Do You Really Know What Medicare Covers?

medicare coverage

Do you really know all there is to know about how your Medicare coverage works?

If you answered no, you’re not alone!

Although many people are familiar with the fact that Medicare may be a health care coverage option upon turning age 65, most people are not certain about just exactly what this program covers.

In fact, it’s been estimated that more than 70% of older Americans are actually misguided with regard to Medicare and the health care coverage that it provides – even though knowing how Medicare works can be an essential step in your overall retirement, health care, and financial planning.

But, if you fall into this majority, fear not!

While knowing all of the ins and outs about Medicare can be a tad bit overwhelming, by learning some of the more important aspects of this program, you’ll be in a much better position when it comes to knowing what is and is not covered, as well as for anticipating what your out-of-pocket cost responsibilities could be.

Costs Associated with Medicare Coverage

First and foremost, when you initially enroll in Medicare can have an impact on how much your benefits will cost you. For instance, even though most people are eligible for Medicare upon turning 65, you can’t just apply for your benefits at any convenient time after that.

Rather, you have an initial Medicare enrollment period. This window of time will begin three months prior to the month in which you turn age 65. It also includes the month of your 65th birthday, and it goes out three months after that.

If you are already collecting your Social Security retirement benefits at that time, then you will typically be enrolled in Medicare Part A automatically. This part of Medicare – which covers various hospitalization expenses – is premium-free for most enrollees (provided that you and / or your spouse worked and paid taxes into the Medicare system).

You can also enroll in Medicare Part B during this initial enrollment period. Medicare Part B provides coverage for doctors’ visits, as well as for necessary medical supplies and equipment.

There is a monthly premium for Medicare Part B coverage. For most people, this premium amount is $134 per month (in 2018). However, this amount could be more, if you are considered a higher income earner.
If you wait to enroll in Medicare Part B until after your initial enrollment period has elapsed, however, you could face a “penalty” in the form of an increased Part B premium – and this premium increase will remain in effect going forward.

Not All Health Care Needs Are Covered by Medicare

Another of the big misconceptions regarding Medicare has to do with what is, and what is not, covered. While Medicare does provide benefits for a wide array of services, it can also fall short in many areas. So, having a good understanding of Medicare’s benefits can help to alleviate some financial hardship down the road.

As an example, Medicare actually pays very little – if anything – for long-term care. In order to qualify for Medicare’s nursing home coverage, there are several criteria that must first be met. But, even if you do qualify for this coverage, Medicare Part A will only provide the following skilled nursing home coverage (in 2018):

  • Days 1 through 20: Medicare pays all approved charges
  • Days 21 through 100: You are required to pay a daily co-insurance amount of $167.50, and Medicare pays the rest of the approved expenses
  • Days 101 and beyond: You are responsible for all charges

In addition, Medicare Part A and Part B do not provide coverage for prescription medication (other than meds that are administered to you during a hospital stay). So, if you want prescription drug coverage, you will have to purchase a Medicare Part D plan.

Unlike Parts A and B of Medicare, Part D prescription drug plans are not offered by Medicare itself, but rather by private insurance companies that are approved by Medicare to sell them. Because of that, not all Medicare Part D plans provide the exact same coverage. Likewise, the premium that is charged can vary from one Medicare Part D plan to another.

With that in mind, be sure to review what medications are and are not covered before you make a commitment to purchase a Medicare Part D plan. It can also be beneficial to compare the premium charge on several policy options.

You Do Have Some Flexibility in Your Medicare Benefits!

In the past, Medicare enrollees had only one option for their benefits. This consisted of Medicare Part A (hospitalization), and Medicare Part B (doctors’ services and medical equipment). This is why Medicare Part A and B are often referred to as Original Medicare. But today, you have a choice.

Rather than going with Original Medicare, you could instead opt to receive your Medicare benefits through a Medicare Advantage plan. These plans, also known as Medicare Part C, provide the same coverage that is found in Medicare Part A and Part B.

However, Medicare Advantage plans will also oftentimes include additional benefits, such as dental, vision, and / or wellness coverage. In addition, Medicare Part D prescription drug coverage is also oftentimes included in Advantage plans.

Like Medicare Part D plans, Medicare Advantage coverage is also sold via private insurance carriers. So, both the benefits that are offered, as well as the premium that is charged, can differ – sometimes significantly – from one of the Part C plans to another.

If you are currently enrolled in Original Medicare, but you want to change over to a Medicare Advantage plan, you can do so at certain times of the year – including during Medicare’s open enrollment period, which runs from October 15th to December 7th of each year.

Sources

1. 72% of Older Americans Are Sorely Misguided on Medicare. Maurie Backman. July 1, 2018. The Motley Fool.
2. Skilled nursing facility (SNF) care. Your Medicare Coverage.