MAY. 05, 2021
On February 24, 1970, The Jackson 5 released a song called “ABC,” an upbeat and catchy little tune whose lyrics taught listeners “how easy love can be.” It compared love to other “simple” elementary challenges – like learning the alphabet, how to count, and musical scales. The song was a hit, knocking “Let It Be” by the Beatles off the #1 spot on the Billboard Hot 100 chart.1 If you were in elementary, junior, or senior high school when that song came out, then that means you are approaching (or may have already reached) retirement age. Congratulations!
As that magical age approaches, one very important topic to learn about is the federal health insurance program known as Medicare. Unfortunately, learning about Medicare is not as simple as learning your ABCs (then again, in reality, neither is learning about love). Regardless, I want to share with you some “simple” and “easy” Medicare basics to help you be better informed as you help your clients make decisions about Medicare in the future.
ABCs – Who is eligible for Medicare?
Historically, most people became eligible for “full” Social Security benefits as well as Medicare at age 65. However, the age for “full” Social Security benefits is in the middle of a years-long gradual increase from age 65 to 67, while the age for Medicare eligibility will remain at age 65. This separation between the age of eligibility for full” Social Security benefits (currently at age 66 and 2-months) and eligibility for Medicare (age 65) is confusing to many people.
To keep it simple, the only age one needs to remember for purposes of Medicare eligibility is age 65; that has not changed. For those approaching that age, the only additional requirement to be eligible for Medicare is that you are qualified to collect Social Security benefits, be a U.S. citizen, or a permanent resident (i.e. a “green card” holder) for at least five years.
In addition, I should also note that a small group of people under age 65 may also be eligible for Medicare. That small group is limited to those who have a qualifying disability or one of two diseases: ALS (also known as Lou Gehrig’s disease) or advanced kidney disease (permanent kidney failure requiring dialysis or transplant).
123s – When does enrollment begin?
Another simple rule that generally applies across the board to everyone who turns 65 and is eligible for Medicare is that all such individuals will have a seven-month “initial enrollment period,” or IEP. The IEP spans from the start of the third month before the month of an individual’s 65th birthday through the end of the third month following the month of their 65th birthday. This IEP is available to them regardless of whether they continue to work past age 65.
If an individual works past age 65 and also remains eligible for group health coverage provided by their employer (or their spouse’s employer), then they may choose not to enroll in Medicare during their IEP. If this is the case, they will have a second chance to enroll during a “special enrollment period,” or SEP. The SEP generally lasts 8 months, beginning from the month after their employment or group health coverage ends, whichever occurs first. If they do not enroll in Medicare during their IEP or SEP, then they may be subject to lifelong penalties in the form of increased premiums.
Speaking of premiums, this reminds me of another very important topic that I want to briefly touch on: which is cost. It is very important to understand that Medicare is not free. There will be premiums, deductibles, and copays that an individual must pay. More details about the costs associated with Medicare coverage will be addressed in a forthcoming article.
Do Re Mis – What does Medicare cover?
The last bit of basic information about Medicare that I will share centers on coverage. Medicare covers both inpatient care after being admitted to a hospital and outpatient care outside of a hospital admittance.
Inpatient care covered by Medicare also includes skilled nursing care for up to 100 days following a three-night or longer hospital admittance, hospice care, and possibly home healthcare as well (but only when certain physician-certified conditions are satisfied). Outpatient care covered by Medicare includes physician services outside of a hospital admittance, ambulance services, durable medical equipment, and preventative benefits such as an annual checkup and cancer screenings.
What Medicare does not cover
Finally, it is also very important to understand that Medicare will not cover everything. In particular, be aware of a few important things that Medicare will not cover, the most important of which (for most people) is prescription drugs. If an individual needs prescription drug coverage, they will need to buy a supplemental Medicare Part D prescription drug plan from a private insurance company. In the alternative, they can buy a Medicare Advantage Plan (known as a Medicare Part C plan) from a private insurer. Medicare Advantage plans replace “original” Medicare provided by the Federal government, and usually include prescription drug coverage. In addition, Medicare does not cover most dental, vision, or hearing care; nor does it cover most alternative medicine or care received outside of the United States. Lastly, Medicare does not generally cover long-term care.
I will go into more detail on what is, and what is not, covered by Medicare in a forthcoming article. Until then, I hope reviewing this basic information will help you all easily learn the ABCs and 123s of Medicare in order to better help you and your clients make decisions about their coverage options.
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