Before 1965, Americans over the age of 65 had difficulty gaining access to private health insurance coverage. This is why the federal government introduced Medicare – a low-cost health insurance program for seniors that has opened the door to accessible healthcare. Since it was introduced in the 1960’s, Medicare has become more robust as a health insurance option for the United States' aging population. Although it offers a wide variety of options, benefits and features, just like it is with any insurance program, getting started with Medicare can prove to be complicated or challenging.
To help bring clarity, we have compiled a 'New to Medicare' checklist to help you out with all the basic Medicare information that you’ll need.
1. Eligibility – As mentioned earlier, Medicare is a health insurance program for seniors who are turning 65, as well as people under 65 based on special circumstances (see #2). If you have been paying your taxes for at least ten years leading up to your retirement, you can qualify for Part A of Medicare for free. (See #4 for a description of Medicare’s Part A, B and D coverage and other key topics.)
2. Medicare for People with Disabilities – People under the age of 65 but with specific illnesses such as end-stage renal disease are also eligible for Medicare coverage. If you are on disability benefits from Social Security or certain disability benefits from the Railroad Retirement Board for 24 months, you automatically qualify for Part A and B coverage. (See #4 for a description of Medicare’s Part A, B and D coverage and other key topics.)
3. Enrollment – You first become eligible for Medicare during what is called an Initial Enrollment Period. This is a seven-month period which begins three months before the month of your 65th birthday and ends three months after your birthday month in the year you turn 65. If you are on social security benefits, you are automatically enrolled in Medicare.
If you wish to make changes to your plan or enroll at a different time, you may be eligible to do so during a Special Enrollment Period. But it’s important to note that in order to make changes during this time, whatever events that happened to prompt a change in your plan or enrollment must fall under special circumstances. For example, if you are still working when you are 65, you can continue on your work insurance, but when you retire, you could have a window of time during which you can enroll in Medicare.
If you want to make changes to your Medicare plan and cannot do so during a Special Enrollment Period, you can make changes during the Annual Open Enrollment period that remains operational from October 15 to December 7 every year.
4. Parts or Types of Medicare – There are various types or 'parts' of Medicare that you need to understand in order to make an informed decision.
5. Cost of Medicare – Is Medicare free? Typically, Part A is, but for everything else, there's a cost. You have to pay monthly premiums for Part B, D, any other Medigap plans you choose, or if you opt for a Medicare Advantage plan. The actual premium amount depends on your average income and the type of plan you choose among other things.
6. Penalties - While Medicare isn't mandatory, there are penalties you have to pay if you chose not to opt for it, but decide to sign up at a later date. For Part A you pay the penalty equal to 10% of your monthly premium for twice the number of years you were eligible for Medicare but didn't choose to sign up for it.
In terms of Part B, the penalty is 10% of each full twelve-month period that you opt not to sign up but were eligible. Even Part D can incur a penalty - 1% of the national base beneficiary premium multiplied by the number of months you were eligible but chose not to get coverage and did not have creditable coverage.
7. What Medicare Doesn't Cover - "If I have Medicare do I need additional insurance?" The answer to this question is typically, no. Medicare doesn't cover everything; this includes long-term care of over 100 days, cosmetic procedures, or dental, eyesight and hearing care. Some Medicare Advantage plans can offer coverage for some of these aspects however it’s important to be clear on what your plan does and does not cover.
Remember to consider your future health, your budget, and your needs when you choose your Medicare plan. There are a variety of Medicare Plans in California that can help meet your needs and requirements.