Learn About Medicare and Medigap

Medicare Part A helps cover:

• Hospital bills
• Hospice
• Some home health care

You automatically qualify for Part A if you've worked the 10 years required to receive Social Security or if you are on the account of someone who qualifies, such as a spouse, or have a qualifying event.

If you already get benefits from Social Security, you'll get Medicare Part A and Part B automatically when you're first eligible and don't need to sign up.

If you aren't yet receiving Social Security benefits, you can sign up for Part A and Part B during the Initial Enrollment Period (IEP), which consists of the three months before you turn 65, the month you turn 65, and the three months after your 65th birthday, so you are fully covered as of your birthday. During the IEP you generally can sign up for Medicare Advantage or Medigap policies without medical underwriting. After the IEP, insurers can medically underwrite applications, depending on the state in which you reside and the plan you are applying for. There are some special election periods (SEPs) that could become available to you if you have other employer coverage, move out of state (or coverage area), or other qualifying event. To learn more about SEPs, visit Medicare’s website - www.medicare.gov.

You can apply for Medicare Part A, even if you have health insurance at work and are considering staying on the job past age 65. Part A may cover some of the costs not covered by your group health plan. You should contact your employer to determine what they require you to do. Some employers will require you to sign up for A and B, and then their coverage will be secondary, and other employer plans will stay primary and advise signing up for part A only. If you are not taking Part B, because you have employer coverage, you will need to prove you had that coverage from 65 until Part B enrollment so that you are not penalized on your Part B premium (1% per month for every month you should have been enrolled) and to receive a SEP. Ask your employer how signing up for Medicare will affect your company health insurance.

When you sign up for Part A, you will be asked if you also want Part B. If you are going to have other health care coverage, it’s important to check with them to determine if you should wait to elect Part B coverage.

Among other things, Medicare Part B covers:

• Most doctors' bills
• X-rays
• Some lab tests
• Medical equipment and medications
• Physical and speech therapy

Part B comes with a premium, which is based on your income and eligibility date.

If you don't sign up for Part B within a certain timeframe after you become eligible, you may have to pay a late enrollment penalty.

Once you have both Parts A and B of Medicare, you then have a number of choices on how to cover the co-insurance amounts that Medicare does not pay. (Medicare is generally considered an 80% insurance and 20% co-insurance coverage.)

If you want more coverage than what you would receive from Medicare Parts A and B, you can instead choose Part C, also known as Medicare Advantage, whereby Medicare pays a fixed fee for your care every month to companies offering Medicare Advantage plans. These companies must follow rules, that is, strict mandates, set by Medicare. Each plan, however, can charge different premiums, out-of-pocket costs, benefits and procedures they cover, and has different rules for how you receive services, including whether you can see a doctor out of network. There's a wide variety of plans, so carefully compare several companies' costs and terms of coverage. Also, you should confirm with your doctor's office to make sure it accepts the plan you are considering. It is also advisable to confirm which hospitals in your area accept the plan and whether they are in or out of network. Depending on the plan (e.g., HMO, PPO, PFFS) you are considering, the provider list changes.

Medicare Part D covers prescription drugs. It is offered to anyone with Medicare coverage and funded by the government. But you must join a plan run by an insurer or other private company approved by Medicare, unless you have other credible prescription drug coverage. It is generally a good idea to compare several plans in your area to see which ones pay for the drugs you need at a cost you can afford.

Even if you don't need extra prescription coverage when you turn 65, you may want to sign up for Part D anyway, in case your prescription drug needs change in the future. Additionally, there is a late enrollment penalty.

There is a yearly out-of-pocket maximum of $2,100 and then no co-pays for covered drugs for the rest of the calendar year. Each plan differs in how coverage works prior to the out-of-pocket max.

Note: Most Medicare Advantage plans include prescription coverage. You’re not permitted to have Medicare Advantage and a stand-alone Part D prescription plan. Enrolling in a Part D prescription plan would end your Medicare Advantage plan and revert you to original Medicare Parts A and B. This risk is especially high during the annual open enrollment period, as you consider your coverage options for the coming year.

Once you have enrolled in Medicare Parts A and B, you might consider Medicare supplement insurance, known as Medigap. Medigap is private insurance that covers some of the holes–or gaps–in Medicare coverage. It’s issued through insurance companies but dictated by Medicare. The premiums are dictated by the insurance companies and approved by your state insurance department. Most state insurance departments produce a list of Medigap insurers and their premiums in that state. This insurance usually covers most to all of the co-payments and doctor's bills, but it does not cover long-term care. Medicare also generally doesn't cover nursing home care, except for stays that are needed post-hospitalization. Medicare Advantage plans could have more flexible rules regarding nursing, home, and respite care. But for traditional Medicare to approve a stay in a nursing home, you generally need to have been in a hospital for a minimum of three days and require skilled nursing care.

The decision between Medicare Advantage and Medigap + Part D is a state (sometimes county) specific decision as to the best choice. The best choice for coverage includes many factors, and the best plan for one person may not be the best choice for their spouse.

Keep in Mind Increasing Costs for Medicare

Make sure to plan for the potential of increasing costs for Medicare coverage, such as rising premiums for Part B and D and surcharges for high-income beneficiaries, as well as your Medigap or Medicare Advantage premiums, and potentially IRMAA (an Income-Related Monthly Adjustment Amount), based on your income from two years prior. Keep in mind, too, at every annual election period you can make changes to your coverage.

For more information on Medicare and Medigap policies, including online tools to help you research costs and plan features, go to www.medicare.gov.