Medicare Basics

Medicare has many Parts and Plans......

Medicare Part A

Part A covers hospitalization, skilled nursing facilities, certain home health care, and hospice care.

If an employee (or their spouse) has worked and paid Medicare taxes for at least 10 years, they will receive Medicare Part A premium-free and there is no penalty for delaying enrollment.

Fewer than 20 employees

If an employer has fewer than 20 employees, Medicare is the primary payer and the employer health plan is the secondary payer. In this instance, it's generally considered essential that employees enroll in Medicare Parts A and B when turning 65. If they don't enroll, they will have to pay out of pocket anything that Medicare would have covered as primary payer.

 

More than 20 employees

If an employer has more than 20 employees, Medicare Part A acts as secondary payer when the employee turns 65. The employee must stop making contributions to an HSA 6 months prior to enrolling in Part A in order to avoid incurring a 6% excise tax on any contributions made during that time frame.

Medicare Part C

 Medicare Advantage plans are offered by private insurance companies approved by Medicare.

 

In addition to the Part B premium, members might pay a monthly premium, although many MA plans have a $0 monthly premium. 

 

MA plans must cover all Part A and Part B benefits and may offer extra coverage, like vision, hearing, dental, and other health and wellness programs. Most include prescription drug coverage.

There are HMO and PPO networks, among other options. Members generally get their services from a plan's network of providers. In all types of MA plans, members are always covered for emergency and urgent care anywhere in the US and sometimes overseas.

MA plans usually charge a fixed co-pay for services such as doctor visits or outpatient surgery, and there is an annual limit on members' out-of-pocket costs for medical services. The co-pays and annual limit may be different between plans.

 

Medicare Part B

Part B covers

Fewer than 20 employees

If an employer has fewer than 20 employees, Medicare is the primary payer and the employer health plan is the secondary payer. In this instance, it's generally considered essential that employees enroll in Medicare Parts A and B when turning 65. If they don't enroll, they will have to pay out of pocket anything that Medicare would have covered as primary payer.

 

More than 20 employees

If an employer has more than 20 employees, it's possible to delay enrolling in Part B when first eligible because the employer health plan is the primary payer.   In this instance, employees have 8 months to apply for Part B from the date employment terminates, or the group health plan ends, whichever is earlier.

 

This 8-month period is called a Special Enrollment Period (SE). If employees enroll in Medicare Part B during this SEP, they will not be required to pay a late enrollment penalty.

If they do not enroll during this SEP, they won't be able to sign up for Part B until the next General Enrollment Period (GEP), which is from January 1 to March 31 each year, and Part B will not become effective until July 1 of that year. They may be required to pay a late enrollment penalty that will be added to the monthly Part B premium for as long as they are covered.

It is generally advisable to enroll in Medicare Part B when the group health plan terminates.

Medicare Part D

Medicare Part D prescription drug plans are available as stand-alone policies or are embedded in a Medicare Advantage plan.

If an employee doesn't enroll in a Part D prescription drug plan when they are first eligible because they have creditable coverage through an employer group health plan, they will only have 63 days to enroll in such a plan after the group health plan ends. If they enroll within this   63-day period, they will not be required to pay a late enrollment penalty (LEP).

Supplemental Options

There are two ways to supplement Original Medicare Parts A and B:

Medigap Plans

 Medigap policies are a type of private insurance that work only with Original Medicare Part A and Part B and, for that reason, they are accepted by every provider in the United States that accepts Original Medicare. 

They are designed to help pay some of the out-of-pocket costs (like deductibles and coinsurance) in Original Medicare.  All policies offer the same basic benefits, but some offer additional benefits so people can choose which one meets their needs and budget.

Medigap policies are standarized and are identified by letters A-N. Every Medigap policy of the same letter provides identical coverage no matter which insurance company offers it.

The best time to buy a Medigap policy is during the Medigap Open Enrollment Period.  This 6-month period begins on the first day of the month in which a person is 65 or older and enrolled in Part B.  After this enrollment period, people may not be able to by a policy due to pre-existing medical conditions.

If people delay enrolling in Part B because they have group health coverage based on their (or their spouse's) current employment, their Medigap Open Enrollment Period won't start until they sign up for Part B.

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