As you age, you become increasingly aware of just how important your health is. You realize that, unlike when you were 20, you’re no longer invincible.
If you are approaching retirement, or already there, you’ve undoubtedly thought about how you will cover the cost of medical expenses without insurance from your employer.
Enter Medicare, which provides health insurance for those over 65.
However, even if you are very familiar with Medicare, there are times when it can be hard to determine what things Medicare covers, especially since there are four parts to Medicare, with each part covering something different.
In this guide, we’ll help you get clarity on the question, “What does medicare cover?”
What is Medicare?
Medicare is the federal health insurance program for people over 65 and disabled individuals. It provides medical care to more than 50 million Americans who are not covered by private or other government-sponsored programs.
The cost of this coverage has been rising steadily since its inception in 1965. In fact, it’s expected that costs will continue to rise at a rate faster than inflation until about 2040 when they’ll begin to level off.
This means that if you’re currently under age 65, your premiums may be going up soon. If you have already reached retirement age, however, there’s no need to worry because Medicare won’t increase your premium rates unless you live longer than 10 years after turning 65.
Medicare Vs. Medicaid
Unlike Medicare, which is run solely by the Federal Government, Medicaid is run jointly by the Federal and State governments. Every state sets qualification standards, as well as decides what gets covered. The purpose of the program is to make health care available to low-income individuals in the United States.
There are some services that must be included in every Medicaid program:
- Inpatient and outpatient hospital services
- Doctor services
- Family planning services and supplies
- Rural health clinic support
- Home health care for eligible individuals
- Prenatal care
- Vaccines for children
- Nursing facility services for individuals over age 21
- Lab and x-ray services
- Pediatric and family practitioner services
- Nurse-midwife services
- Federally qualified health-center (FQHC) services and ambulatory services
- Early and periodic screening, diagnostic, and treatment for children under age 21
To determine whether you qualify for Medicaid, you’ll need to research your state’s guidelines.
How Do You Qualify for Medicare?
To be covered by Medicare, you must:
- Be at least 65 years old
- Have worked long enough to have paid Social Security taxes during your working life
- Not currently receive any other type of public or private health insurance that covers more than just hospital stays
If you’re under 65 but still qualify because of disability, you may also be able to get Medicare if you meet certain requirements.
After a two-year waiting period, people who receive Social Security disability insurance usually become eligible for Medicare, although there are certain conditions that qualify a person automatically, such as end-stage renal failure or ALS.
How Much Does Medicare Cost?
If you or your spouse paid into Medicare for at least 10 years, you are eligible for Medicare Part A without paying any premiums. Otherwise, you must pay monthly premiums for Part A of up to $471 per month. These premiums are required for coverage of services such as doctor visits and prescriptions.
How Does a Person Enroll in Medicare?
When you turn 65, if you’re already receiving social security benefits, you’ll be automatically enrolled in Medicare Part A and B, which covers hospital costs and doctor visits. You must enroll yourself if you want Medicare Part D prescription drug coverage.
If you don’t get Social Security benefits, you can sign up for Medicare through the Social Security website. It is recommended that you do it in the seven-month window around your 65th birthday to avoid permanent penalties.
You should apply for both Parts A & B even though only one part requires payment. This way, you’ll always have some form of protection against catastrophic illness.
Once you’ve applied for Medicare, you’ll receive an enrollment card from SSA with instructions on how to use it. The card allows you to choose between different plans offered by private insurers called Medicare Advantage Plans.
What is Covered by Medicare Part A?
Medicare Part A is a program that pays for your medical care while you are hospitalized, in a nursing home, or hospice. It also helps pay for some home health care, as well as things like wheelchairs and blood transfusions.
The cost for Part A depends on several things. If, through your job, you paid FICA taxes for ten years, you won’t pay any premium. If you don’t meet this criteria, you still may not have to pay a premium depending on your income.
With Part A, you will pay a deductible that you must meet each year before Medicare pays its share. You’ll also pay coinsurance, which is the portion of the cost you must pay after meeting your deductible.
For example, you don’t don’t have to pay copays for the first 60 days of hospital care, but then will have to pay somewhere around $371 per day for days 61 – 90, and even more after 90 days.
What does Medicare Part B cover?
Medicare Part B pays most doctors’ bills and outpatient services. It covers a significant number of tests and services, including but not limited to:
- Cancer screening
- Emergency services
- Influenza and hepatitis vaccinations
- And more
The monthly premium for Medicare Part B starts at $148.50 per month. Higher premiums are paid by single people with adjusted gross incomes over $88,000 and married couples with AGIs over $176,000. There is a $203 deductible for Part B, after which you will pay around 20% of the Medicare-approved amount for any medical services or supplies you receive.
What is the Medicare Part B penalty?
The Medicare Part B penalty applies when someone doesn’t enroll in Medicare Part B within 30 days of their 65th birthday. You’ll pay a penalty of 10% of the premium for every 12 months after your 65th birthday, and you’ll end up paying this penalty for the rest of your life (unless you decide to drop Part B).
However, if you or your spouse had health insurance when you first became eligible for Medicare, you don’t have to pay the penalty. You have an eight month window after your health insurance coverage ends to sign up for Part B with no penalty.
What is Medicare Advantage?
Medicare Advantage (or Medicare Part C), is for people who want an alternative insurance plan rather than original Medicare. These plans are often purchased through private companies and include the benefits of Part A and B, plus additional benefits such as vision and dental coverage. They’re often less expensive than traditional Medicare because insurers negotiate lower rates with doctors and hospitals. However, cheaper isn’t always better. Some plans have high deductibles and copays while others charge extra fees for certain tests and procedures that would normally be covered by original Medicare.
What is Medicare Part D?
Medicare Part D helps individuals cover the costs of prescription drugs. The program was created under President George W Bush’s administration and it allows enrollees to purchase supplemental drug coverage from private insurance carriers called “Part D sponsors.”
Enrollees can choose between two types of plans: stand alone prescription drug plans and pharmacy benefit managers that manage multiple prescriptions. Standalone plans typically offer low out-of-pocket expenses compared to PBMs. But they usually require higher premiums and co-pays.
The premium for Part D coverage averages around $33/month, although it can be higher depending on your income. And like Part B, if you don’t sign up when you first become eligible, you will most likely end up paying a penalty on top of your premium.
What is Medigap?
Medigap Supplement Insurance policies provide supplemental medical protection against high deductibles and other uncovered charges. Medigap doesn’t cover prescription drugs, dental, hearing aids, vision, long-term or private nursing care. They’re sold privately by insurance agents who work directly with Medicare enrollees.
In order to purchase a Medigap plan, you must be enrolled in Medicare Part A and Part B. If you have Medicare Advantage, you can’t buy a Medigap plan. You much choose one or the other.
What Isn’t Covered By Medicare?
There are some things not covered under Medicare, most notably, long-term care (or custodial care). Medicaid does cover long-term care but this is only available to those with very low income and little to no savings.
Other items that are commonly not covered include:
- Dental care
- Hearing aids
- Overseas medical care
If you want these items covered, you might consider buying supplemental policies from Medigap providers.
As Medicare.gov notes, generally speaking, Medicare coverage depends on three primary factors:
- Federal and state laws
- National coverage decisions made by Medicare about whether something is covered
- Local coverage decisions made by companies in each state that process claims for Medicare
How to Find Out if Medicare Covers a Need
There are two primary ways you can find out if Medicare covers something you need. First, you can ask your doctor or other health provider if the service or supply you need is covered. Even if it is normally covered, your doctor may tell you that they don’t think it will be covered in your situation. If so, you will have to read and sign a notice that tells you that you may have to buy the service yourself.
The other way is to visit the coverage section of the Medicare website and see whether something is covered.