What is Medicare: 5 Things You Need to Know About This Coverage Option
The US Centers for Medicare & Medicaid Services (CMS), report that there are 58 million people enrolled in the Medicare system today. If you are close to retirement yourself, you may be asking yourself “what is Medicare really all about?” Read further to find out about the five most important things you’ll need to know about this coverage.
1. So, What is Medicare?
Medicare is a health insurance program sponsored by the federal government to provide health care to US seniors who are 65 years old and older. Medicare is funded through many sources such as the federal budget and deductions from US worker paychecks.
Medicare became law in 1965 in the US when Congress passed Title XVIII of the Social Security Act. Medicare was created because many seniors at that time, couldn’t qualify for health insurance, regardless of their income or medical history.
2. How Does the Medicare System Work
Medicare provides seniors with access to hospitals, doctors, and other healthcare services. Medicare is called a “fee-for-service plan where the patient pays part of the cost for each medical service and the Medicare system pays the rest.
3. What Does Medicare Cover
Medicare has different plans for different health benefits. Each plan is identified with a different letter. The two main Medicare insurance plans are Medicare Parts A and B.
Medicare Parts A and B are the traditional plans found in the original 1965 Medicare program. Medicare Part A pays for inpatient costs such as hospital stay expenses and home health care services. Medicare Part B covers outpatient costs such as diagnostic testing and doctor appointments.
Medicare Part A members pay no monthly premiums. Medicare Part B members pay a $134 monthly premium. Both of these Medicare parts are still available to eligible enrollees today.
4. What are Medicare Supplemental or “Gap” Plans
Another form of Medicare coverage are Medicare Supplemental plans. Medicare Supplemental plans (also called “Gap” or Medigap plans) can help provide Medicare insurance coverage beyond what’s offered in Original Medicare Parts A and B.
Supplemental Plans come in ten different formats. Federal and state laws direct how Supplemental plans should be structured so that the same fundamental Original Medicare benefits are found in each supplemental plan.
Private insurance companies offer supplemental plan policies. They contract with CMS to provide these alternative “Gap” plans along with Original Medicare coverage policies.
For example, retirees applying for Medicare Richmond can contact Boomer Insurance Group. Boomer Insurance Group is a specialized independent insurance agency that educates clients on the details surrounding Medicare Plans. They can discuss plan options and answer questions about the different choices that are available.
It’s wise to compare Medicare supplemental plans to be sure you are picking added coverage that’s right for you. Here are some high-level outlines of the ten Supplemental plans you can consider for your retirement years.
Medicare Supplemental Plans A and B
Supplemental Plans A and B are an extension to Original Medicare Parts A and B. Medicare Supplement Plan A will cover an extra 20 percent of outpatient costs that aren’t covered by Original Medicare Plan B. Medicare Supplement Plan B can cover any remaining hospital stay fees beyond what Original Medicare Plan A can’t pay for.
Medicare Supplemental Plan C
Medicare Supplemental Plan C, not only includes coverage found in both Original Medicare parts A and B but also pays for additional medical fees like vision, hearing, dental or wellness program expenses for a higher cost.
In 2020, Medicare Supplemental Plan C will no longer be available to new Medicare enrollees. People who were members of the Medicare system before 2020 will still be able to sign up for Medicare Supplement Plan C coverage. New Medicare members after this date, will not be able to join this plan.
Medicare Supplemental Plan D
Medicare Supplemental Plan D is an added benefit that covers prescription drug expenses. Private insurance companies coordinate Medicare Plan D coverage. Enrollees who are members of Original Medicare and live in a Medicare Plan D service area can sign up for this coverage.
Medicare Supplemental Plan F
Medicare Supplemental Plan F can cover hospice care and nursing facility costs if caring for seniors at home isn’t an option. Medicare Part F can also help cover up to 80 percent of any emergency medical expenses you might run up while you travel out of the country.
Medicare Supplemental Plans K, L, and M
Medicare Supplemental Plans K, L, and M are related in that they can only cover some of the expenses beyond what Original Medicare can pay for. Medicare Plan K can pay for 50 percent of hospice care or nursing facility fees. Medicare Plan L will pay up to 70 percent of these same expenses. Medicare Plan M can cover 20 percent of these same expenses.
Medicare Supplemental Plan G
Medicare Supplemental Plan G offers complete coverage for hospitalization expenses for an additional year after Original Medicare benefits are over. Nursing facility fees, blood transfusions, and hospice co-payments are also 100 percent covered with Medicare Plan G.
Medicare Supplemental Plan N
Medicare Supplemental Plan N offers lower monthly payments than these other Supplement insurance plans. Medicare Plan N can pay for costs such as ambulance transport, imaging, lab-work or other medical services.
5. When Can You Apply for Medicare Coverage
Medicare coverage begins when you turn 65 years old. Your Medicare insurance will start instantly the day after you sign up. You can also apply for Medicare either three months before or three months after you turn 65.
Next Steps
No matter how far away you are from retiring, it’s time to consider what your retirement health plan will look like. Start with this Medicare comparison chart that highlights the benefits of supplemental plans A-N.
Still have questions about what is Medicare? Maybe you’re ready to talk to an insurance agent to learn more about the types of supplemental Medicare insurance that’s available.
It’s up to you to learn all you can. Prepare now so that you can get the most out of this benefit you worked your entire career to enjoy.