One benefit to turning 65 is that you qualify for Medicare, the government's health insurance program. Medicare covers part or all of the cost for many medical services and prescription drugs. Before you sign up, it helps to know who's eligible, what services the program includes, and how much you might have to pay out of your pocket.
Who Is Eligible for Medicare?
Americans become eligible for Medicare when they turn 65. Some younger people qualify if they have disabilities or medical conditions like amyotrophic lateral sclerosis (ALS). Medicare also covers people who have permanent kidney failure, called end-stage renal disease.
What Are the Different Medicare Parts?
Original Medicare is made up of two parts: A and B.
Part A is hospital insurance. It covers:
- Hospital stays
- Care at skilled nursing homes
- Some home health care
- Hospice, or end-of-life care
Part B is medical insurance. It covers the services and equipment needed to treat a medical condition or stay healthy, including:
- Visits to doctors and other medical providers
- Outpatient visits to hospitals and clinics
- Medical equipment like wheelchairs, walkers, and hospital beds
- Preventive services like yearly physicals, screenings such as mammograms and colonoscopies, flu shots, and other vaccines
- Mental health care
With Original Medicare, you can go to any doctor or hospital that takes Medicare without needing a referral. That includes specialist visits.
During your first year in Part B, you'll get a "Welcome to Medicare" preventive visit. During this visit, your doctor will go over your medical history and let you know what screenings, vaccines, or other preventive services you're eligible to receive. You will also get a yearly wellness visit, which is basically a checkup.
Part D is prescription medication coverage. It’s a separate plan offered by private insurers you can choose to join. It includes:
- Prescription drugs
- Some recommended vaccines and shots
Part C is also called Medicare Advantage. It consists of bundled plans that include Parts A and B, and usually Part D. Some Medicare Advantage plans include extras like vision, hearing, and dental care that original Medicare doesn't cover. You might even get coverage for wellness services like a health club membership.
Medicare Advantage requires you to use doctors who are in your plan's network. You buy Part C from a private insurance company, but the plans are Medicare-approved and follow all the same rules. And unlike Medicare, there's a yearly limit on how much you'll have to pay out-of-pocket for services.
A Medicare Advantage policy only covers one person. If you and your spouse both want coverage, you'll need to buy two separate plans.
What Is Medicare Supplemental Insurance (Medigap)?
Medigap is an extra policy you can buy from a private insurance company when you opt for Original Medicare. It gets its name because it helps fill in the "gaps" that Medicare Parts A and B don't cover. Medigap helps pay for deductibles, coinsurance, copayments, and other costs left over from Medicare.
As with Part C plans, a Medigap policy doesn't include your spouse. You can't get Medigap if you have a Medicare Advantage plan.
When Can I Sign Up?
If you already get Social Security or Railroad Retirement Board benefits, you don't have to do anything. You'll automatically start getting Medicare Parts A and B on the first day of the month that you turn 65. The exception is if you or your spouse still work and are covered by an employer's insurance plan. Then, you can wait until you or your spouse stop working or lose health insurance (whichever happens first) to sign up.
But if you're close to turning 65, don't have employer coverage, and don't yet receive Social Security, you'll need to sign up for Medicare. Your first enrollment period starts 3 months before your 65th birthday, and it ends 3 months after the month you turn 65.
It's important to sign up during this open enrollment period. Otherwise, there could be a delay in your Medicare Part B coverage and you might have to pay a late fee.
How Much Will I Have to Pay?
There are three types of payments related to Medicare:
- Premium: A monthly fee you pay to access Medicare services
- Deductible: The amount you pay for medical services before Medicare kicks in and starts to pay
- Coinsurance: The fixed amount you pay for each doctor visit or other health care service
You won't have to pay a premium for Part A if you or your spouse paid Medicare payroll taxes long enough – usually at least 10 years. Another name for this is "premium-free Part A." If this scenario doesn't apply, you can buy Part A. The cost depends on how long you or your spouse worked. In 2022, the cost was up to $499 a month.
For Part B, you'll have to pay a premium. That amount changes based on the year and your income. In 2022, the standard premium was $170.10 a month (it's higher for people with higher incomes). You'll also pay a deductible once a year and coinsurance that equals 20% of the cost of each service.
Before you get any services, ask your provider if they “accept assignment.” That means they agree to charge the Medicare-approved amount and won't bill you for any more, except the required cost-sharing. If not, you could end up paying extra for health care.
The costs for Medicare Part C and Part D vary based on your plan and the doctors and pharmacies you use. With Part C, you'll have to pay more if you visit a doctor who's out of network.
Most Part D drug plans charge a monthly premium in addition to the amount you pay for Part B coverage. You'll also be responsible for copayments. But once you've spent $7,050 out of pocket, "catastrophic coverage" kicks in. You'll pay no more than 5% of the cost of covered drugs for the rest of that year.
How Do I Use Medicare?
When you enroll in Medicare, you'll get a red, white, and blue health insurance card. On the card will be your:
- Name
- Unique Medicare number
- Coverage -- whether you have both Part A and Part B
- The date your coverage begins
You'll show this card wherever you get health services, including at your doctor's office, hospital, and pharmacy. If you have a Medicare Advantage plan, you'll show that plan's card instead before you receive medical services. Don't share your Medicare card with anyone other than trusted medical providers.
What Do I Do Now?
If you're still not clear on how to sign up for Medicare or what it covers, here are a few places to go for more information:
- Your State Health Insurance Assistance Program (SHIP)
- 800-MEDICARE (800-633-4277)
- Medicare.gov
Show Sources
Photo Credit: JGI / Tom Grill / Getty Images
SOURCES:
Medicare.gov: "Costs," "How To Get Medicare Services," "Medicare & You: 2022," "Parts of Medicare," "What's Medicare?" "What's Medicare Supplement Insurance?" "Working Past 65," "Your Medicare Card."
