Medicare can be extremely complicated and confusing to sort through, which is why the help of a knowledgeable Medicare and financial advisor is beneficial. Here we breakdown the basics of Medicare coverage including everything from hospital care to doctors visits, prescription drugs, and more.
How do I qualify for Medicare?
Most individuals who are 65 years and older are eligible for Medicare hospital insurance (Part A) based on their own or their spouse’s employment. You are eligible at 65 years old if you:
- Receive Social Security or Railroad Retirement benefits
- Do not qualify for Social Security or Railroad Retirement benefits but have worked long enough to be eligible for Medicare
- Would be entitled to Social Security benefits based on your spouse’s (or divorced spouse’s) employment, and that spouse is at least 62 years old. *Your spouse does not have to apply for his or her own benefits for you to be eligible.
- Held a federal, state, or local government job for a certain number of years
What are the different parts of Medicare?
Medicare was introduced in 1965 as a federal insurance program, and since then its benefits have expanded along with the number of its beneficiaries. Currently, those numbers are 57 million Americans 65 years and older and 9 million disabled Americans! Because of the complex nature of Medicare, the program is broken down into four different parts:
Part A – Hospital Care
Part A covers the cost of inpatient stays in hospitals and short-term skilled nursing facilities, home health services, and hospice care. When you apply for Medicare, you will be automatically enrolled into Part A, a part of Medicare that you have already paid for in the form of Medicare tax deductions on your paycheck.
Please note, Part A isn’t totally free! Medicare charges a sizeable deductible ($1,484 in 2021) each time you are admitted to the hospital. To cover this deductible and other potential out-of-pocket costs, a lot of people opt for a supplemental Medigap policy.
Part B – Doctor and Outpatient Services
Part B of Medicare covers doctor visits, lab tests, diagnostic screenings, medical equipment, ambulance transports, and other outpatient services. Because Part B involves more out-of-pocket costs, you may want to defer signing up for Medicare if you are still employed or covered by a spouse’s health plan.
Here’s the catch. If you don’t have health insurance and do not immediately sign up for Part B when you first enroll in Medicare, you will likely end up paying a higher monthly premium! Part B’s monthly premium is set by the government and is currently $148.50 per month and higher if your income exceeds $88,000. Also, you will be subject to an annual deductible ($203 for 2021) and will pay 20% of doctor visits and other outpatient services.
Part C – Medicare Advantage
This is an alternative coverage option to “Original” Medicare that allows you to receive Plan A and Plan B Medicare health care benefits through one plan. Certain plans provide extra benefits that original Medicare doesn’t offer, including dental and vision care, and extras such as wheelchair ramps, shower grips, meal delivery, and transportation to and from doctor’s offices. Some Medicare Advantage plans include prescription drug coverage.
It is important to note that if you opt for Medicare Advantage, you are still required to enroll in parts A and B and pay the Part B premium. In addition, you will have to choose a specific Medicare Advantage plan (either an HMO or PPO plan) and enroll with a private insurer.
Part D – Prescription Drugs
Part D of Medicare covers the cost of FDA-approved prescription drugs and must also be purchased through a private insurer. Expect an annual deductible and to pay a premium as well as other out-of-pocket costs, either flat copays per prescription or a percentage of the cost.
In 2021, the maximum prescription drug allotment is $4,130. If you exceed this amount, you will be responsible for 25% of the cost of your prescription drugs. The good news? If your drug costs exceed $6,550, you may qualify for catastrophic coverage and pay only 5% of the cost of your drugs.
Learn more about Medicare Benefits with Maggi Tax Advisory and Financial Group!
For over 30 years, our expertise has guided individuals, families, and businesses with all aspects of their financial well-being, Medicare benefits included. To learn more about our services or to schedule an appointment, please call our Hillsborough office at (813) 850-0241 or our Pinellas/Pasco location at (727) 493-7295.