Medicare Basics, May 2014

| May 01, 2014
Share |

Eligibility:

  • Disabled, or
  • Age 65

Coverage:

Part A Hospital Insurance
  • Hospital stays
  • Skilled Nursing Facility stays (limited coverage)

Part B Medical Insurance

  • Outpatient and diagnostic services
  • Doctor visits

Part C Medicare Advantage Plans

  • Combines Part A and B, making it easier to manage plans
  • May include Part D prescription drugs, dental, or vision
  • Provided by private health insurers
  • Various Part C plans available with varying levels of service and cost

Part C Medicare Advantage Plans

  • May be purchased separately
  • Provided by private health insurers
  • Various plans available with varying levels of coverage and cost

Medigap

  • Supplemental insurance covering some Part A and B deductible and co-pay
  • Provided by private health insurers
  • Various plans available with varying levels of coverage and cost

Excluded Coverage:

  • Dental care and dentures
  • Hearing aids
  • Long-term care
  • Deductibles and co-pays (unless provided by Medigap)

Premium Costs, Deductibles and Co-pays (see attached for 2014 Medicare Costs):

  • Part A: No premium if you have paid FICA taxes for 10 years
  • Part B: Annual deductible and monthly premium (means-tested)
  • Part C: Annual deductible and monthly premium (varies by plan)
  • Part D: Annual deductible and monthly premium (varies by plan; means-tested)

Enrollment:

  • As you near age 65, you will receive enrollment information from Medicare.
  • You may enroll 3 months prior to, the month of, or three months after turning 65. For example, if your 65th birthday is in July, you must be enrolled no later than October 31st.
  • You may defer Part B enrollment if you are working and are covered by employer health insurance, or your spouse is working and has employer health insurance under which you are covered (however, you must seek a deferral from Medicare to avoid late enrollment penalties).
  • If you are working and receive a deferral, but then leave your job, you have eight months to enroll in Part B to avoid late enrollment penalties.

Late Enrollment Penalties:

  • Part B: If you do not receive a Part B deferral, you will be subject to a late enrollment penalty up to 10% for each 12-month period that you could have been enrolled. This penalty applies to your Part B premium for as long as you have Medicare.
  • Part D: If you go for more than 63 days without Part D coverage equal to or better than the standard set by Medicare after enrolling in Part B, you will be subject to a late enrollment penalty. This penalty is determined by adding up the number of months you did not have coverage after becoming eligible and multiplying the number by 1% of the national average monthly benchmark premium ($32.42 for 2014). This penalty applies for as long as you have Part D coverage.
  • Medigap: Since Medigap is optional coverage, there are no late enrollment penalties. However, Medigap providers are only required to guarantee you the right to coverage during the first six months after you enroll in Part B. After that, Medigap providers may charge higher rates or deny you coverage.

Changing Plans:

  • You will automatically be re-enrolled annually in the same Medicare plan(s) if you do nothing following your initial enrollment.
  • After your initial enrollment, you may change your plan(s) at least annually during the specified annual enrollment period (check for specified period dates).
  • Other than the annual enrollment period, the only other circumstances under which you may change your Medicare plan(s) include:
    -
    Five-star Special Enrollment Period: If you are enrolled in a Medicare plan with fewer than five stars, you have a one-time opportunity to switch to a five-star Medicare Advantage plan or Part D Prescription Drug plan (check for available time period dates).
    - Medicare Advantage Disenrollment Period: If you are dissatisfied with your Medicare Advantage plan, you may leave the plan and enroll in original Part A and B Medicare along with Part D Prescription Drug plan between January 1 and February 14.
    -
    General Enrollment Period: If you did not enroll in Part B when first eligible, you can sign up during the general enrollment period, which runs January 1 through March 31 for coverage beginning the following July 1. You may be subject to Part B late enrollment penalties (see Late Enrollment Penalties above).
    -
    Special Enrollment Periods: A special enrollment period may be available if you lose coverage after moving out of a Medicare plan’s service area.

Tips:

  • Identify your health care needs and budget. Prioritize your medical and prescription drug needs including medications, doctors and health care facilities. Remember, your health care needs change over time and so may your Medicare coverage.
  • Compare Part C Medicare Advantage Plans with original Medicare options. Decide if you want to use original Part A and B Medicare with a stand-alone Part D prescription drug coverage plan or an all-inclusive Medicare Advantage Plan. Medicare Advantage plans are usually less costly, and frequently offer additional coverage, but may limit access to specific health care providers and facilities. Another alternative is to select original Part A, B and D Medicare and select a Medigap plan which provides some coverage not provided by original Medicare.
  • Look beyond the premiums. In addition to monthly premiums, a plan’s co-pays and deductibles can affect your health care budget. Some Medicare plans place restrictions on drug quantities or have preferred pharmacies, all of which can increase your out-of- pocket expenses. Also, make sure that your Medicare plan includes your health care providers and facilities.
  • Consider Medicare plan quality ratings. Medicare gives each plan a rating of one to five stars. A five-star rating means that Medicare rates the plan as offering excellent quality to members. But, don’t rely exclusively on ratings. You’ll want to confirm that your plan includes your health care providers, prescription drug needs, and appropriate deductible and co-pay. Also, Medicare does not rate new plans until they have established a sufficient track-record.
  • If choosing a Medicare plan is overwhelming, ask for help. There are many readily free unbiased resources available to help you choose an appropriate, cost-effective Medicare plan. There are also professionals who specialize in providing advice for selecting appropriate Medicare plan(s) that meet your specific needs and budget.

Resources:

2014 Medicare Costs

Medicare Part A (Hospital Insurance) Costs

Part A Monthly Premium

Most people don’t pay a Part A premium because they paid Medicare taxes while working. If you don’t get premium-free Part A, you pay up to $426 each month.

Hospital Stay

In 2014, you pay:

  • $1,216 deductible per benefit period
  • $0 for the first 60 days of each benefit period
  • $304 per day for days 61–90 of each bene t period
  • $608 per “lifetime reserve day” after day 90 of each benefit period (up to a maximum of 60 days over your lifetime)

Skilled Nursing Facility Stay

In 2014, you pay:
  • $0 for the first 20 days of each benefit period
  • $152 per day for days 21–100 of each benefit period
  • All costs for each day a er day 100 of the benefit period

Medicare Part B (Medical Insurance) Costs

Part B Monthly Premium

You pay a Part B premium each month. Most people will pay the standard premium amount. However, if your modified adjusted gross income as reported on your IRS tax return from 2 years ago is above a certain amount, you may pay more.

If you have questions about your Part B premium, call Social Security at 1-800-772-1213. TTY users should call 1-800-325-0778. If you pay a late enrollment penalty, these amounts may be higher.

Part B Deductible - $147 per year

Medicare Advantage Plans (Part C) and Medicare Prescription Drug Plans (Part D) Premiums

Visit Medicare.gov/find-a-plan to get plan premiums. You can also call 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048. You can also call the plan or your State Health Insurance Assistance Program.

Part D Monthly Premium

The chart below shows your estimated prescription drug plan monthly premium based on your income. If your income is above a certain limit, you will pay an income-related monthly adjustment amount in addition to your plan premium.

2014 Part D National Base Beneficiary Premium - $32.42

This figure is used to estimate the Part D late enrollment penalty and the income-related monthly adjustment amounts listed in the table above. The national base beneficiary premium amount can change each year. See your Medicare & You handbook or visit Medicare.gov for more information.

For more information about Medicare costs, visit Medicare.gov.

Share |