Medicare can be overwhelming, and it is important to learn the Medicare coverage basics. If you are approaching retirement, you may worry about paying for medical expenses once you leave the workforce. The good news is the United States has a health insurance program for individuals 65 and older. The program is called Medicare. Read on to learn more about it.
What Is Medicare?
Medicare is a federal health insurance program primarily designed for individuals aged 65 and older. It also covers certain younger people with qualifying disabilities and those with End-Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS).
Established in 1965, Medicare aims to ensure that seniors and other eligible individuals have access to affordable and comprehensive health care.
Medicare Coverage Basics
Medicare is divided into four parts, each providing different types of coverage:
Part A: Hospital Insurance
- What it covers: Surgeries, lab tests, inpatient hospital care, skilled nursing facility care, hospice care, and some home health care.
- Costs: Most people don’t pay a premium for Part A if they or their spouse have paid Medicare taxes for at least 10 years. They may have to pay deductibles and coinsurance for services.
Part B: Medical Insurance
- What it covers: Doctor visits, outpatient care, preventive services, durable medical equipment, and some home health care.
- Costs: Part B requires a monthly premium, which adjusts based on income. Enrollees will also pay deductibles and coinsurance for services.
Part C: Medicare Advantage
- What it covers: Offered by private companies, Medicare Advantage plans include all Part A and Part B benefits, and often Part D. These plans may also offer additional benefits, such as vision, dental, and wellness programs.
- Costs: Premiums vary by plan, and there may be additional out-of-pocket costs.
Part D: Prescription Drug Coverage
- What it covers: Helps cover the cost of prescription drugs.
- Costs: Enrollees pay a monthly premium, and costs can vary depending on the plan and the drugs covered.
How Old Do You Have to Be for Medicare?
The typical age when people become eligible for Medicare is 65. Individuals can sign up for these benefits during a seven-month initial enrollment period that begins three months before they turn 65. (These seven months include the month of their birthday and end three months after they turn 65.) Keep in mind that you may incur fees if you wait to enroll in Medicare until after your seven-month initial enrollment period.
Some exceptions to the age requirement exist. People under 65 can qualify if they have received Social Security Disability Insurance (SSDI) benefits for 24 months. Individuals of any age with permanent kidney failure requiring dialysis or a kidney transplant can qualify for Medicare. Those diagnosed with ALS are eligible for these benefits regardless of age, and they are enrolled in the program as soon as they begin receiving SSDI benefits.
Costs and Coverage Limitations
Medicare is not entirely free, and there are various costs associated with the different parts. Make sure you understand the premiums, deductibles, copayments, and coinsurance to avoid unexpected expenses. Additionally, some services and items, such as long-term care, most dental care, and eyeglasses, are not covered under Original Medicare (Parts A and B), so you might need additional coverage.
It is especially important to understand that Medicare is very limited in its coverage of long-term care. Long-term care is expensive and continues to increase in cost as baby boomers age. Without some sort of financial assistance, these costs could be financially devastating. In fact, your entire life savings could be quickly depleted within a few years of needing long-term care. This is where Medicaid can help and be the “safety net”.
Medicaid is a joint federal and state program which can assist those with long-term care expenses. While Medicare provides very limited coverage, Medicaid is much more extensive. However, because of its restrictions, qualifying for Medicaid can be extremely difficult. But paying for home care, assisted living, and nursing home without it could be all but impossible. Navigating the complex rules of Medicaid on your own could be a nightmare at best and subject you to penalties at worst. Fortunately, though, our experienced professionals can guide you through the Medicaid maze. Our legal team can advise you throughout the application process, ensuring that you (and your spouse, if applicable) retain the maximum income and total assets allowed by law.
For retirees, understanding Medicare coverage basics is important. If you want to learn how you can engage in Medicaid planning to provide long term care beyond what Medicare would cover, contact Kurre Schneps today to schedule a consultation.
