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What are Medicare Benefits?

Medicare benefits applies to the services available through the Medicare program. Medicare is a federal health care program funded via payroll taxes. Medicare has four parts: Part A, Part B, Part C, and Part D.

Understanding Medicare Parts A and B

Medicare Parts A and B are also known as Original Medicare. Each part covers a different area of service. Part A is hospital insurance. It is free if you have earned 40 Medicare credits. Medicare Part B is medical insurance and carries a premium.

Medicare Part A

Medicare Part A covers inpatient hospital care, some home health services, skilled nursing facility care, and hospice care for terminally ill patients. These services may include surgeries, hospital stays, physical or occupational therapy, and mental health care.

Medicare Part A will only cover costs that are medically necessary. For example, it will not pay for privately sourced blood for transfusions. It also does not cover custodial care, private nurses or single-patient hospital rooms. If you require 24-hour home health care, it must be related to the treatment of an illness or disease. If you need help determining what your Part A coverage will pay for, ask an Expert.

Medicare Part B

Medicare Part B works more like a regular health insurance plan. It covers preventative care, durable medical equipment, outpatient care, and ambulance services. Physical therapy or part-time home health services ordered by a doctor are covered as well.

Reviewing Medicare Parts C and D

Medicare Parts C and D have different structures than Original Medicare; they are not benefits. Part D provides prescription drug coverage. This coverage is not available through the government. Instead, private insurance companies contract with the government to offer prescription drug coverage for a premium.

Medicare Part C is not a benefit; it allows private insurance companies to offer Medicare Advantage Plans. Enrollees may choose between a Health Maintenance Organization (HMO) or a Preferred Provider Organization (PPO) plan. PPOs offer more flexibility in choosing healthcare providers. Medicare beneficiaries may enroll in a Medicare Advantage Plan instead of Original Medicare.

Medicare supplemental insurance

You may also purchase a Medigap policy through a private insurance company. These Medicare supplemental policies help cover the costs that Original Medicare does not cover.

Earning Medicare credits

People earn Medicare credits by working and paying Social Security and Medicare taxes. You can earn up to four credits per year. To receive Medicare Part A for free, you must earn a total of 40 credits. This equates to 10 years of paying into the Medicare system through payroll taxes.

People who have fewer than 40 Medicare credits must pay a monthly premium. However, you may continue working until you earn the full amount of credits you need. At that point, you do not have to pay a premium for Medicare Part A.

Determining Medicare eligibility

Most beneficiaries are not eligible for Medicare until they reach age 65. You must also be a citizen of the United States or a permanent resident for the past five years.

Some people qualify for early Medicare benefits. In general, you are eligible for early benefits if you meet one of the following criteria.

  • You have a disability and already receive disability benefits
  • You have a diagnosis of end-stage renal disease
  • You have a diagnosis of amyotrophic lateral sclerosis (ALS), also called Lou Gehrig’s disease

Enrolling in Original Medicare

Automatic enrollment

If you meet eligibility requirements and already receive benefits from the Railroad Retirement Board (RRB) or Social Security, you will be automatically enrolled in Medicare Part A and B. Your Medicare coverage starts the month you turn 65. It will begin on the first day of that month unless your birthday falls on the first. In that case, your coverage begins on the first day of the prior month.

Automatic enrollment is different for people with disabilities. Coverage begins 24 months after you start receiving Social Security or RBR benefits.

The rules are a little different for Puerto Rican residents too. If you meet eligibility standards, your enrollment in Medicare Part A is automatic, but you must sign up for Part B.   

Signing up for Medicare

You must enroll in Medicare if you are not receiving Social Security or RBR benefits. Enrollment is not automatic for end-stage renal disease patients either. Submit your Medicare application through the Social Security website or call or visit a local Social Security office. Former railroad workers should contact the Railroad Retirement Board.

You will have the opportunity to review and make changes to your plan each year. However, you do not have to reapply annually.

Paying Medicare Part B premiums

If you receive benefits from the RRB or Social Security, the agency automatically deducts the premium from your monthly benefit check. However, people who do not receive benefit checks will get a monthly bill.

Most people will pay a standard premium. However, your tax return from two years ago affects how much you pay. If your modified adjusted gross income for that year exceeds a specified threshold, you will pay an Income Related Monthly Adjustment Amount (IRMAA). This is an extra charge added to the standard premium.

Getting your Medicare card

If you automatically enroll in Medicare, you will receive your Medicare card in the mail about three months before you turn 65. If your automatic enrollment is due to a disability, your card will arrive 22 months into your 24-month waiting period.

If you choose to enroll in Medicare, expect your card within 30 days of enrollment. The same waiting period applies to replacing a lost Medicaid card. If you need proof of insurance sooner, you can request a letter from Social Security. It will take about 10 days to arrive. Visit your local Social Security office if you need immediate proof of insurance.

Delaying Medicare Part B

Delaying Medicare Part B enrollment can save you money if you have health insurance through an employer or your spouse’s employer. When you stop working or lose health coverage, you have an eight-month Special Enrollment Period. If you enroll in Medicare during this time, you will not have to pay the penalty.  However, delaying your Medicare Part B coverage past the enrollment period will result in a penalty.

How to unenroll

If you are automatically enrolled in Medicare Part B and do not want to keep it, follow the instructions that came with your Medicare card. Make sure you send the card back. If you keep it, you will be responsible for premiums, regardless of whether you use it. Contact the Social Security office if you chose to enroll in Medicare Part B but now wish to drop your coverage.

The Medicare program is complex. If you face important decisions regarding your Medicare coverage, ask an Expert for their insight. Getting information from a verified Expert can help you make a better decision about your health insurance coverage.

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