Understanding Medicare

If you work in healthcare or have family members who require medical care, it is likely you or someone you know has received assistance from Medicare. Centers for Medicare and Medicaid services (CMS) reported that almost 60 million people are enrolled in Medicare and in 2018 over 730.7 billion dollars of government funding went towards Medicare coverage¹. Despite these staggering numbers, key concepts regarding how Medicare works is often misunderstood.

What is Medicare?

Medicare is a federal health insurance program for individuals who are either 65 years or older, under the age of 65 with disabilities, or who have been diagnosed with End-Stage Renal Failure (kidney disease requiring dialysis or kidney transplant)². Medicare consists of different branches and each branch covers a different set of health services.

Medicare Part A:

Also known as hospital insurance, Part A covers patients while they are under the direct care of their provider. Examples include inpatient hospital stays, hospice care, treatments provided in a skilled nursing facility, and home health care².

Medicare Part B:

Part B is also called medical insurance because it provides coverage on outpatient care, durable medical equipment (DME), preventive services, and an array of doctors’ services. For patients who need DME or medical supplies to manage their chronic conditions, Part B coverage is essential. Some examples of DME include blood sugar monitors for diabetic patients and breathing assistance like oxygen tanks or nebulizers for patients with chronic breathing problems. Preventive services include providing vaccines for disease prevention and screenings for risk of disease².

Medicare Part C:

Frequently referred to as Medicare Advantage Plan, this branch is unique because it includes the services covered under Part A and Part B, but the services provided in Part C are offered by Medicare-approved private insurance companies. Part C usually provides prescription drug coverage and additional services not normally included in Part A and B for an extra monthly cost³.

Medicare Part D:

An easy way to remember this branch is to think D for “drug”. Part D’s purpose is to help cover the cost of prescription medication. Medicare Part D plans are also run by Medicare-approved private insurance companies³.

What Medicare does not cover:

Most Medicare and Medicare Advantage Plans do not cover hearing aids, prescription glasses or contact lenses, dentures, cosmetic surgery, acupuncture, costs incurred at Long Term Care Facilities (LTC), or care provided outside of the United States³.

Choosing Your Coverage

When deciding to enroll in Medicare, there are a few ways to choose your coverage. You can go the Original Medicare route, where your Part A and B coverage is provided directly through Medicare. With this option you can choose your provider if they accept Medicare insurance at their practice. Original Medicare covers an average of 80% of healthcare costs and users will typically pay a premium for Part B coverage.  Additionally, you have the choice to enroll in a Medicare-approved Part D plan if needed.

You can also select the Medicare Advantage Plan (Part C) option, where your Part A, Part B, and commonly Part D coverage, is offered as a bundle through private insurance companies.  Many Part C plans have the incentive of lower out-of-pocket costs compared to Original Medicare, but all your health concerns must be treated by a set network of providers. Medicare Advantage users will likely pay co-pays/coinsurance with each service provided. Users will also pay a Part B premium like Original Medicare.

If you use Original Medicare and still need additional assistance, you can sign up for a Medigap plan. Medigap is offered by Medicare-approved private insurance companies and aims to fill gaps in coverage in Original Medicare Plans. Note: It is illegal to enroll in a Medigap plan if you are already on a Medicare Advantage Plan².

When and How to Enroll

Medicare has specific rules related to when you can apply for a Medicare plan. If you have a disability, you will automatically be enrolled into Medicare Part A and B after receiving 24 months of disability assistance. Individuals currently receiving help from Social Security or the Railroad Retirement Board (RRB) will automatically be enrolled in Part A and B coverage once they turn 65.  If you are not receiving Social Security, RRB benefits, or disability aid you will have to sign up for Medicare during an initial enrollment period which begins 3 months before you turn 65 and ends 3 months after your 65^th birthday. If you miss your initial enrollment period, you can apply during the General Enrollment Period which takes place from January 1^st-March 31^st each year. If you enroll during this time, you may be subject to late enrollment penalty and your coverage will be delayed until July 1^st of the year that you applied. You may be able to avoid a late enrollment penalty if are covered by a group insurance, such as an employer’s insurance, or if you recently had a group insurance in the last 8 months before you applied for coverage.

If you are interested in applying for Medicare coverage, you can get information about your potential coverage options online at Medicare.gov/plan-compare, or by phone at 1-800-MEDICARE (1-800-633-4227).

References:

1. Total Medicare Enrollment: Total, Original Medicare, and Medicare Advantage and Other Health Plan Enrollment, Calendar Years 2013-2018. (2018). Retrieved May 25, 2020, from https://www.cms.gov/research-statistics-data-systems/cms-program-statistics/2018-medicare-enrollment-section.
2. Center for Medicare and Medicaid Services. (2020). Medicare and You National Handbook 2020 [Brochure]. Baltimore, MD: Department of Health and Human Services.
3. https://www.cms.gov/Medicare/Medicare. Last Updated May Accessed May 25, 2020, from https://www.medicare.gov/