Medicare is a complex national health insurance program that has many parts and plans. Most people become Medicare-eligible at age 65, but you can qualify for Medicare before 65 if you have specific disabilities. Before you become Medicare eligible, you will want to research the different Medicare parts and plans to get a complete understanding of your options and how you will be covered. Although all of Medicare is important, keep reading to learn more about six important facts about Medicare that you should know.
Medicare is not free
A common misconception about Medicare is that Medicare is free because you paid FICA taxes while you worked. However, this is not the case. The FICA taxes fund your Part A premium, and when you work at least 40 quarters in the U.S., you qualify for premium-free Part A. You are still responsible for cost-sharing with Part A, including a deductible and daily copay.
You also must pay the Part B premium when you are enrolled in Part B. In 2022, the base premium will be $170.10. There is a Part B annual deductible that you must satisfy, and once you have met that deductible, you will pay 20% coinsurance for all approved Part B services. It is essential to know there is no cap or limit to your expenses, so this could be financially devastating if you find yourself going to the hospital and doctor frequently.
Medicare does have penalties that you will want to avoid if possible. You will be penalized when you have to pay a Part A premium and fail to enroll in Part A, and do not have creditable coverage. The Part A late enrollment penalty is a 10% premium penalty for twice the number of years you went without coverage and did not enroll.
The Part B premium is 10% of the national base premium for every 12 months without Part B coverage or creditable coverage. This penalty is a lifetime penalty, and you would pay it monthly in addition to the Part B premium.
There is also a Part D penalty. You will have a Part D penalty if you do not have creditable coverage and fail to enroll in a Part D plan or an Advantage plan with prescription coverage when you were first eligible. The penalty is 1% of the national average premium for every month you go without coverage. This penalty is also a lifetime penalty, and you will pay it in addition to your plan’s premium.
It is essential to know whether or not your coverage is creditable and if you can delay Medicare coverage with no penalty.
Medigap Open Enrollment
Everyone has a one-time Medigap Open Enrollment window to apply for a Medigap plan with no health questions asked. This window is a 6-month window from your Part B effective date. You may need to answer health questions when you apply for a plan whenever you are outside of that window. If you start with an Advantage plan and later want to change to a Medigap plan, you could be denied because of your health history. There are some situations and states that have exceptions, so be sure to check out the rules in your state before you choose a plan.
Medicare does not cover retail drugs
Medicare Part A and Part B do not provide coverage for prescription drugs that you would get from a pharmacy. Few drugs can be covered by Medicare, such as those administered through an infusion, IV, or durable medical equipment. However, any drugs that you administer yourself are likely to be covered by a Part D plan. Part D plans are separate from your Original Medicare, and you would purchase one from a private insurance company.
Medically necessary services
Medicare covers medically necessary services necessary to treat, diagnose, or monitor a health condition. Preventive services are also covered, but the frequency of the services will vary with each service and if you are high-risk for a certain condition.
Routine services like routine bloodwork, dental, and vision are generally not covered by Medicare. You may consider getting a standalone dental and vision plan to cover routine services.
Medicare has Part B excess charges that you will have to pay if a doctor does not accept Medicare Assignment. Medicare Assignment is when a provider accepts what Medicare will pay them for the service, also known as Medicare-approved amount. If a provider does not accept Medicare Assignment, they can charge you 15% above what Medicare will pay them for a particular service.
Some Medigap plans will cover the Part B excess charges for you, such as Plan G. However, Plan N does not cover these charges. If you have Plan N and want to avoid the excess charges of 15%, you will want to ask each provider if they accept Medicare Assignment. If they do, you would not worry about the 15%, but if they don’t, you will need to pay the 15% excess charge.
These six critical facts are just the beginning of understanding Medicare. It can take time to understand the ins and outs of Medicare, so you will want to start your research early. You may also consider working with a broker as they can help you with a wide range of plans and make sure you do not make any mistakes.