Jan 8, 2021

Medicare - What You Need To Know

Medicare was originally enacted into law in 1965 to provide medical care for Seniors at age 65 and beyond.  Since prescription drug coverage was not included at that time, it was added in 2003.   Everyone working and paying taxes has withholdings taken out of our paychecks to pay for Medicare, presumably when we retire.  Everyone must sign up for Part A of Medicare to cover hospitalization no later than turning 65 even if we have private medical insurance.  There is no premium for Part A provided we contributed to Medicare during our working life.  It is probably best to sign up few months before turning 65.  Failure to sign up for Medicare at age 65 will result in a life time penalty so it is really important not to miss the initial sign up.  

However even though we pay for Medicare while working, Medicare is not free during retirement unless someone has little income and also qualifies for Medicaid.  For most people, there are premiums that are means tested based on your income for Parts B, regular doctor care and D to cover prescription drugs.  The premiums are taken out of monthly Social Security payments for those on Social Security, or must be paid by check or debit card.   Most people on Medicare do not just have straight single payer government Medicare because it does not provide full coverage.  Instead, many people buy private insurance Medigap policies to cover those thing and deductibles that Medicare does not pay.  In doing so, additional monthly premiums are paid to the insurance company for the overlay coverage.  

Or, they opt for a private insurance company Medicare Advantage Plan, which can be either an HMO, or PPO with, or without monthly premiums.  This option is Part C of Medicare.  The amounts that are paid for premiums typically determine various deductibles and co-pays.  The higher the monthly premiums, the lower the deductibles and co-pays.  The zero premium plans have higher deductibles and co-pays.  These plans have become the most popular because they cover more benefits.  

Medicare is a wonderful entitlement; but it is very complex.  By the time someone turns 64, it is time to study all of the features that Medicare provides to determine the best plan for the particular person.  There are pro's and con's to various options.  Most important, if and when the time comes to enter the hospital for surgery, or some other chromic disease, all the pieces of the puzzle come into play.  The more the family knows about Medicare before that time comes the better in order to take advantage of all the benefits that are available.