Medicare 101: How to get started

Blog / Medicare 101: Understanding the Basics

What is Medicare?

Medicare is a federal medical insurance, established by Congress in 1965, that helps cover healthcare costs for individuals who are ages 65 and older, disabled, or suffering from unique ailments such as End Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD), Black Lung, and other applicable illnesses. It is funded through the Hospital Insurance Trust Fund and the Supplementary Medical Insurance Trust Fund. Medicare currently serves more than 44 million enrollees and is funded through the Hospital Insurance Trust Fund and the Supplementary Medical Insurance Trust Fund.

Different parts of Medicare

Medicare is divided into different parts that cover specific services:

Medicare Part A

Medicare Part A covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care. Most people do not have to pay a premium for Part A because they or their spouse paid Medicare taxes while working.

Medicare Part B

Medicare Part B covers medical insurance needs such as doctors’ services, outpatient care, medical supplies, and preventive services. Most people pay a monthly premium for Part B.

Medicare Part C

Medicare Part C relates to Medicare Advantage Plans, which are offered by private companies that contract with Medicare to provide Part A and Part B benefits. Medicare Advantage Plans offer an alternative to Original Medicare (Parts A and B) and may also include additional benefits such as vision, hearing, and dental coverage. Most Medicare Advantage Plans also include prescription drug coverage.

Medicare Part D

Medicare Part D adds prescription drug coverage to specific Medicare plans. Private insurance companies offer Part D plans, and the plans vary in cost and coverage. Part D plans are optional, but if you don’t enroll in a Part D plan when you’re first eligible, you may have to pay a late enrollment penalty if you decide to enroll later.

It’s important to note that Original Medicare (Parts A and B) and Medicare Advantage Plans (Part C) are two different options for getting your Medicare benefits. You can’t have both at the same time. You may also choose to supplement your Original Medicare coverage with a Medigap (Medicare Supplement) policy to help pay for out-of-pocket costs like deductibles and coinsurance.

Who is eligible for Medicare?

Anyone who meets the general eligibility requirements mentioned above should contemplate and evaluate their need for Medicare as a medical insurance option. In addition, eligibility for Medicare requires that an individual is:

a U.S. citizen or permanent legal resident for five continuous years.
eligible for Social Security benefits with at least ten years of payments contributed to the system.

Individuals should typically apply for Medicare within four months prior to turning age 65, during the disability application process, or after they no longer have a group health plan through current employment.

What are the benefits of Medicare?

Since it began, Medicare has provided universal health care to millions of seniors. Not only is Medicare efficient, but it also provides greater health equity in America. Among the biggest reasons why Medicare is universally appreciated is it offers guaranteed health benefits in return for the contributions individuals make during their working years.

The Right Steps to Take

For many people, turning 65 is a pivotal moment, as they now have reached retirement age and qualify for Medicare. However, according to the U.S. Bureau of Labor Statistics, over the past decade, the number of people working over the age of 65 climbed 52%, which means that employers now have the added complexity of considering Medicare in their employer-provided healthcare decisions. Because of this, more companies are taking steps to coordinate their healthcare coverage options for employees who are eligible for Medicare. Whether or not you need Medicare at 65, it’s always a good idea to begin planning for when you do. In this blog, we’ll cover the steps you need to take to start the planning process.

1. Make a list of your prescriptions.

Document all of your necessary prescriptions and treatments. Then spend some time researching the various types of Medicare policies available where you live and which ones include your prescriptions and treatments.

2. Document past healthcare expenses.

Keeping a record of several years’ worth of healthcare expenses will help you project which types of healthcare you might need and how much they will cost. While you may only require a little bit of healthcare now, it is a possibility that as you age, your healthcare needs will increase.

3. Know which Medicare package best suits your needs.

There are two main Medicare packages to consider: Original Medicare and Medicare Advantage.

Original Medicare is a fee-for-service program, where beneficiaries can obtain care from any participating provider. Original Medicare includes Part A (hospitals) and Part B (doctors, outpatient, and medical equipment) coverage. You can supplement this with Medigap, state-regulated insurance that covers several things Original Medicare does not. It’s worth noting that people with Original Medicare almost always buy stand-alone Part D (prescription drug) coverage.
Medicare Advantage plans are sold by private insurers and must offer coverage as good as Original Medicare, though in most cases Medicare Advantage plans offer more inclusive coverage. Some Medicare Advantage plans also offer vision and dental coverage and include Plan D coverage. These plans offer care through their own networks of hospitals, doctors, and other healthcare providers.

4. Understand that Medicare’s Premiums are scaled based on your household income.

For most families, the standard Medicare Premiums will apply, but for others, you may be subject to higher premiums. However, it is important to note that there are ways to request your Medicare premiums to be reduced in some circumstances.

With these four things in mind, applying for Medicare should be less of a hassle and make it easier to transition into your new healthcare coverage.

If you need assistance with the process, do not hesitate to contact your local LBMC Employment Partners, LLC, representative.

We also work with FEDlogic, a value-add to LBMC Employment Partners PEO, for Medicare transition support. Contact FEDlogic’s Frank Cardenas at 615-830-4630.