Original Medicare basics
Starting the Medicare process can be overwhelming. To help you understand what to expect during the Medicare decision-making process, let’s start with the basics.
Medicare is a social insurance program administered by the Federal Government. Mostly offered to those 65 years of age and older, Medicare has over 55 million beneficiaries across the nation. At age 65, many Americans choose to retire as they finally become eligible for Social Security and Medicare benefits, giving them the freedom to leave their employer-sponsored health plan.
What it covers
Original Medicare (Part A and Part B) provides eligible individuals healthcare coverage and access to healthcare providers at a cost. Beneficiaries can visit any hospital in the United States that accepts Medicare, and Medicare will cover its portion of the bill for any Medicare-covered service and the beneficiary will be in charge of the rest (unless they have a Medigap plan that covers the extra costs).
Part A and Part B cover most, but not all, health problems seniors face, including hospital stays and check-ups. Part A covers inpatient care, which is typically reserved for serious health conditions and trauma. Part B covers outpatient care, which is typically temporary hospital care (like emergency care) that is not on doctor’s orders. Understanding the difference between inpatient and outpatient hospital stays can help you understand the costs you may incur with Original Medicare.
A commonly-overlooked area of coverage for many beginning Medicare for the first time is dental, vision, or hearing insurance. Medicare does not cover the basic services such as annual check-ups, so it's worth considering an add-on plan for this should you core policy not provide coverage.
Part A: Hospital insurance
Most people are automatically eligible for Medicare Part A (hospital insurance) when they turn 65 if they’re already collecting retirement benefits from the Social Security Administration or the Railroad Retirement Board. When you apply to Medicare, you are automatically enrolled in the Part A plan. Part A covers about 80 percent of your inpatient costs.
Medicare Part A covers
- Inpatient hospital care, including tests, services, and some transfusions
- Stays in hospitals and skilled nursing facilities up to benefit limits
- Some home health care services, including rehabilitation
- Hospice care
- Necessary medical supplies and drugs administered during stay
Medicare Part A does NOT cover
- Doctors’ fees for care received during hospital stay
- Hospital fees deemed medically unnecessary
- Prescription medication and supplies
Part B: Medical insurance
Medicare Part B covers outpatient care, including doctor visits, routine and emergency medical services, and some forms of preventative care. Plan B is optional and comes with an additional premium. You may want to opt out of Part B or delay coverage if you still have insurance through your employer, spouse, union, etc. Note: if you are do not sign up for Part B when you are first eligible and also do not maintain some other coverage (example: an employer-sponsored plan) you may pay a higher premium once enrolled.
Medicare Part B covers
- Outpatient medical services and mental health care
- Routine doctor visits
- Clinical lab tests and some diagnostic tests, including X-rays, MRIs, and CT scans
- Preventive care and services (like flu shots and mammograms)
- Home health visits and durable medical equipment for home
- Equipment or tests administered during outpatient services
- Medication administered during outpatient visits
Medicare Part B does NOT cover
- Self-administered prescription medication and supplies. In a hospital outpatient department, drug coverage is generally limited to drugs that are given by infusion or injection.
Cost of Part A and B
Original Medicare does not cover the full cost of most treatments and beneficiaries are required to pay premiums and deductibles. These costs change each year and are published annually by the Centers for Medicare & Medicaid Services.
The costs below are only for procedures and conditions that Medicare covers, or procedures that are deemed “medically necessary.” Medicare defines healthcare services and supplies as medically necessary if they are required to diagnose or treat an illness or injury, condition, disease or its symptoms or if it meets accepted medical standards. So while routine dental care isn’t covered under the medically necessary standard, a tooth extraction for radiation treatment would be.
Should you ever wish to file an appeal regarding a specific service claim, Medicare has a specific process to follow.
Here’s a look at the 2019 costs for Original Medicare:
|Part A||Part B|
|Co-insurance and Other costs (Costs you incur)||$352/day for days 61-90 in hospital
$704/day for lifetime reserve days
|20% of the service after you pay the deductible|
*Most people (about 99 percent) over 65 do not pay a monthly premium for Medicare Part A coverage. This is because they or their spouse have been paying Medicare taxes for at least 10 years while working. If you do not qualify for premium-free Medicare Part A, you may have to pay up to $458 each month.
**If you make over $85,000 individual or $170,000 joint, you will be susceptible to income-related monthly adjustment amounts for Medicare Part B, ranging from $54.10 to $325 per month, in addition to the $135.50 premium.
Enrolling in Medicare
There are very specific times in which you can enroll in Medicare. Some people are enrolled automatically and others will need to apply. The first time you can enroll in Original Medicare coverage is during your Initial Enrollment Period.
Initial Enrollment Period
Initial Enrollment Period (IEP) is your unique time to enroll in Medicare parts A, B, and D. Enrollment begins three months before your 65th birthday and ends three months after—for a total of seven months including your birth month. Even if you don’t plan to begin retirement at age 65, you can still sign up for Medicare parts A and B during IEP and elect more coverage after retirement.
Delaying Part B
If you plan to retire later than age 65, you can delay your Part B coverage. You may want to delay Part B coverage if you’re paying for an employer-sponsored insurance plan and want to avoid the Part B premium. The best way to delay this coverage is by calling your local social security office prior to your 65th birthday.
Medicare and the Health Insurance Marketplace
Medicare and the Marketplace are separate, and the Marketplace doesn’t offer Medicare plans. Medicare offers federally sponsored health care, while the Marketplace offers coverage through private insurers.
Am I qualified for Medicare?
Most people are typically eligible for Medicare when they turn 65 if they’re a US citizen or have been a legal resident for at least five years.
You may quality for Medicare before 65 if:
- You receive Social Security Administration or Railroad Retirement Board disability benefits. If you have been receiving these benefits for 24 months in a row, you will be automatically enrolled in Medicare during your 25th month.
- You have ALS or Lou Gehrig’s disease.
- You have end-stage renal disease (ERSD). You will not be enrolled automatically and will need to apply.
How do I enroll in Medicare?
To enroll in Medicare when you are eligible, you can do it online through SocialSecurity.gov or in-person at your local Social Security office. If you are enrolled automatically (like most people) through RRB or Social Security, you do not need to worry. If you are concerned about your eligibility, we recommend working directly with your local social security office.
If you missed your initial enrollment period, you can enroll during the General Election Period, which runs from January 1 to March 31 each year. You may be faced with late enrollment penalties at this time.
Medicare fraud can quickly develop into a major problem. If you’re vigilant, it’s relatively easy to prevent. These simple steps go a long way toward Medicare fraud prevention.
Getting started with your Medicare coverage can feel overwhelming—but United Medicare Advisors is here to help. We have plenty of resources to help get you up to speed on your options.