The Basics of Medicare and Enrolling

Basics of Medicare

Basics of Medicare

In this quick, easy post, I’ll provide the basics of Medicare, explain its different parts and highlight how and when you can enroll.

What is Medicare?

Medicare in the United States is a national social insurance program. Medicare has been around since 1966, after its enactment in 1965 by Congress under Title XVII of the Social Security Act, signed by President Johnson.  Did you know Harry Truman and his wife, Bess were the first two Americans to get Medicare?  Now you do.  Anyway, Medicare generally covers people who are 65 years and above. However, there are some exceptions for younger people living with disabilities, end stage renal disease and Lou Gehrig’s disease (amyotrophic lateral sclerosis).

The Alphabet Soup of Medicare

Medicare is divided into 4 parts, A-D:
1) Medicare Part A: hospital insurance that will cover Inpatient care, skilled nursing facility care, hospice and home health care.
2) Medicare Part B: medical insurance that mainly covers outpatient care and preventive treatment services such as Pap smear tests for cervical cancer.
3) Medicare Part C: this is also referred to as Medicare Advantage and is a combination of Part A and Part B. Part C is offered by private insurance companies that have been approved by Medicare. Under this plan, you may be able to access more benefits and services, though sometimes at extra cost.
4) Medicare Part D: this plan covers drug prescription costs you’d normally get at a pharmacy or mail-order pharmacy.

How Do I Enroll in Medicare?

When enrolling for Medicare, there are really only two options available when you break it down.  I know, there are millions of websites and publications out there that are confusing.  I call it, “analysis paralysis.”  Don’t spend hours and hours trying to figure out what options are out there, because there really are only two.

1) Staying in Original Medicare: this is Medicare Part A and Medicare Part B. If you are interested in a PDP plan (and you should be) then you will have to find a Part D plan (PDP). It is important to enroll for Medicare Part D when you are first eligible, as this will protect you from paying the late enrollment penalty if you decide to do so later. You may also opt for supplemental insurance (Medicare supplement, or Medigap) that will plug gaps in the benefits offered by Part A and Part B.  And believe me, there are a lot of gaps to plug if you decide to go “Bare with Medicare.” Click here for my post about why you really need to think about a Medicare Supplement policy if you decide not to go with a Medicare Advantage plan. Also, check out my post on whether or not Medicare Supplement plan F or Medicare Supplement plan High-Deductible F makes more sense by clicking here.

2) Joining a Medicare Advantage Plan (Part C): this is the other option available. In order to be eligible for this plan, you must first sign up for the Original Medicare Part A and B.  Check out my post on whether or not a Medicare Advantage plan is right for you by clicking here.

When Can You Apply for Medicare?

For starters, most people get Medicare coverage automatically. These people include:
1) People already receiving benefits from Social Security or the Railroad Retirement Board.
2) People under 65 years, living with disabilities and have been receiving disability benefits for 24 months.
3) People living with ALS (amyotrophic Lateral Sclerosis) receive coverage the month their Social Security benefits start kicking in.

Some folks do have to sign up, for instance:
1) People close to 65 and not receiving Social Security benefits.
2) People with End Stage Renal Disease.
3) People living in Puerto Rico will have to sign up for Part B separately.

There are three enrollment periods when you can initially sign up:
1) Initial Enrollment Period: this is a 7 month part that begins 3 months before you turn 65 up to 3 months after your 65th birthday.
2) General Enrollment Period: If you did not sign up for Medicare during the initial enrollment period, you can do so between January 1st and March 31st every year.
3) Special Enrollment Period: this is for people (or their spouses) who are still working and are covered by their group’s health plan, or during an 8 month period that begins the month that their employment ends.

Finally, there’s the Annual Election Period (AEP) which begins on October 15, and ends on December 7th.  That’s when folks already on Medicare get to choose the PDP or the Medicare Advantage plan they want for the following year, without underwriting.