As a general rule, every U.S. citizen is eligible to participate in the government-sponsored health insurance program called Medicare.
Though there are some situations that allow you to participate at an earlier age, all citizens who have hit age 65 can enroll in this program.
Medicare consists of three parts. Part A (hospital insurance) helps cover inpatient care in hospitals, skilled nursing facility care, hospice care and home health care. Part B (medical insurance) helps cover services from doctors and other health-care providers, outpatient care, home health care, durable medical equipment and many preventive services; and Part D (drug coverage) helps cover the cost of prescription drugs, including recommended shots or vaccines.
Generally, you need to sign up for Parts A and B once. Part A is free and Part B has a cost that varies according to your income. You do not need to sign up for both at the same time. Part D is optional coverage that also has a cost.
Each year, you can choose to change the way you get health coverage and add or switch drug coverage.
Medicare is different from private insurance. It doesn’t offer plans for couples or families. You don’t have to make the same choice as your spouse. You can choose either Original Medicare or Medicare Advantage (Part C) for your health coverage.
Original Medicare provides you with Parts A & B, and you must decide whether you want drug coverage (Part D) and supplemental coverage, sometimes referred to as Medigap.
Original Medicare covers most, but not all, of the cost for approved health-care services. Services covered by Medicare must be medically necessary.
Medicare Supplemental Insurance helps to lower your cost for service you receive. Several years ago, the government required all providers of supplemental insurance to provide the exact same coverage and name for their plans. You can safely know that Plan F with one company is the same coverage as Plan F with another company. The differences will be price, service and financial stability.
With Original Medicare, you can go to any doctor or hospital that takes Medicare.
Medicare Advantage (Part C) bundles your Part A, Part B and usually Part D coverage into one plan. You join a plan offered by Medicare-approved private companies that follow rules set by Medicare. Each plan can have different rules for how you get services, like needing referrals to see a specialist.
Costs for monthly premiums and services you get vary with the plan you join. Medicare Advantage requires you to use doctors or hospitals who are in the plan’s network for non-emergency care. You must have Parts A and B to join a Medicare Advantage plan.
You also cannot buy or use separate supplemental coverage (Medigap) if you chose a Medicare Advantage plan.
If you have Medicare and other health insurance (usually from your employer), one will pay first (called a “primary payer”) and the other will pay second (a “secondary payer”).
If you have other insurance, the provider who pays first depends on a number of factors, such as: whether you’re still working, the type of insurance you have and whether you have a special medical condition. Contacting your other health insurer and asking how it works with Medicare is always a good move.
Waiting until the last minute to decide whether you are going to choose Original Medicare or a Medicare Advantage plan is not a good move. Give yourself at least six months before you turn 65 to gather and understand your choices.
If you plan on traveling during retirement and choose a Medicare Advantage plan, understand what “out of network” means and what it may cost.
As always, consult a professional who is licensed to sell Advantage Plans, Supplemental Plans and Part D plans.