Medicare Primer 101
Jason Alderman | 12/23/2014, 6:59 p.m.
If your 65th birthday is around the corner or you're anxious about the Medicare open enrollment period (closing Dec. 7), it's a good time to start focusing on your options.
Healthcare choice is becoming a bigger factor in the lives of pre-retirees as the Patient Protection and Affordable Care Act (ACA) ‐ better known as Obamacare ‐ brings significant change to employer-sponsored and individually purchased health plans. Though a separate federal health insurance system with no connection to Obamacare or its online marketplaces, Medicare is going through its own evolution in terms of plan offerings and customer access.
Here's a basic primer for future Medicare enrollees:
What is Medicare? Medicare is a government-provided health and hospitalization insurance program for people 65 and older and for some people under age 65 based on disability or particular forms of illness.
What does it cost? Though you've likely paid taxes into the Medicare system your entire career, Medicare isn't a completely free program; you'll pay premiums deducted from your Social Security checks for some portions of your benefits. There may be copays and deductibles for certain services. If you have health issues already, it's a good idea to investigate coverage based on the services you're likely to need over time.
When do I get to join? You can apply for Medicare through your nearest Social Security office up to three months before your 65th birthday. If you wait longer than three months after your 65th birthday to apply, you may face a late enrollment penalty. If you are already drawing Social Security benefits at age 65, you'll be automatically enrolled in Medicare.
What does Medicare coverage look like? Keep in mind that you can get many current answers to Medicare questions online or in person at your nearest Social Security office. But as of late 2014, here's an overview of current Medicare plans:
• Parts A (Hospital) and B (Outpatient). Part A covers inpatient hospital care and Part B covers outpatient medical care and procedures. You'll hear Parts A and B referred to as "Original Medicare" or "Traditional Medicare" because if you choose to take this option, you'll sign up for them as a pair. You'll get to go to any doctor, hospital or facility that's enrolled in Medicare and accepting new Medicare patients. You'll end up paying a premium for Part B which can change from year-to-year while Part A is usually free for most people.
• Part C (Medicare Advantage). Call this one-stop shopping for your hospital, outpatient (Part A and B) and usually your prescription coverage (see Part D, below). Medicare Advantage policies are sold by private insurers ‐ Medicare pays their share and you pay your premium. They may include differing assortments of services ‐ vision, prescription drug, dental or hearing. But keep in mind different Medicare Advantage plans have different rules for services and can charge different out-of-network costs.
• Part D (Prescription drug coverage). Part D added prescription drug coverage to "Original" Medicare, but as mentioned, may be folded into Medicare Advantage coverage if you elect to take it.