If you've just celebrated your 65th birthday or it is coming up in the next year, your mailbox is probably full of postcards, flyers and letters about your health care needs as you become eligible for Medicare.
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It's important to understand the ins and outs of Medicare before you sign up to avoid unexpected costs. Even if you've been on Medicare for years, you may want to reevaluate your options annually to verify that your plan is still the best choice for you. The annual open enrollment period, during which you can switch Medicare plans, runs from Oct. 15 through Dec. 7.
"It is never a good idea to be complacent,” says Diane J. Omdahl, founder of 65 Incorporated, a Wisconsin-based company that helps people choose Medicare coverage.
To help you better grasp those ins and outs, we outline what you need to know in this guide.
What Is Medicare?
Simply, Medicare is a federal health insurance program for those age 65 and older. Medicare also covers those under the age 65 with disabilities, as well as people with end-stage renal disease or amyotrophic lateral sclerosis (also known as Lou Gehrig's disease).
Medicare Eligibility and Enrollment
No matter your retirement age, you become eligible for Medicare when you turn 65. You can sign up three months before your birthday, during your birth month or throughout the three months after. This period is known as the initial enrollment period. You may face a long-term penalty if you don't sign up during these seven months, even if you're still working.
Individuals receiving benefits four months before their 65th birthday from Social Security or the Railroad Retirement Board before they become eligible for Medicare will be automatically enrolled.
Medicare general enrollment
For those who aren't enrolling for the first time, the general enrollment period for Medicare is Jan. 1 through March 31 every year. According to Medicare.gov, your insurance coverage begins the month after you enroll, and you can face penalties for not enrolling during this period (unless you qualify for special enrollment).
Medicare special enrollment
After your initial enrollment, you may qualify for a special enrollment period. Some example situations include:
- You lost Medicare coverage after Jan. 1.
- You couldn't enroll because of a natural disaster or an emergency happening after Jan. 1.
- You're volunteering and serving in another country.
- You were recently incarcerated and couldn't sign up during your incarceration.
Depending on your situation, you may have up to six months to enroll in Medicare. If you don't sign up within that window, you'll have to wait for the general enrollment period and possibly pay a late enrollment penalty.
Medicare Plans and Coverage
As you may know by now, there is a virtual alphabet soup of Medicare plans. Here are the parts that you ought to know about:
- Part A covers hospital care, skilled nursing, hospice and some home health care. If you or your spouse has at least 10 years of Social Security work history, Medicare Part A will probably not cost you anything. Your premium amount is determined by your number of Social Security work credits. You can find this information on the government's Social Security website. Credits are based on your total wages, including self-employment income, for the year. The earnings it takes to gain credit may change each year. In 2024, you could earn one Social Security or Medicare credit for every $1,730 earned in covered wages. You must earn $6,920 to get the maximum four credits for the year.
- Part B covers doctor visits, preventive care, outpatient care and hospitals, and some home health care as well. In 2024, the standard monthly premium for Medicare Part B enrollees is $174.70. However, premiums are higher for individuals earning more than $103,000 per year. Many people find they need a Medigap plan in addition to parts A and B to cover all the services and medications they need or may need in the coming year.
- Part D covers prescription drugs. Monthly premiums in 2024 are $34.50.
Medicare Advantage vs. Medicare
In addition to Medicare Parts A, B and D, there's an additional letter in the Medicare alphabet soup: Medicare Part C, also known as Medicare Advantage.
What is Medicare Advantage?
Medicare Advantage comprises health plans offered by private companies that contract with Medicare to provide you with all your Part A and Part B benefits. Many plans also offer Part D drug coverage. Premiums range by region and plan. The Centers for Medicare & Medicaid Services and the National Council on Aging say that average monthly plan premiums for Medicare Advantage enrollees will be about $18.59 per month in 2024. However, Medicare Advantage members must still pay their Part B premiums ($174.70 per month in 2024).
What does Medicare Advantage cover?
Medicare Advantage provides the same coverage as original Medicare (Part A and Part B), as well as some dental, vision and hearing coverage. Some Medicare Advantage plans may also include wellness coverage, such as gym memberships, according to Medicare.gov, and some over-the-counter drug coverage not provided in Part D. Plans can vary, though, so you'll need to read the fine print to make sure your needs are covered.
What does Medicare Advantage not cover?
Plans vary, but generally, Medicare Advantage does not cover medical care needed outside of the U.S. You may also need approval from your plan to get coverage for some services, such as those the plan deems not medically necessary, so make sure to check before making appointments.
Who should get Medicare Advantage vs. Medicare?
Choosing traditional Medicare (Parts A, B and D) or a Medicare Advantage plan is a big decision, says Meredith Ramsey, an independent insurance agent in New Orleans.
"Medicare Advantage plans can have low or no monthly premiums, but they usually require members to get their care only from network doctors and hospitals," she points out, adding, "Both options may have deductibles, copays and coinsurance, where you pay a percentage of the bill."
In 2024, Medicare Advantage plans have a maximum out-of-pocket limit of $8,850 for in-network services, according to NCOA. On the other hand, original Medicare has no cap on the amount you may spend on medical costs in a given year.
But with Medicare Advantage, you’ll have access to fewer doctors and hospitals. For those who absolutely can't afford to purchase a Medigap supplement to help cover the costs of original Medicare (more on that below) and who don't mind adhering to a limited network of providers, a Medicare Advantage plan will likely be the best option.
How to sign up for Medicare Advantage
You can sign up for a Medicare Advantage plan in several ways:
- Through Medicare.gov.
- By calling 1-800-MEDICARE.
- By paper application to Medicare.
- Through a specific private insurer's website.
- With the help of an insurance agent.
Medicare Supplement (Medigap) Plans F and G
If you're opting for original Medicare but may need additional financial assistance to pay for out-of-pocket coverage, then you might consider a Medicare supplement plan.
What is a Medicare supplement plan?
A Medicare supplement plan, also known as Medigap, is for people who need a plan in addition to Parts A and B (original Medicare) to cover all the services and medications they require or may need in the coming year.
Depending on where you live and when you’re eligible for Medicare, there are multiple types of Medigap policies, such as Medicare Part F and Part G, offered by private insurers or via groups such as AARP. Costs vary considerably.
"You can go through your life with just parts A and B, but the out-of-pocket costs will get you," Omdahl says.
The reason is, as mentioned, traditional Medicare lacks a maximum for out-of-pocket costs. But with a Medigap policy, many of those costs are covered.
What does Medigap cover?
Medigap helps cover original Medicare-related costs, including:
- Deductibles.
- Copayments.
- Coinsurance.
Unlike Medicare Advantage plans, Medigap may also cover emergency medical costs when you're abroad.
What does Medigap not cover?
Medigap does not cover:
- Vision care and glasses.
- Dental care.
- Hearing aids.
- Private nursing.
- Long-term care, such as a nursing home.
Who should get a Medigap plan?
You should get a Medigap plan if you need help paying for out-of-pocket costs associated with Medicare. A Medigap plan can also provide greater flexibility. Compared to Medicare Advantage, for instance, original Medicare combined with a Medicare supplemental plan offers greater access to specialists and doesn't require the insurance company to approve specific treatments.
How to sign up for Medigap
Before signing up for Medigap, make sure to do your research. Medigap plans can vary by state, and you'll want to know how much coverage you'll need and what your copay might be. Resources to help you include:
- Trusted sites such as Medicare.gov and CMS.gov.
- Licensed brokers or agents who sell plans from private insurance companies.
- Counselors with the State Health Insurance Assistance Program.
- Medicare supplement websites, where you can search for plans by zip code.
Once you've settled on a plan, you can fill out an application. Following approval, you should review the policy to make sure it's still the right fit.
Note that you can enroll in a Medigap plan during the six-month window once you've turned 65 and you've enrolled in Medicare Part B. You can also sign up for Medigap after this period, but prices could be higher or your application could be denied.
Medicare Savings Programs for Low-Income Seniors
Americans with very low income (an individual income of about $1,200) may be eligible for extra help with Medicare premiums and health care costs. The four primary Medicare Savings Programs are:
- Qualified Medicare Beneficiary Program, which helps to pay for premiums, deductibles, coinsurance, co-payments and prescription drugs. The monthly income limit for an individual in 2024 is $1,275, and the resource limit is $9,430.
- Specified Low-Income Medicare Beneficiary Program, which helps to pay for Medicare Part B premiums and prescription drugs. The monthly income limit for an individual in 2024 is $1,526, and the resource limit is $9,430.
- Qualifying Individual Program, which helps to pay for Medicare Part B premiums. The monthly income limit for an individual in 2024 is $1,715, and the resource limit is $9,430.
- Qualified Disabled Working Individual Program, which helps to pay Medicare Part A premiums for those with disabilities who are working and lost their premium-free Part A coverage because they chose to return to work. The monthly income limit for an individual in 2024 is $5,105, and the resource limit is $4,000.
FAQs
According to Medicare.gov, in most cases, you can keep your doctor – as well as visit any other health care provider, hospital or facility – as long as they are enrolled in Medicare. If you have Medicare Advantage, you may be able to keep your doctor, depending on your specific plan and if your doctor is in-network.
Medicare does not cover all care and services. Examples include:
- Long-term care.
- Cosmetic care.
- Routine physical exams.
- Hearing aids.
- Most dental procedures.
- Eye exams for prescription eyeglasses.
To check whether a service is covered, you can use Medicare's look-up tool.
Yes, Medicare premiums can be tax deductible if:
- You itemize deductions on your federal tax returns.
- Your Medicare premiums exceed 7.5% of your adjusted gross income.
You may not have to sign up for Medicare when you turn 65, depending on your employment and health coverage. For example, if you or your spouse is still working and has employer-provided insurance, you may not need to sign up for Medicare Part B at your 65th birthday. Check with your health insurance provider or health benefits administrator to see what your options are, or visit Medicare.gov for guidelines.
If you are 65 and have health insurance, whether it's through Medicaid, retirement coverage or a current employer, you'll want to check with a health benefits administrator or other expert to see what your obligations are.
It also depends on the size of your employer. For instance, if you work for a large employer (more than 20 employees), you may not need to enroll in Medicare Part B at age 65. If you work for a smaller employer (fewer than 20 employees), you should check with your company to see if it requires you to enroll in Medicare.
Medicare Resources
The system is complex, and most people should seek help when choosing a plan. The U.S. News Best Medicare Plans site can help you navigate the options and get the proper medical coverage. If you're deciding among several Medicare Advantage plans, call the company that offers each one to verify that the coverage is what you think it is.
Omdahl stresses that seeking information from these and other reliable sources is essential because the onslaught of mailings and TV commercials can be overwhelming. Since Jan. 1, 2023, CMS must approve Medicare Advantage plan commercials prior to airing – relieving some of the misinformation that causes confusion among beneficiaries.
You can find ratings of Medicare Advantage plans from the National Committee for Quality Assurance. As mentioned, you can also get help via phone or in person from SHIP. Those agencies often maintain office hours at senior centers or other locations.
U.S. News also highlights the Best Medicare Advantage Plans and Best Medicare Part D Plans.
