How Does Medicare Work?

As of 2018, 59.7 million people are enrolled in Medicare. Of those, 64.32% are enrolled in original Medicare. On the other hand, 35.51% are enrolled in Medicare Advantage and other health plans. Of all those with Medicare, 73.87% hold Plan D for prescription drugs.

With all these terms and plans floating around, we want to make it easy for you to pinpoint what you need from Medicare. So let’s tackle a few questions to figure it out. How does Medicare work?

What is Medicare?

Medicare is federal-provided health insurance for those who are 65 years old and above, and for a few other exemptions.

Who Can Get Medicare?

  • Citizens or at least 5-year permanent residents of the US who are 65 or older;
  • Those receiving Social Security Disability Insurance (SSDI), on the 25th month of payment onwards;
  • Those receiving SSDI on the 1st month of payment onwards if you have Amyotrophic Lateral Sclerosis (ALS);
  • Those with End-Stage Renal Diseases (ESRD), also diagnosed as kidney failure;
  • Those receiving benefits under the Railroad Retirement system.

When in doubt, contact both your Social Security and Medicare office to get the specific details about your situation from them.

How Does Medicare Work?

When can you apply for Medicare?

Are you already receiving Social Security benefits? If you are, you will automatically be enrolled in Medicare if you have at least 40 quarter-year Social Security payments. This means you won’t have to apply for it. But what if you’re not? You will need to apply for it as soon as you know you’re eligible.

Open enrollment period is when you can enroll for Medicare anytime. You have the three months before until the three months after your birth month to enroll (a total of 7 months) on the year you  turn 65. Miss open enrollment, and you won’t like the late fees!

If you are eligible through a Medicare exemption and not through age, ask about open enrollment periods for those who receive your diagnosis.

How can you apply for Medicare?

You can easily apply online or over the phone. The trickiest bit is choosing which “Part” to include in your application. Part A is automatically included and does not have a premium. Part B, Medicare Advantage, and Part D are all optional and do require a little more out-of-pocket expenses.

What are some insurance terms you need to remember?

Deductible. A deductible is the amount you should pay on any services covered by your health plan, before your healthcare providers begin coverage. This depends on your healthcare provider and your plan, so go over the details with your agent carefully. Lower premiums sometimes mean higher deductibles, and vice versa.

Co-payment. Co-payment is a specified amount you need to pay to receive certain medical services and supplies, before your insurance provider covers the remainder.

Coinsurance. Coinsurance is the percentage of costs you pay for a service covered by your healthcare provider, if you already met your deductible. If you have not yet met the deductible, you pay the full amount.

What are the “Parts” of Medicare?

When you research Medicare, the first thing you run into are the “Parts” that make up the plan. It can be confusing, so let’s simplify it.

Medicare Part A

Part A is the first part of what is called Original Medicare. Basically, Medicare Part A is hospital insurance.

It includes inpatient care, which means costs incurred while you are admitted into a hospital, a nursing facility, a hospice, and sometimes even while you are receiving care at home. This is provided the care you need is intensive, not simply custodial (care for basic needs). While in the hospital, you will receive a semi-private room, regular meals, regular nursing services, any relevant medications and whatever the hospital automatically provides to its patients.

Part A has a yearly deductible but no premium, co-payment, or coinsurance if you are automatically receiving it because of previous Social Security payments, and if your inpatient treatments don’t last beyond 60 days. After 60 days, call Social Security or Medicare to know your coinsurance amount. You will also need to pay for any services rendered above and beyond what Medicare covers, such as private nursing, personal care items, and so forth.

Medicare Part B

Medicare Part B is the second part of Original Medicare. It’s basically medical insurance.

Part B covers any services you receive from a health professional in the Medicare network; any prescribed health equipment you need for mobility or home use, such as oxygen talks, walkers, and wheelchairs; certain kinds of services that can only be done at your home, like nursing or therapy; and emergency transportation, specifically in an ambulance. These help you cover your bases for any maintenance or emergency treatment you might need.

Additionally, Part B allows you to go through check-ups that give early warning of any kinds of illnesses and health conditions (preventive care). If you are prescribed therapy, a Medicare-certified therapist can also be provided. More than that, Part B can cover mental health treatment, different lab tests and x-rays, prescribed spinal care, certain preventive or maintenance care prescription drugs that are given by a doctor, and so forth.

You usually need to share the cost of Part B, through a premium and by paying part of the bill if you use of any of the included services.

Medicare Part C

Part C is no longer part of Original Medicare. However, to opt for using it, you must already be enrolled in Medicare Parts A and B.

Part C, or Medicare Advantage, is a privately-insured health plan that includes Part A and Part B, and other services provided by the health provider. It can include HMOs (health maintenance organizations), PPOs (preferred provider organizations), and other kinds of private insurance providers.

The advantage is that, for a premium (plus a reduced Part B premium), you gain both Medicare Part A and Part B, additional services, and sometimes even Part D. You also have a different or more varied network of health care providers, depending on your insurance provider.

For typically less payment, you get more coverage. However, the plan will come with its own deductibles, co-payments, and coinsurance, so choose your preference carefully.

Medicare Part D

Part D, like Part C, has only been around since the Medicare Modernization Act of 2003, and took force in 2006. It’s a federally-provided health insurance plan covering prescription plans. While it is not mandatory, it only applies to Medicare-eligible persons who already have prior insurance that covers their medical and hospital care.

Part D Medicare comes in the form of prescription drug lists, of which you can choose one that combines the prescriptions you most need. Depending on your needs, you may even need to get additional coverage for certain other drugs.

As it is not part of the original Medicare plans, Part D comes with its own premiums, deductibles, and co-payments, depending on the drug list combination you choose.

What do Medicare Parts A, B, and D not cover?

Medicare, like any other insurance plan, has limits when it comes to coverage. A general list would include no coverage for dental care or dentures, for vision care (including glasses prescriptions) or hearing care (including any hearing aids), cosmetic plastic surgery, acupuncture and other alternative medical treatments, and any routine care relating to feet.

There is also no coverage for long-term care that goes beyond prescribed hospital stays or nursing treatment. It is best to find out early what your coverage includes, and to disclose right away any conditions you need extra coverage for.

Do you need to enroll in all Parts of Medicare?

You will be automatically enrolled in Medicare if you have been receiving Social Security benefits, when you turn 65. This includes Part A. You may opt out of Part B, but risking a higher premium if you do decide to enroll later. The same goes for Part D–you can opt out, especially if you already have similar coverage. However, should you decide to enroll in Part D later, your premium will also be more expensive.

Another way to cover your bases is to take out a Medigap policy. Unlike a Medicare Advantage Plan, it does not cover anything your Original Medicare already covers. Rather, it covers medicines and services not in Original Medicare. Medigap is provided by private insurers, but the policy has to be federally approved.

You can also have additional health insurance plans even while you are receiving Medicare. If you are only opting for Part A, for example, you can take out a policy with a private health insurer for any extra coverage.

Even before needing Medicare, it is best to review if you will be needing Medicare Parts A, B, and D, Medigap, a privately-insured equivalent, or a Medicare Advantage Plan (Part C). This way, you can begin to set up the insurance you need before you even need to shift to it.

What network do you get with Medicare?

Any hospital or doctor who accepts your Medicare coverage can treat you. Certain doctors will have already accepted a Medicare assignment, so their rates tend  to be lower. You can always ask your health provider for the list of doctors in your preferred hospital who accept Medicare.

Make the Best Medicare Decision for You

There are quite a number of options you have when it comes to Medicare–you don’t need to just go with the basics. Review the plans carefully, and choose which works best for you, your lifestyle, and your future plans.

James Donaldson

I like to blog about insurance, health and the great outdoors. Memphis born and raised.