Your Essential Guide to Navigating Healthcare After 65
Administered by the Centers for Medicare and Medicaid Services (CMS), a branch of the U.S. Department of Health and Human Services, Medicare is a national health insurance program. It caters to individuals over 65, certain individuals with disabilities, and those suffering from end-stage renal disease (a chronic kidney disease requiring continuous treatment such as dialysis or a transplant).
There are two primary pathways through which beneficiaries can access their Medicare coverage: Original Medicare and Medicare Advantage. Despite covering most of the same services, these two plans operate slightly differently.
Original Medicare: Core Features
Also referred to as Traditional Medicare, Original Medicare is a fee-for-service health plan that encompasses Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance). If prescription drug coverage is required, beneficiaries can enroll in a separate Prescription Drug Plan (Medicare Part D). Important characteristics include:
Providers: Original Medicare grants the freedom to use any doctor or hospital that accepts Medicare across the United States.
Costs: Generally, beneficiaries pay a deductible, followed by 20% of the cost of care.
Supplemental Coverage: To cover some or all out-of-pocket costs in Original Medicare, beneficiaries can purchase an auxiliary policy known as a Medigap policy.
Prescription Drug Coverage: Original Medicare does not automatically include prescription drug coverage; beneficiaries need to purchase a separate Part D plan.
Medicare Advantage: An Integrated Approach Provided by private insurance companies that Medicare approves, Medicare Advantage Plans or Medicare Part C include all services covered under Part A and Part B. Most plans also integrate prescription drug coverage and may offer additional benefits not covered by Original Medicare, like vision, hearing, dental, and other health programs. Important characteristics include:
Providers: In most cases, beneficiaries need to utilize doctors within the plan's network. Referrals may be necessary for specialist appointments.
Costs: Out-of-pocket costs differ among plans, and some may offer lower out-of-pocket costs for certain services. Many plans also impose an annual limit on out-of-pocket expenses.
Supplemental Coverage: Beneficiaries cannot purchase a Medigap policy to cover out-of-pocket costs in a Medicare Advantage Plan.
Prescription Drug Coverage: Most Medicare Advantage Plans integrate prescription drug coverage.
The choice between Original Medicare and Medicare Advantage primarily hinges on individual healthcare needs and preferences. It's prudent to assess your options annually during Medicare's open enrollment period. As of September 2021, this period typically runs from October 15 to December 7.
Medicare Eligibility Eligibility for Medicare is contingent on age and disability status:
Age-based eligibility necessitates that you:
Are 65 years old or older
Are a U.S. citizen or a permanent resident having lived in the United States for a minimum of five years
Have contributed to Medicare taxes for at least 10 years
Meeting these criteria qualifies you for premium-free Part A coverage, and you can enroll in Part B by paying a monthly premium.
Disability-based eligibility for individuals under 65 years requires that you:
Have a disability that aligns with the Social Security's definition of disability
Have been receiving Social Security disability benefits for at least two years
Have lived in the United States for a minimum of five years
Fulfilling these conditions qualifies you for premium-free Part A coverage, and you can enroll in Part B by paying a monthly premium.
Eligibility based on end-stage renal disease stipulates that you:
Are diagnosed with end-stage renal disease
Have been receiving dialysis or undergone a kidney transplant
Have lived in the United States for a minimum of five years
Complying with these requisites qualifies you for premium-free Part A coverage, and you can enroll in Part B by paying a monthly premium.
Medicare Costs Medicare's cost varies according to your income and chosen coverage type. Here's a brief breakdown for 2023:
Part A: Most individuals don't pay a premium for Part A, which is also known as "premium-free Part A." There is a 20% coinsurance fee after the deductible, which is typically $0.
Part B: The premium is set at $164.90 per month (or higher, depending on your income), and there's a $226 deductible. After reaching the deductible, it's a 20% coinsurance fee.
Part C (Medicare Advantage): Costs differ depending on the plan you select, including premiums, deductibles, and coinsurance.
Part D: Costs depend on the selected plan.
In addition to monthly premiums, your costs may include copays, coinsurance, and deductibles for services covered by Medicare. If you're a high-income earner, you may need to pay a higher premium for Part B.