Medicare Benefits: What You Need To Know

Medicare is a federal based health insurance program for the elderly and disabled. There are four main parts. The two main segments of the program are Medicare Part A (inpatient health coverage) and Part B (outpatient health coverage). Medicare Part C, also known as Medicare Advantage, is a fairly recent program instituted in 2003. Those who enroll can either select Part C or combine Parts A, B and D (prescription coverage) for total, affordable health insurance.

Medicare is an entitlement program, similar to Social Security, and it is funded through three sources. The Medicare program draws funding from the taxes that United States Citizens pay, the funding allotted by the national government and the premiums paid by Medicare recipients. These combined sources are the reason that many people who enroll in Medicare Part A pay low premiums or do not have to pay any premiums at all. It is also the reason the premium costs of the other four Medicare parts can be kept affordable.

Medicare: Understand the Basics

Medicare is a program provided by the federal government that offers health coverage for the disabled and the elderly. This health coverage is available in two forms. One, original Medicare, includes health insurance offered by the federal government. Two, Medicare Advantage, is private insurance offered by companies that have a contract with Medicare. Know that Medicare Advantage includes all of the same benefits that a person could receive through Original Medicare. For more information about the differences between the two, review the following sections.

Guide to Original Medicare

The main programs under Original Medicare are Medicare Part A (Inpatient/Hospital Coverage) and Medicare Part B (Outpatient/Medical Coverage). However, some Americans also choose to enroll for Part D (Drug Coverage). While Part A and Part B are established parts of Original Medicare, and some eligible parties will be automatically enrolled in both programs, beneficiaries must actively choose the Medicare Part D plan in order to receive prescription drug coverage.

Medicare Part A coverage includes inpatient care in a hospital, skilled nursing facility care, hospice care and home health care. All candidates receive Medicare Part A benefits even when they have the option to delay their enrollment into Part B. The only beneficiaries who pay a monthly premium for the insurance covered by Part A are those who did not work long enough to satisfy the program’s tax contribution requirements, approximately 10 years.

Medicare B covers medically necessary and preventive services. Mental health screening, ambulance services, limited prescription drugs and clinical services are all covered under Medicare Part B plans for example. There are premium fees for Part B, but candidates who have dual eligibility for Medicare and Medicaid can typically use their Medicaid benefits to pay the Medicare premiums. Those who do not have Medicaid eligibility will pay deductibles on their Medicare plan.

Guide to Medicare Advantage

Also known as Medicare Plan C, Medicare Advantage launched in 2003. Part C of Medicare is the catch-all package bundle that includes every benefit of Parts A, B and D. The most customary plans under Medicare Advantage are:

  • Health Maintenance Organization (HMO) plans
  • Private Fee-for-Service (PFFS) plans
  • Preferred Provider Organization (PPO) plans.

Part C is the option that beneficiaries can use to buy insurance from a private provider rather than claim coverage from the government, which differs from other Medicare plans. Unlike other Medicare options, those who use Medicare Advantage will not use the red, white and blue Medicare card. They will receive a card from their own service provider that can be used at in-network offices and hospitals.

A Medicare HMO will provide limited coverage to doctors within certain locations and do not provide for out-of-network services. To utilize this plan, a beneficiary would have to reside in the limited region covered by the HMO in order to find health services. Prescription drug coverage is included with most HMOs. Regardless, if drug coverage is not included in the plan, the beneficiary can purchase a Medicare prescription plan.

Private Fees-for-Service plans are private insurance plans. The plan determines how much it pays for medical services and the co-pays for health coverage. It is not necessary to select a primary care doctor for a PFFS plan or get a referral to see specialists. Medicare PFFS plans usually cover services outside of the network providers, but costs will be lower for service within the network.

A Medicare PPO plan is like the PFFS plan in that a primary care physician and referrals to see specialists are not required. Costs of a PPO are usually lower than costs of a PFFS. Services provided out-of-network but will obviously come with higher costs than those received in-network.

Qualifying For Medicare

As mentioned, Medicare eligibility is restricted to the elderly and disabled. There are three key classifications of people who are eligible for Medicare:

  1. People older than 65 years of age
  2. People with disabilities
  3. People of any age with End Stage Renal Disease (ESRD)

There are further requirements within the initial identity categories. Every applicant must be a United States citizen and have paid taxes into the Medicare program. The requirements are as follows:

Medicare qualifications for those older than 65 years of age:

If you are 65 years of age or older, a United States citizen and have paid Medicare taxes for at least 10 years, you are eligible for the Medicare program. Candidates in this program are eligible for Part A premium-free if they are currently receiving or eligible for Social Security or Railroad Retirement Board benefits. Additionally, petitioners are eligible if they or their spouse previously had Medicare-covered government employment.

Medicare qualifications for Americans with disabilities:

If you are younger than 65 years of age and have received Social Security Disability Insurance, you are eligible for Medicare. To qualify for Medicare under this category, there is a 24-month waiting period. All people who can claim SSDI are eligible for Medicare but may not enroll for benefits until two years after the distribution of the first SSDI check.

Medicare eligibility for those with ESRD:

Kidney dialysis or kidney transplant patients meet the requirements to qualify for Medicare Part A premium-free. To fully qualify, a candidate must need regular dialysis or have already had a transplant. Additionally, the candidate must be eligible for Social Security or Railroad Retirement Board benefits or have paid Medicare taxes for at least 10 years.

Note: If you need Medicare and are the child or spouse of someone who meets the Medicare eligibility requirements, you are also eligible for Medicare.

Best Time to Apply for Medicare

Majority of candidates must enroll for Medicare during the initial eligibility period when they or their spouse reach 65 years of age. However, some candidates receive eligibility automatically and do not have to apply.

A beneficiary will receive Medicare automatic enrollment in Part A or Part B if he or she is already receiving benefits from another program. For example, you are automatically enrolled in Medicare if:

  • You received Social Security or Railroad Retirement Board benefits for at least 4 months before you reached 65 years of age. You will be automatically enrolled in Medicare Part A and B on the first month after you turn 65. Your Medicare card will arrive in the mail three months before your birthday.
  • You have received Social Security Disability Insurance for at least 24 months. You are automatically enrolled in Part A and Part B on your 25th month of benefits. Your Medicare card will arrive in the mail three months before your 25th month of benefits.
  • You have received disability benefits from the Railroad Retirement Board for at least 24 months. You are automatically enrolled in Part A and Part B and will receive your Medicare card three months before your 25th month of disability benefits.
  • You have Amyotrophic Lateral Sclerosis, also known as Lou Gehrig’s disease. You are automatically enrolled in Part A and Part B, and you will receive your Medicare card in the mail the month your disability benefits begin.

All other eligible parties should review how to apply for Medicare during the initial eligibility period. The seven-month initial eligibility period begins three months before the applicant reaches 65 years of age, includes the birthday month and ends three months after the candidate’s birthday. You may be charged a Part B late penalty or suffer a delay in health coverage if the applicant does not enroll during this period. Applicants may enroll even if they are still receiving health insurance from an employer.

Where to sign up?

You can sign up online through the Social Security Administration web portal. The application if quick taking approximately 10 minutes, and there is no required documentation. Good new is there are no forms that must be signed. Social Security will review the initial Medicare application and make an enrollment decision, or let the applicant know that he or she must provide more information. If the candidate is deemed eligible, his or her coverage card will arrive in the mail.

Note: Each year provides the opportunity to renew coverage or change your Medicare plan, which means you do not have to enroll for Medicare each year.

Medicare vs Medicaid: What Are the Differences

Both are federal health insurance programs. Medicaid, however, is a program designed to benefit the very low income, and its benefits and eligibility requirements are vastly different from those of Medicare. Medicaid may be the program for you if you do not meet the Medicare requirements. Alternatively, if you are eligible for both programs, you may combine them to claim benefits from each.

Medicare and Medicaid are both health coverage programs, but they are run by different agencies. The largest differences between Medicare and Medicaid are:

  • Medicaid is a state and federal program. While Medicare is federally-funded and federally-administered, Medicaid is administered by the states. This means each U.S. state and territory has a different set of eligibility guidelines, and there is not one simple Medicaid application, but many state-specific enrollment processes.
  • Medicaid is an income-based program with no age requirement. Medicaid is available to low-income families, qualified pregnant women, Americans with disabilities and newborns, among many other qualification groups.
  • Medicaid coverage varies by state. The federal government sets the standards for what services are required, which includes nursing home and home health coverage, physician and laboratory services and inpatient and outpatient services, among a longer list. Nonetheless, because Medicaid is a state program, the non-mandatory benefits offered are determined by state governments.