The United States government provides public health insurance known as Medicare to senior citizens aged 65 years or older and others with specific disabilities. Medicare can be overwhelming when you first enroll. There are several parts and plans that cover different services. Here is an overview of Medicare for 2021 to help ease any confusion you may have.
There is a common misconception that you are automatically enrolled in Medicare once you turn 65. This is unfortunately not true unless you are already receiving Social Security or Railroad Retirement benefits for four months prior to your 65th birthday. There is a specific time to enroll in Medicare: The Initial Enrollment Period (IEP). The Initial Enrollment Period begins three months before your 65th birthday and ends three months after your birth month. Therefore, you will have seven months to enroll in Medicare Part A and Part B once you become eligible.
Medicare Part A covers inpatient services, such as your hospital room, meals, medications, and any lab services or medically necessary supplies during your inpatient stay. If you need care at a skilled nursing facility after being discharged from the hospital, Part A will cover your stay if it’s considered medically necessary. Medically necessary is a key word here, as Medicare only covers services deemed medically necessary by your doctor.
As an inpatient, you will pay the Part A deductible, which is $1,484 in 2021. Once you have paid the deductible, Medicare will cover the first 60 days of your inpatient stay.
Other services covered by Medicare Part A are hospice services and short-term post-hospital home care. Medicare Part A doesn’t cover long-term care, however. If you need long-term care in a nursing home or assisted living facility, you would need to look at additional long-term care insurance.
Most beneficiaries do not pay a Part A premium. You can get Medicare Part A premium-free if you have worked ten years (40 quarters) in the United States and paid FICA taxes. If you do not have the qualifying work history for premium-free Part A, you will pay $471 per month for Part A.
Medicare Part B covers most outpatient services. For example, Part B covers doctor’s visits, durable medical equipment, preventative services, select vaccinations, ambulance rides, and more. Part B will often cover services you receive in a hospital setting, such as radiation and chemotherapy for cancer treatment.
Medicare does not cover routine dental, vision, or hearing services. Therefore, if you would like access to those specific benefits, you would need to purchase a separate standalone plan or a Medicare Advantage plan.
Unlike Part A, everyone pays the Part B premium regardless of work history. The standard Part B premium in 2021 is $148.50. There is an annual Part B deductible of $203 in 2021.
Medicare does not pay for your inpatient and outpatient services at 100%. This is why many Medicare beneficiaries purchase either a Medigap plan or Medicare Advantage plan for help with cost-sharing expenses. However, you cannot get either of these plans without enrolling in Medicare Part A and Part B first.
Medigap plans (Medicare Supplement)
Private insurance companies sell Medigap plans – also known as Medicare Supplement plans – to help pay your out-of-pocket expenses for Medicare-approved services. Medigap plans work alongside Original Medicare. What this means is that Medicare would be your primary insurance, and Medigap would be secondary.
There are no network restrictions with a Medigap plan. You can visit any doctor across that accepts.
Medicare leaves many gaps in its coverage, such as copayments, coinsurance, and deductibles. When you purchase a Medigap plan, that plan will help cover those gaps for you.
For instance, once you have met the Part B deductible, Medicare Part B will pay 80% of your Medicare-approved service. If you purchase Medigap Plan G, Plan G will pick up the 20% coinsurance you would typically pay without a Medigap plan. Therefore, you will not have any out-of-pocket costs for your outpatient service after you’ve met your deductible.
Medigap Open Enrollment
Most people don’t realize that you can enroll in a Medigap plan without underwriting or answering personal health questions. In most states, there is only one way to do this. Everyone gets a six-month Medigap Open Enrollment Period that begins on the day your Part B becomes effective. Once your Medigap Open Enrollment begins, you can apply for any Medigap plan available in your area and you can’t be charged more due to a pre-existing condition.
If you apply for a Medigap plan outside your six-month Medigap Open Enrollment, you will likely have to answer health questions on your Medigap application. If you have any serious or chronic health conditions, you could be denied a Medigap plan or pay a higher premium due to your pre-existing health conditions.
Medicare Advantage plan (Part C)
Medicare Advantage plans – also known as Part C – are also sold by private insurance companies. However, Medicare Advantage plans are very different from Medigap plans. For example, when you purchase a Medicare Advantage plan, you get your Part A, Part B, and Part D (drug coverage) through your Medicare Advantage plan instead of the government.
There are several different Medicare Advantage plans; however, HMO and PPO Medicare Advantage plans tend to be the most popular. HMO Medicare Advantage plans usually have stricter provider network rules than PPO Medicare Advantage plans.
For example, with an HMO plan, you can only get routine healthcare services within the insurer’s approved provider network. If you go outside your network for anything but emergency healthcare services, you could be responsible for the full bill.
PPO Medicare Advantage plans are more lenient, as you can see providers outside the plan’s preferred network. However, you’ll pay more out-of-pocket for out-of-network care.
As of 2021, you don’t have to answer any health questions when you apply for a Medicare Advantage plan. In the past, Medicare Advantage plans weren’t usually available to people with ESRD, but those rules changed in 2021. Now anyone enrolled in Medicare can buy a Medicare Advantage plan.
You can enroll in Medicare Advantage during your IEP. You can also switch from Original Medicare to Medicare Advantage without penalty during the fall Annual Election Period.
Medicare may seem like a complicated subject, but luckily there are many free resources that can help. Contact an experienced Medicare brokerage to help you compare plans and rates to ensure you are fully informed and ready for your Medicare enrollment.
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