Springtime Medicare Refresher

The pandemic has demanded our undivided attention for a year, and rightfully so, but it doesn’t mean that other important things should be ignored. It’s time to review one of our most important benefits . . . Medicare.

Medicare is a government program that affects a large number of Americans, including those who care for those of us who are over 65, those that are approaching 65, younger people who are planning their retirement and those who are disabled. Spring is probably a good time for a Medicare refresher. It seems that some of us get caught up in the minutia of Medigap plans or Medicare Advantage before we really understand the basics of Medicare. While I’ll try to keep it simple, and some of you will know a lot of the Medicare basics that I cover, you may be surprised when you find that there are things you didn’t know or had forgotten about Medicare.

Anyone who is 65 in America, even permanent residents who have lived here at least 5 years, qualify for Medicare. People who have qualified for 24 months of disability under Social Security are also eligible. When you turn 65 you qualify for Medicare, even if you haven’t started taking Social Security benefits. Original Medicare was signed into law in 1965 and consists of Part A and Part B and are provided by the federal government. You will enroll in these two parts (and only these two parts) through the Social Security office. The third part is a benefit that was added later, in 2006, which is Part D, your prescription drug benefit. You must sign up for this benefit when you turn 65 unless you have private health insurance, like insurance through your employer.

Medicare Part A is your inpatient hospital coverage. It supplies a room and meals along with medications, lab services and medical supplies required while you are hospitalized. Part A also covers medically necessary short term home healthcare and skilled nursing. And It covers hospice services and some relief care for caregivers. Medicare does NOT cover long-term care or long term stays in a nursing home. There are some things, like outpatient surgeries, that don’t fall under Part A. It is always good to get guidance as you determine what is inpatient and outpatient services.

If you are already receiving Social Security benefits when you turn 65, you will automatically receive your Medicare card. If you have postponed your Social Security benefits then you must sign up for Part A; you can do this on the Social Security website. If you have worked for at least 40 quarters (10 years) then Part A has no cost to you.

Part B is the outpatient benefit and usually involves services provided by your doctor. This benefit covers things like doctor office visits, ambulance rides, MRIs, cancer treatments (like chemotherapy), and dialysis. While some of these procedures may be performed in a hospital setting, they will fall under Part B because doctors perform the service. This benefit does come with a cost to you; the base rate in 2021 was $148.50. You may have to pay more depending on your income. Again, if you are already getting Social Security, you will automatically be enrolled in Part B. If not, you can sign up on the Social Security website, over the phone or in person. It is important that you sign up for Part B when you turn 65 unless you have other credible coverage since you could pay a lifelong monthly penalty if you fail to sign up. Part B does NOT cover routine dental, vision, hearing or foot care.

Part D is your prescription drug benefit. It covers many prescription drug costs and is purchased from private insurance companies. There are often 20 different insurance plans in each state to choose from. You are not automatically signed up for Part D and must sign up yourself. By going to the Part D plan finder (here) you can select a prescription drug insurance plan based on whether they cover the drugs you use, the premium cost and the estimated out-of-pocket costs. You could face a monthly penalty if you do NOT sign up for Part D when you are 65 or when you no longer have approved private prescription drug coverage.

There is a fourth part of Medicare, Part C. This part is the identifier for Medicare Advantage which is a program that allows those who qualify for Medicare to purchase Parts A, B and sometimes D through private insurers. This option is often less expensive than traditional Medicare and offers a predictable healthcare expense but can have higher out-of-pocket costs. This option often covers wellness benefits, vision and other services not provided through original Medicare. When you become eligible for Medicare, you can choose whether you would like original Medicare or Medicare Advantage.

Many people choose Medicare Supplemental (Medigap) insurance to cover some or all of the out-of-pocket costs of original Medicare.

Medicaid is sometimes confused as a part of Medicare. Medicaid is healthcare administered by the states primarily for low-income beneficiaries. Medicare is a federal program for everyone who qualifies by age or disability. Some people are eligible for both programs.

As with any health insurance, Medicare can be complicated depending on your unique circumstances. Medicare’s website, Medicare.Gov, offers more details and can help you as you make decisions about your Medicare. A basic overview can be found here.

Now for my soapbox. Medicare has worked well for a long time, the newest part of Medicare, Part D, has beat all of the initial premium estimates and remains one of the most popular parts of Medicare. Hospital costs went down substantially after Part D was implemented. It is up to us, the users of Medicare, to remain vigilant as Washington proposes changes to Medicare. The addition of choices and competition and the infusion of increased transparency can lower costs. The transition from fee for service healthcare to value-based care is another way to more closely match cost with benefit. There are ways that Medicare can be improved without limiting access. Many of the changes proposed by our government sacrifice access for cost savings.

There are proposals that could (will) have a negative impact on Medicare. For instance:

• Government controlled single payer healthcare – a proposed change that would eliminate private insurance and any free market competition. While this healthcare option historically was not considered to be feasible, it lately has become an often discussed approach and was considered as a real option in the last presidential debates. It would have a huge impact on our freedom to choose.
• The public option – This proposal purports to offer a choice of a government run public health insurance option as an insurance choice. This approach would only cause a downward spiral in access and quality which would end up in the government “rescuing” our healthcare system by instigating the single payer option.
• Raise the Medicare enrollment age – This proposal has some validity but requires more studies to ascertain its impact on retirement planning.
• Proposals to control prices – Using foreign prices, limiting price increases based on inflation, and setting new drug entry prices are all blunt instrument solutions that have proven to be ineffective and limit innovation.
• Executive orders and regulations – The increased use of executive orders and intrusive regulations are simply ways to avoid the checks and balances of government and to govern by fiat. Not the way our democracy should function. 

My point is there has never been a time when our basic Medicare benefits have come under such a sustained attack. It’s up to us to remain vigilant, to speak out, and to combine our voices in the preservation of this basic benefit. In reviewing the parts of Medicare, we begin to understand how important these benefits are to our lives. It’s up to us to make sure they are preserved.

Best, Thair