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Medicare Enrollment Information: Part 1 – The Basics

category_bug_journal2.gif Today is the first day of Medicare's annual open enrollment period during which those who are eligible may make changes to their traditional Medicare, prescription drug (Part D) or Medicare Advantage plan for the calendar year 2013.

The enrollment period lasts until 7 December and if you do not make changes during these nine weeks, you must wait until next year's enrollment period. As I promised last week, this series will fill you in on many facts and other kinds of information that will help you make your choices this year. And I will try to keep it as easy to understand as possible.

Inevitably, that means I will not answer every question individuals have. Medicare is a vast program with uncounted numbers of possibilities so I cannot cover every contingency. Medicaid is even more complicated and I will not cover that at all. But I will do what I think will be useful for widest group of TGB readers.

At the end of the series, I will give you links to good additional resources along with a list of places where you can find people (real people) to help with your particular situation.

Because it appears there are a good number of readers who are just recently or soon to be eligible for Medicare, today we will cover the basics.

WHAT IS MEDICARE
Medicare is a health insurance program for people age 65 and older. Created during the presidency of Lyndon Johnson in 1965, it is the closest thing to a universal coverage/single payer system the U.S has.

The Centers for Medicare and Medicaid (CMS), an agency of the U.S. Department of Health and Human Services (HHS), administers Medicare. The Social Security Administration (SSA) determines eligibility for Medicare.

WHO IS ELIGIBLE FOR MEDICARE
In general, anyone age 65 and older who is a U.S. citizen or a legal resident for at least five years is eligible for Medicare. There are certain work requirements to qualify for Part A (see below) and if they are not met, a premium is charged.

There are circumstances under which younger people are eligible but because this is a blog about aging, I will not address those.

WHEN IS SOMEONE ELIGIBLE FOR MEDICARE
Anyone already receiving Social Security benefits will receive his or her Medicare card three months before their 65th birthday. The benefits begin on the first day of the month in which you turn 65.

Those not receiving Social Security checks on their 65th birthday must enroll on their own. You should do this three months before your 65th birthday so benefits will begin on time.

What is called the “initial enrollment period” begins three months before the month in which a person's 65th birthday occurs and continues through three months following the birthday month.

To enroll, you can telephone SSA (800) 772-1213 or visit the web site or apply at your local Social Security office.

THE FOUR (OR FIVE) PARTS OF MEDICARE
Medicare is divided into four sections which cover different aspects of health care. Here is an overview of each:

Medicare Part A
Part A is hospital coverage: in-patient hospital stays including a semi-private room, food and tests. In certain circumstances, it also covers rehabilitation in skilled nursing facilities, hospice and home care.

Most enrollees pay no premium for Part A. Those with too few working quarters to qualify pay premiums ranging (in 2012) from $248 to $451 per month.

Medicare Part B
Part B covers doctors, outpatient care, lab and diagnostic tests, x-rays, blood transfusions and more. It typically pays 80 percent of the cost; patients are responsible for the remainder.

Part B is optional and can be deferred if a Medicare enrollee or spouse is still working at age 65 AND has group coverage with his/her employer.

Without that private coverage, if you do not enroll in Part B before the end of the initial enrollment period and decide to enroll later, there is a lifetime penalty added to the premium of 10 percent for each year delayed.

For most people, the 2012 premium for Part B has been $99.90 (those with high income pay more) and it is usually deducted from people's Social Security benefit.

Medicare Part C
Part C, also called Medicare Advantage, is private Medicare insurance including HMOs (Health Maintenance Organizations) and PPOs (Preferred Provider Organizations). It replaces Parts A and B (referred to as traditional Medicare) and sometimes Part D, and will be explained thoroughly later in the week.

Medicare Part D
Part D, Medicare's prescription drug plan, went into effect on 1 January 2006. It is private coverage open to any traditional Medicare beneficiary. Beneficiaries may enroll in a plan or change plans during the annual open enrollment period.

In the beginning of Part D, there was the now-infamous and expensive “donut hole” wherein, after a period of coverage, beneficiaries were required to pay the entire cost of their drugs until a certain amount was met when catastrophic coverage would kick in.

Obamacare (the Affordable Care Act) is changing that. The donut hole is gradually being reduced year-by-year until it will be eliminated entirely in 2020.

You should enroll in a drug plan when you first join traditional Medicare and do not have other coverage. If you do not and join later, you may be required to pay a late enrollment penalty with your monthly premium.

There is a wide variety of Part D plans and it can be difficult to weigh the advantages and disadvantages of each to choose what is best for you. There will be a more complete explanation later this week.

IMPORTANT NOTE: If you are enrolled in a Medicare Advantage (Part C) plan that includes drug coverage and you join a Part D prescription drug program, you will be dis-enrolled from your Advantage Plan and returned to traditional Medicare. (I don't know why anyone would do that but apparently it happens, so now you know.)

Medicare Supplemental (Medigap) Plans
This is the reason I noted the (or Five Parts of Medicare) above. Supplemental policies, which are optional, are private insurance that helps fill the gaps in traditional Medicare such as the 20 percent not covered in Part B along with some copayments, coinsurance and deductibles.

Generally, Medigap policies cannot cover gaps in Medicare Advantage and Part D plans nor private employer plans, Veterans Administration or Medicaid.

Medigap policies must follow state laws so even from the same insurance company, policies may not match state to state. When I moved to Oregon from Maine two years ago, I was required to purchase a new Medigap policy within a month or so of making the move.

In most states, only Medicare-standardized Medigap policies can be sold. Different levels of coverage are identified with letters A through N. The best time to buy a Medigap policy is during the six-month Medigap enrollment period which begins in the month you turn 65. You must also be enrolled in Medicare Part B to purchase a Medigap policy.

If you miss that open enrollment period, if you have a pre-existing condition, you can be denied Medigap coverage. I will expand on Medigap policies later this week.

VETERANS
If you have veterans benefits and Medicare, you can use either program but not at the same time. You must choose one or the other each time you see a physician or other health care professional. And, to have the Veterans Administration pay for your services, they must be administered in a VA facility or a VA-authorized outside facility.

There are other restrictions and this is a good, basic, two-page explanation [pdf] from the Centers for Medicare and Medicaid Services.

Whew! Did you make it this far?

I know that some of you have been Medicare beneficiaries for years and today's post is probably redundant for you. But Medicare is hard to understand, especially for newbies, and before diving into more details I want us all to be on the same page. Sorry for the boring parts.

I've read all your questions from last week's post and will incorporate many of them in this series which will continue on Wednesday.

I am skipping tomorrow, Tuesday, due to the second presidential debate and I will be moderating a Google+ "hangout" of several other elders as we watch the debate and comment throughout. So tomorrow's post will have some pre-debate commentary.

The next installment on Medicare, Supplement (Medigap) policies, will appear here on Wednesday.

Medicare Enrollment Information: Part 2 - Medigap
Medicare Enrollment Information: Part 3 - Prescription Drugs
Medicare Enrollment Information: Part 4 - Advantage Plans
Medicare Enrollment Information: Part 5 - Where to Get Help


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Comments

I just got my first Medicare related communication from my current health insurance plan an--instant panic attack. This was so very helpful. I will be paying close attention here.


Ronni,

Another one of your "READ THIS AND TELL ME WHAT IS SAYS" posts.

I only wish that I had had you by my side when I first reached Medicare age and was trying desperately to figure it all out.

I'm sure that ,like Olge, many of your readers will find your explanations and advice invaluable. Thanks again...

On the funny side of Medicare, I remember reading that Elizabeth Taylor went into the hospital and had brain surgery the day BEFORE she was 65. That's class!

There were no boring parts, Ronni. I am not yet eligible for Medicare but I'm close enough to be very interested in this.

Thank you for distilling the information down into something understandable. I'm looking forward to learning more.

Just want to say again how terrific it is that you're doing this. thanks!

Thank you SOOO much. I am on employer insurance now but planning to retire next summer so this is very helpful. You help me every day Ronni!

The government does have some helpful website information but you have filled an important gap with today's column. The first thing people need is a basic overview, crystal clear, and that is what you have written. I am going to bookmark this column to refer friends to.

My only suggestion would be to make it more clear in the Medicare Part C section that people get to CHOOSE whether to stick with traditional, government-run Part A and Part B for their Medicare, OR to go with Part C: privately-run commercial insurance(aka Medicare Advantage).

When you talk about people who have "other coverage" after they become eligible for Medicare, it is often people who had good group coverage through their employment. After retirement, many of these employer-sponsored group plans transition to Medi-gap type policies, which continue to provide drug coverage, and fill in the gaps which Medicare does not pay.

I was lucky enough to find a great Medicare Advantage plan by asking friends in the area, but your article will help all those who can't see the forest through the trees and can't dig through all the Medicare mail you receive at this time of year.

Thank you!

One would try buy a basic Advantage plan and a Part D policy to save money, and since it doesn't clearly state you can't do that, your first inkling is when they dis-enroll you from the Advantage plan without an offer to let you buy the Advantage Part D plan.

Then you find out that the Part D plan you chose will cover a 30 day supply of the drugs you use, but not a 90 day supply. At far greater cost to both the insurance company and yourself.

There WILL be surprises in this journey. The good news is that www.medicare.gov continues to improve their website.

All readers...
I appreciate all the comments but do not necessarily endorse readers' advice.

I stand by mine and, if proved wrong, will certainly correct it. I am not able to check every piece of comment information for validity so please do not act on it without confirming it for yourself.

I'm one of those newbies who will be eligible late next year and this post was abundantly helpful Ronni. Primarily because I have never taken the time to sit down and read up on this as I have now with your information.

Thanks so much. I will post this to my "Favorites" folder so I can use it when the the time comes.

Thank you, Ronni! This explains it better, and more simply, than anything else I have read.

Thanks for your very clear explanations!

This is great! ....and I start receiving my medicare on November 1st :) I have been struggling thru this maze for 3 months....the paperwork I received in the mail is staggering! I had a good insurance man help me with the supplemental stuff...and, even tho I take NO prescriptions, he said to enroll in that coverage anyway to avoid a penalty later!

Thats' a great article about the medicare plans.Thanks for the share.

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