Medicare is a very complicated program. To help clarify for Medicare beneficiaries here are some FAQ's regarding Medicare Insurance
What is Medicare?
Medicare is a federal health insurance program for people who are age 65 and older and for others with certain disabilities. Part A is for hospital coverage, skilled nursing and hospice; and Part B is for doctor visits and outpatient services. This program is regulated by Center for Medicare and Medicaid Services (CMS). Medicare is not Medicaid which is a federal program implemented at the state level to help low income families and individuals. In California Medicaid is called Medi-CAL. Medicare and Medicaid may work together.
What will Part A and Part B cost me once I enroll?
For people who have worked for ten years or more and paid taxes into the system there will be no premium for Part A. Those who do not meet those parameters may be able to obtain Part A at a premium determined by CMS. There are deductibles and co-payments which a beneficiary will be responsible. The deductible is $1,364 for the first 60 days of hospitalization. This deductible resets every 60 days for example, a beneficiary is admitted into the hospital and then released two days later and then is readmitted again a week later, the original deductible covers the readmittance. If a beneficiary is released and readmitted more than 60 days later the deductible of $1,364 is again the responsibility of the beneficiary. In addition to the deductible there are per day co-payments beginning after 60 days of hospitalization.
For Part B there will be a premium which is required to be paid by the beneficiary. This premium is currently $135.50 for most beneficiaries but there is also an adjustment made based on income. CMS will go by your most recent tax filing and increase premiums for higher income earners using a formula called Income Related Monthly Adjustment Amount (IRMAA), or possibly reduced for low income earners. There is also an annual deductible of $185 for Part B. After a beneficiary meets the deductible then they will typically pay 20% of services received.
There is also a Part B Excess Charge which beneficiaries need to be aware. CMS determines prices which providers may charge beneficiaries for Medicare approved services. Providers may charge up to 15% over these established prices for services. Beneficiaries are responsible for these charges.
There is no maximum out of pocket costs for beneficiaries who only have Part A and Part B coverage. There are additional insurance programs offered by private insurance companies to help mitigate the deductibles and co-payments and we will cover those options in a future Money Talk column.
Will Medicare cover Long Term Care expenses?
Medicare will not cover these expenses. This is a misconception many people have. Medicare will cover the first twenty days of skilled nursing at no cost to beneficiaries. Days twenty-one through one hundred are covered with a co-payment to the beneficiary of $170.50 per day. All days after that are one hundred percent the responsibility of the beneficiary.
Is a Medicare beneficiary required to enroll in a Part D prescription drug plan?
No, you do not because it is considered optional according to CMS. However, if you do not enroll after 63 days of becoming eligible you will begin to incur a late enrollment penalty. This penalty is 1% of the national average premium of Part D prescription drug plans for every month after 63 days in which you do not have credible coverage. This penalty continues to increase until you get credible coverage. Note that this is a lifetime penalty which will be added to the premium of your prescription drug plan once you do enroll. Currently the lowest premium for a drug plan is $12.90 per month and there are 30 plans to choose from. Credible coverage is determined by CMS and for the veterans out there, VA coverage is considered credible coverage, but you must sign up for your VA benefits for this to be effective.
If I keep working beyond age 65, will I be required to sign up for Medicare?
Maybe. It depends on whether you have coverage through your employer and whether that coverage is considered credible by CMS standards. If it is credible coverage than no and if not, then yes. If you do not have credible coverage and do not sign up for Part B services when you become eligible then you may incur a late enrollment penalty. This penalty is calculated for every 12 months you delay enrolling in Part B you will incur a 10% penalty of the standard Part B premium. You may also have to wait until the General Enrollment Period for Part B which is from January 1 to March 31st every year and coverage would begin on July 1st of that year.
This is just the tip of the iceberg when it comes to the Medicare program. We will continue to keep you informed about this program and options available to you so stay tuned for further information. Until we talk again, be well.
Registered Representative offering securities and advisory services through Independent Financial Group, LLC (IFG), a registered broker-dealer and investment advisor. Member FINRA/SIPC. Dedicated Financial & Insurance Services and IFG are unaffiliated entities. Dale Immekus California Insurance License #0K34034