If you are planning to retire within the next year, it’s time to start thinking about Medicare and your coverage options. Understanding how Medicare works and transitioning to new medical coverage can seem confusing and overwhelming. We are here to make it easier.
Medicare is a federal health insurance program that serves people ages 65 and older or people with qualifying disabilities. To qualify for Medicare, you must be a legal resident living in the United States for at least five consecutive years and meet one of the following requirements:
Some people may also be “dual eligible,” meaning they are eligible for both Medicare and Medicaid, also known as MediCal. When enrolling in Medicare for the first time, there are many health plan options you can consider. Your choices can be divided into three options: Original Medicare, Medicare Advantage or insurance provided by your employer.
Original Medicare is a fee-for-service plan managed by the federal government. When you sign up, you receive a Medicare card, which makes you eligible for Medicare-approved services. Original Medicare allows you to choose any doctor, hospital or other facility that accepts Medicare.
Original Medicare includes:
Medicare Part A provides hospital coverage, skilled nursing facility care, hospice care and home health care. Most people do not pay a monthly premium for Medicare Part A; you or your spouse paid for this through payroll taxes while working. With Medicare Part A you are responsible for costs when receiving inpatient care.
Medicare Part B provides outpatient services like visits to your primary care doctor or specialists, outpatient surgery, ambulance, outpatient medical health, durable medical equipment, outpatient physical therapy and outpatient lab work. There is a monthly premium for Medicare Part B, which is determined by your modified adjusted gross income reported on your tax return from two years prior. Depending on your income, you may pay more or less per month for your Medicare Part B coverage.
Enrolling in Medicare Part A (hospital coverage)
If you were already receiving Social Security benefits when you turned 65, you were automatically enrolled in Medicare Part A and should have received your Medicare card in the mail around your 65th birthday. If you are not receiving Social Security benefits, you may apply for Part A. You can apply online at http://www.ssa.gov/medicare or in person at your local Social Security office. Call 1-800-772-1213 to confirm Social Security office hours and holiday closures.
Orange County Social Security Office Locations:
If you are retiring from work and will no longer have insurance through your employer and you are enrolling in Medicare Part B after age 65, there are important steps you need to take to avoid a late-enrollment penalty. Before you retire, Social Security requires your employer to complete the Request for Employment Information form, which states the date through which you had creditable coverage. This form will exempt you from the late-enrollment penalty.
If you have Original Medicare, you can choose to go to any doctor or hospital that accepts Medicare. If you are considering Original Medicare (Parts A and B), you may also want to consider enrolling in a Part D prescription drug plan or a Medicare Supplement insurance plan. These are both optional add-ons to Original Medicare.
Parts A and B of Original Medicare do not include drug coverage. If you want to add drug coverage, you will need to choose a Part D plan and pay a monthly premium. These plans are offered through private insurance companies, not the federal government. The cost for a Part D plan, and the drugs included in the plan, varies based on the plan you choose.
If you go 63 days or more without a Part D plan (or other credible drug coverage) after your initial enrollment period is over, you may owe a late-enrollment penalty. The late-enrollment penalty is calculated by multiplying 1 percent of the national base premium for a Part D plan by the number of full uncovered months you were eligible but didn’t join a Medicare prescription drug plan.
Medicare Supplement Insurance Plans, also known as Medigap plans, cover “gaps” in Parts A and B of Original Medicare. Gaps are costs that you are responsible for, such as deductibles and copays. The policy cost and coverage depend on the plan you select. These plans are offered through private insurance companies, not the federal government. When you choose a Medicare Supplement plan, you can continue to go to any hospital or physician that accepts Medicare.
Medicare Advantage plans, also known as Part C plans, provide coverage beyond Original Medicare Parts A (hospital coverage) and B (outpatient coverage). These plans are offered through private insurance companies, not the federal government. A Medicare Advantage plan is an alternative to having a Part D and Medicare Supplement plan. You cannot have both a Medicare Advantage plan and a Medicare Supplement plan.
Medicare Advantage plans offer the same coverage as Medicare Parts A and B, and may include prescription drug coverage, plus extra benefits like vision, hearing and dental, as well as access to care management services. These plans also provide financial protection through annual limits on out-of-pocket expenses. Medicare Advantage plans offer a low or no-cost monthly health plan premium beyond what you pay for Part B and give you access to care from doctors and hospitals that are within the plan’s network.