Medicare is federal health insurance available to seniors in America who are 65 years and older and for others who qualify due to disability. Medicare can be a complex subject to learn as there are many different parts, plans, and costs. Many seniors need guidance through the Medicare transition, so here are the top five facts to help your parents through Medicare.
1. Understand Medicare coverage
When your parents enroll in Original Medicare, they will get two parts for inpatient and outpatient coverage: Part A and Part B. Both of your parents will need to enroll themselves in Medicare separately. They cannot have a joint Medicare account.
Part A is inpatient coverage. In other words, their room and board inside the hospital. When admitted to the hospital, Part A covers all regular meals, a semi-private room, and any medication administered to the beneficiary as an inpatient.
Medicare Part A never covers long-term care. However, Part A will cover skilled nursing, physical therapy, hospice, counseling, and social services whenever deemed medically necessary by a doctor.
Medicare Part B covers outpatient services, such as durable medical equipment, doctor visits, lab tests, ambulance rides, and home health care. Part B also covers preventative services, such as mammograms, flu shots, and colonoscopies.
Part B covers a handful of services in an outpatient hospital setting, such as emergency room visits, chemotherapy, surgeries, and diagnostic imaging.
2. Medicare is not free
Medicare does cover many inpatient and outpatient services. However, these services do come with a cost. Many seniors misconceive that Medicare is free and there are no out-of-pocket costs, and, unfortunately, this is not true. Your parents will pay separate premiums and deductibles throughout the lifetime of their policies.
If a beneficiary worked ten years (40 quarters) in the United States and paid payroll taxes, then he/she will not have to pay a premium for Medicare Part A. Now, let’s say your mom was a stay-at-home mom, so she never paid payroll taxes. If your dad did work 40 quarters and paid in, your mom would still qualify for a premium-free Part A through her spouse.
Now, if they only worked 30 quarters and did not meet the 40-quarter mark, they will both pay $249 per month in 2021. If they have less than 30 quarters, they will pay $471 monthly in 2021 for Part A.
As an inpatient in the hospital, the beneficiary will be responsible for the Part A deductible per 60-day benefit period, $1,484 in 2021.
Part B comes with a premium, no matter how many working quarters your parents have. In 2021, the standard Part B premium is $148.50. If your parents are in a high-income bracket, they will likely pay more for Part B.
Before Medicare Part B provides cost-sharing for Medicare-approved outpatient services, your parents will need to pay the Part B deductible first. In 2021, the annual Part B deductible is $203. Once the Part B deductible is met, Medicare covers 80% of Medicare-approved services. Once Medicare pays its share, the beneficiary will pay the remaining 20% coinsurance.
3. Know the different Medicare options
Medicare does not cover 100% of Medicare-approved services, as mentioned above. Private insurance carriers sell Medicare plans to help with those out-of-pocket costs.
Medigap plans (Medicare Supplements) work alongside Original Medicare. A beneficiary with a Medigap plan can visit any doctor in the United States that takes Medicare. If a doctor accepts Medicare, they must take a Medigap plan, no matter the carrier or plan.
Many Medigap plans help cover the 20% coinsurance left for the beneficiary. There are ten standardized Medigap plans, which means your parents have options to consider on which one best fits their budget and healthcare needs.
Medicare Advantage plans (Medicare Part C) are very different than Medigap plans. For example, a beneficiary would receive their Part A, Part B, and Part D benefits through the private insurance carrier instead of the government.
Medicare Advantage plans have a network of doctors and pharmacies. These types of plans are very similar to employer group coverage your parents are likely used to, such as HMO and PPO plans. Each carrier sets its own rules, so if your parents are considering a Medicare Advantage plan, you will want to ensure they read the fine print of the plan.
4. Enroll on time
There is a specific time your parents need to enroll in Medicare, and that is during their Initial Enrollment Period (IEP). The IEP begins three months before their 65th birthday and ends three months after their birth month (seven months total).
The only thing that exempts your parents from enrolling in Medicare during their IEP is to actively work past age 65 for a large employer with 20 or more employees. If this is the case, they can delay both parts of Medicare until they retire or lose employer coverage, whichever comes first.
If you parents are not covered by large employer insurance, they will need to enroll in Medicare during their IEP, or they will be charged a lifelong late enrollment penalty.
5. Don’t skip Part D
Medicare covers inpatient and outpatient coverage, but it does not provide coverage for prescription medications. Therefore, if a beneficiary has Original Medicare or Medicare and a Medigap plan, they will want to purchase a standalone Part D drug plan.
Part D plans are sold by private insurance carriers, just like Medigap and Medicare Advantage plans. This coverage is solely for medications one can pick up from a pharmacy. Without a Part D plan, your mom and dad would pay for their drugs in total.
Your parents will need to enroll in a Part D plan during their Initial Enrollment Period. Again, they will purchase a plan through a private insurance carrier and not through Social Security. If they fail to enroll in a Part D plan during their IEP and they do not have creditable coverage, they will be charged a lifelong late enrollment penalty.
Medicare can be a complex path for one to take on by themselves. When you explain these five facts to help your parents through Medicare, it could help them get started on the right foot. There are many resources available online, and Medicare brokers who have been in the field for decades. So, don’t hesitate on reaching out to a trusted agency for additional help.