-free Medicare Part A and will be automatically enrolled at age 65 even if you’re still working. If your spouse has enough employment quarters, you can also qualify for premium-free Medicare Part A based on his or her work history.
Another Medicare eligibility requirement is that you need to be an American citizen or permanent legal resident of at least five continuous years.
If you don’t have enough work history to get Medicare Part A without paying a premium, you can decide to delay enrollment if you already have health coverage through an employer or union (or through your own work or your spouse’s employer). Medicare Part B always comes with a monthly premium, so you may similarly choose to delay your Part B enrollment if you or your spouse are still working and have employer-based group coverage.
Remember, if you don’t sign up for Medicare when you’re first eligible and don’t have other coverage based on current employment, you could have to pay a late-enrollment penalty later when you do enroll. The late-enrollment penalty applies to Medicare Part B (and Part A, if you have to pay a premium for it).
One factor to consider is that even if you have health coverage through your employer or union, Medicare may help pay for some of the costs not covered by your group health plan. For example, enrolling in Medicare may be useful if you work for a small company (less than 20 employees) because Medicare could be the primary payer before your group health insurance. You may want to consult with your employer or union benefits administrator for specifics on how your health coverage and costs may compare with Medicare.
If you do decide to wait until your group coverage ends to enroll in Medicare Part A and/or Part B, you’ll have an 8-month Special Enrollment Period to sign up for Medicare that starts once you stop working or your group coverage ends (whichever happens first). You can also enroll in Medicare at any time that you are still working and have employer-based coverage.
If you choose COBRA after you stop working, do not wait until your COBRA coverage ends to sign up for Medicare. If you delay enrolling in Medicare Part A and/or Part B after your Special Enrollment Period ends, you’ll have to wait until the next General Enrollment Period (January 1 to March 31 every year) to enroll, and you may have to pay a late-enrollment penalty.
Please contact Doris Ford for any questions on Medicare.