Most Americans have been paying into Medicare their entire working lives, but many don’t know what Medicare covers or how to sign up for it. There are specific Medicare enrollment periods, and missing these could lead to penalties or a lack of coverage.
What Is Medicare?
Medicare is one of the U.S. government’s health insurance programs. It’s generally for people 65 and older, but you may also qualify for Medicare if you have:
- A disability and are receiving Social Security Disability benefits
- Amyotrophic Lateral Sclerosis (ALS, also called Lou Gehrig’s disease)
- End Stage Renal Disease (ESRD)
Medicare has several different parts. You may be able to pick and choose what will suit your needs best. There are two primary plans, Original Medicare and Medicare advantage. There are extra insurance options as well.
Original Medicare: Part A and Part B. The Original Medicare plan has both Medicare Part A and Medicare Part B. This plan allows you to use any doctor within the U.S. that takes Medicare.
Medicare Part A is hospital insurance. It helps cover things like:
- Home health care
- Hospice care
- Hospital inpatient care
- Skilled nursing care
Most people do not have to pay a premium for Part A because they paid Medicare taxes while working. This part is called “premium-free Part A,” and you usually must be in the workforce for at least ten years to qualify. If you do not qualify for premium-free Part A, you will have to pay a premium of a few hundred dollars each month.
The 2023 deductible for Part A is about $1600 per hospital stay each benefit period, an increase of $44 from $1,556 in 2022. Benefit periods start the day you are admitted to the hospital and end once you have stayed out of the hospital for sixty consecutive days. Your hospital stay copay for the first 60 days in the hospital won’t cost you anything outside of your deductible. After that:
- Days 61-90 are about $400 per day, an increase of $11 from $389 in 2022
- Days 91-150 are about $800 per day, an increase of $22 from $778 in 2022
- Days 150 and beyond, you pay the entire cost out of pocket
You must sign up for Part B to buy Part A.
Medicare Part B is general health insurance. It helps cover services and supplies like:
- Durable medical equipment like wheelchairs and hospital beds
- Home health care
- Outpatient care
- Preventative services like annual wellness visits, screenings, and vaccines
- Services from healthcare providers
For most people, the Part B premium in 2023 is about $164.90 per month, a decrease from $170.10 in 2022. If you earn more than a certain amount annually, your premium may be higher depending on your income. The deductible for 2023 is $226 monthly, a decrease of $7.00 from $233 in 2022. After the deductible, you’ll pay about 20% for each Medicare-covered service or item.
Medicare Advantage (Medicare Part C). Medicare Advantage is an alternative to the Original Medicare plan. These are Medicare-approved plans through a private insurance company. You’ll likely have to use the doctors within your network. These plans may reduce your out-of-pocket costs and offer extra benefits that Original Medicare doesn’t cover, like dental, hearing, or vision coverage.
The amount you pay for Medicare Advantage will depend on which private company and plan you choose. Medicare Advantage plans have a yearly out-of-pocket limit for services offered in Part A and Part B. Once you hit this limit, your insurance will cover all Part A and Part B services.
Medicare Part D: Drug Coverage. Medicare part D is an optional add-on to your Original Medicare plan that helps cover prescription drugs and many vaccines. Private insurance companies that partner with Medicaid administer Part D plans. As a result, the amount you pay will depend on your selected plan.
Medigap: Medicare Supplement Insurance. Medigap is an optional add-on to Original Medicare that helps pay costs like coinsurance, copayment, and deductibles. Private insurance companies offer these plans at varying costs.
Can You Enroll In Medicare at Any Time?
Most types of Medicare do not allow you to enroll at any time. You have to wait for specific Medicare enrollment periods, or you may have a penalty to pay.
Your first chance to sign up for any Medicare plan is seven months around your 65th birthday. Referred to as the Initial Enrollment Period, it begins three months before you turn 65 and ends three months after your 65th birthday month.
Medicare Part A enrollment (premium-free). If you sign up during the Initial Enrollment Period, your coverage will begin the month you turn 65 unless your birthday is on the first of the month. In that case, your coverage will start the month before you turn 65.
If you miss the Initial Enrollment Period, you can sign up for Premium-free Part A anytime after you turn 65. Your coverage will start six months from when you sign up but cannot begin earlier than the month in which you turn 65.
Premium-Part A and Medicare Part B enrollment. If you sign up during the Initial Enrollment Period, the start date of your coverage will depend on what month you signed up:
- If you sign up in the three months before the month you turn 65: coverage begins the month you turn 65.
- If you sign up during the month you turn 65: coverage begins the following month.
- If you sign up between one and three months after you turn 65: coverage begins the next month.
Unless you qualify for a Special Enrollment Period, if you don’t sign up during the Initial Enrollment Period, you will have to wait until the General Enrollment period. The General Enrollment Period is between January 1 and March 31 each year, and coverage will start the following month after you sign up.
If you don’t sign up during the Initial Enrollment Period, you may have to pay a late enrollment fee. For Premium-Part A, that fee is an extra 10% per month, and you pay that for twice the number of years that you could have had Medicare but didn’t. For Part B, this cost is an extra 10% each year that you could have had Medicare but didn’t. You will pay that fee for as long as you have Part B coverage. These Medicare enrollment rules may not apply if you qualify for a Special Enrollment Period.
Medicare Advantage/Medicare Part C enrollment. After you’ve signed up for Medicare Part A and Part B, you can switch to a Medicare Advantage plan any time during your Initial Enrollment Period. If you don’t sign up for Medicare Advantage during this time, you can switch from Original Medicare to Medicare Advantage between October 15 and December 7th each year. Coverage will begin January 1 of the following year.
If you’re enrolled in a Medicare Advantage plan and want to switch to a different Medicare Advantage plan or go back to Original Medicare, you can do this during the General Enrollment Period. This period is between January 1 and March 31. You can also add Part D coverage to your Medicare Advantage plan during this period.
Medicare Part D enrollment. You can sign up for Part D coverage anytime during your Initial Enrollment Period so long as you’ve already signed up for Part A and Part B. Otherwise, you can add or drop Part D coverage between October 15 and December 7th each year, and coverage will begin the following January 1.
Medigap. Medigap should be purchased within six months of your Plan B coverage starting. If you wait beyond this, you may not be able to get coverage.
Special Enrollment Periods. Some circumstances allow you to sign up for Premium Part A and Part B without a late enrollment penalty. These include:
- You or your spouse have insurance through an employer. In this case, you can sign up at any time.
- If you stop working or lose your employer-sponsored health insurance, you have eight months to sign up for Medicare without a penalty.
- You’re a volunteer serving in a foreign country. Contact Social Security for more information.
- You have Tricare. Contact Tricare for more information.