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Understanding Medicare – How Does Medicare Work?

Medicare is the federal health insurance program for people who are 65 or older, young individuals with disabilities, and people with End-Stage Renal Disease, a permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD. The Medicare official website is www.medicare.gov. Medicare was established in 1965 as an amendment to the social security act.

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Who’s Eligible for Medicare Insurance Plans?

What is Medicare Part A – Hospital Insurance

What is Medicare Part B – Medical Insurance

What is Medicare Part C – Medicare Advantage

What is Medicare Part D – Prescription Drug Coverage

What are Medicare Supplement (Medigap) plans?

What is Medicare Plan F

What is Medicare Tax / What is the Medicare Tax Rate

What Is the Next Step? Medicare Supplement Insurance phone number

Who’s Eligible for Medicare Insurance Plans?

You’re eligible for premium-free Part A Medicare if you’re 65 or older and you or your spouse worked and paid Medicare taxes for at least ten years. You can get Part A at age 65 without having to pay premiums if:

  • You’re receiving retirement benefits from Social Security
  • You’re receiving retirement benefits from the Railroad Retirement Board
  • You’re eligible for either of these benefits but have not yet filed for them
  • You or your spouse had a Medicare-covered government job

If you or your spouse did not pay into Medicare taxes while you worked and you’re a permanent resident of the United States and are 65 or older you can get Part A without having to pay premiums if:

  • You’re entitled to Social Security disability benefits for 24 months
  • You’re entitled to Railroad Retirement Board disability benefits for 24 months
  • You’re a patient of kidney dialysis or have a kidney transplant

(If you have Lou Gehrig’s disease, your Medicare benefits begin the first month you get disability benefits.)

While most won’t have to pay the Part A premium, everyone must pay for Part B if they want it. The cost will be deducted from your Social Security, Railroad Retirement, or Civil Service Retirement check. If these payments are not applicable to you, Part B premiums will be sent to you by Medicare every three months.

What is Medicare Part A and B?

What is Medicare Part A – Hospital Insurance

Medicare Part A and Medicare Part B are the two parts that make up the Original Medicare beneficiaries program. Parts of Medicare Part A covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care.

Here’s how each Medicare Part A segment breaks down:

Medicare Part A hospital care coverage:

  • Acute care hospitals
  • Critical access hospitals
  • Inpatient rehabilitation facilities
  • Long-term care hospitals
  • Mental health care
  • Participate in a qualifying clinical research study

Medicare Part A home health care benefits:

  • Intermittent or part-time skilled nursing care
  • Physical therapy
  • Speech-language pathology assistance
  • Occupational therapy
  • Medical social assistance
  • Part-time or intermittent home health aide assistance

Medicare Part A nursing home coverage:

  • Specialized nursing services
  • Semi-private room
  • Meals
  • Medical social services
  • Rehabilitation services, if medically necessary to treat your illness
  • Medical supplies and equipment used in an SNF
  • Medications received while in SNF care
  • Dietary counseling
  • Ambulance transportation to the closest provider if needed services are not provided at the SNF

For a more extensive breakdown of Medicare Part A click here

What is Medicare Part B – Medical Insurance

Medicare Part B is the second half of Original Medicare medical insurance plans which covers certain doctors’ services, outpatient care, medical supplies, and preventive services. Those eligible for Medicare Part B should know that it comes with an annual deductible. After reaching the deductible, you’ll typically pay 20% of the Medicare-approved amount, for the most part, B-covered services, and permanent medical equipment.

Here’s how each Medicare Part B segment breaks down:

  • Preventive services and screenings
  • Doctor appointments, including yearly wellness exams
  • Lab tests
  • X-rays
  • Certain vaccinations
  • Ambulance services
  • Limited home health care
  • Outpatient mental health services
  • Durable medical equipment, such as walkers, canes
  • Certain prescription drugs administered to you in an outpatient setting

Part B also has a monthly premium with a cost that depends on:

  • When you enrolled in Medicare Part B
  • If you’re collecting retirement benefits
  • If  you’re billed directly for premiums
  • Whether you have parts of Medicare and Medicaid
  • Whether the modified adjusted gross income on your tax return from two years ago is above a certain amount.*

*If you make above a certain amount, you may have to pay an Income Related Monthly Adjustment Amount (IRMAA). For more information on the Medicare Part B premium, visit Medicare.gov.

For a more extensive breakdown of Medicare Part B click here

What is Medicare Part C – Medicare Advantage

Medicare Part C, most commonly referred to as Medicare Advantage, is an alternative to receiving Original Medicare benefits. Instead of receiving your Medicare program benefits through the government, you can get them through a Medicare Advantage plan, made available by Medicare-approved private insurance companies. Medicare Advantage coverage can range in price depending on the plan.

What is Medicare Advantage?

While there are many types of Medicare Advantage plans, the most common types are HMOs or PPOs that work similar to a type of health plan you would usually receive through an employer.

HMO stands for “Health Maintenance Organization.” In these plans, you can only go to doctors, health care providers or hospitals in that plan’s network, excluding urgent emergencies. With HMO’s you usually need to get referrals for tests or to see other specialists from your primary care doctor.

PPO stands for “Preferred Provider Organization.” These plans let you pay less if you use doctors, health care providers or hospitals in that plan’s network. If you go out of its specified network, you will pay more.

While all Medicare Advantage plans are required by law to offer the same coverage as Original Medicare Part A and Part B, they do not need to cover hospice care. Another difference between Medicare Advantage and the Medicare program is that some private insurance companies may cover even more than what the federal program does. This can include routine vision, hearing or dental care, prescription drugs, and wellness programs.

Prescription drugs can be available through Original Medicare by purchasing a Medicare Perscription Drug Plan.

What is Medicare Part D – Prescription Drug Coverage

Medicare Part D adds prescription drug coverage to Original Medicare Part A and B, some Medicare Cost Plans, Medicare Private-Fee-for-Service Plans, and Medicare Medical Savings Account Plans. These are offered by insurance companies and other private companies authorized by Medicare. Medicare Advantage Plans can also offer prescription drug coverage that has the same rules as Medicare Prescription Drug Plans.

What are Medicare Supplement (Medigap) plans?

Another Medicare coverage you may have is a Medicare Supplement insurance plan, also known as Medigap. This works with the Original Medicare Part A and B plan to cover certain costs you’d typically pay for out-of-pocket such as copayments, coinsurance, deductibles, and overseas emergency coverage.

Medicare Supplement Insurance plans do not pay for any costs associated with a Medicare Advantage plan.

There are ten regulated Medicare Supplement Insurance or Medigap plans offered in most states, except for Massachusetts, Minnesota, and Wisconsin which have their versions. These supplemental plans were made to help compensate for coverage gaps that Original Medicare may have.

Because these benefits are standardized, everyone will get the same coverage from Medigap plans of the same letter type no matter where you live or which private insurance company you bought it from. Though be aware that premium costs can differ even though the benefits are the exact same.

The best time to buy a Medigap policy is during your six-month Medigap open enrollment period when you can buy any Medigap policy sold within your state even if you have health problems. You cannot be denied coverage during these six months. This period starts the month you’re 65 and enrolled into Medicare Part B. After this time it will be harder to buy a Medigap policy if you don’t meet medical underwriting requirements. If you’re able to buy one, it may cost more.

There are many benefits to Medigap plans that many may not be aware of such as:

  • no copays
  • low to no out-of-pocket costs
  • You’re able to choose any doctor or hospital that participates in the Medicare program
  • No referrals are necessary
  • You can enroll when you sign up for Medicare at age 65
  • You can obtain coverage out of the United States
  • Hospice care
  • Excessive medical services charges
  • Long-term inpatient care
  • Anyone who has Medicare should have a Medigap plan.

What is Medicare Plan F

If you’ve searched for a Medicare Supplement Insurance Plan, it’s likely that “Plan F” has been a coverage option you’ve come across more than once. It’s a favorite amongst many Medicare program users because of its comprehensive benefits that cover some out-of-pocket expenses you may incur. Know that there are insurance companies that also provide high-deductible alternatives to Plan F. These Supplement insurance plans cannot be purchased by themselves.

For example, if you’re visiting the doctor often and have inconsistent medical costs, Plan F’s coverage could be the plan for you! But if you can afford to pay a little of the costs associated with Medicare upfront, consider a high-deductible version of Plan F.

The following is a list of costs and benefits covered by Medigap Plan F:

  • Part A deductible
  • Part B deductible
  • Part B excess charges
  • Preventative care Part B co-insurance
  • Part A hospital and co-insurance plans cost up to an additional 356 days after Medicare beneficiaries benefits are exhausted
  • Part B co-insurance or co-payment
  • First three pints of blood used in an approved medical procedure (annually)
  • Part A hospice care co-payment or co-insurance
  • Skilled Nursing Facility (SNF) co-insurance
  • Foreign travel emergency

What is Medicare Tax / What is the Medicare Tax Rate

Medicare taxes fund Medicare program coverage, the federal program that provides millions of retired and disabled individuals access to medical treatment.

Medicare Hospital Insurance Tax

No matter what your income is, the government taxes 2.9% on your wages. Employees pay half of this amount (1.45%) through payroll deductions, and their employers pay the other half. In other words, half comes out of your pay and your employer matches that, paying another 1.45% on your behalf.

Medicare Tax for the Self-Employed

If you’re self-employed, you must pay the entire 2.9% on your own. You’re allowed to deduct half your self-employment tax on the first page of your tax return. Unlike other deductions, this one is beneficial in that it lowers your adjusted gross income.

Additional Medicare Tax

In November 2013, the Affordable Care Act added 0.9% Medicare surtax, but only for those with earnings over a certain amount. Those who are affected pay a total Medicare tax of 3.8%. As of 2018, these earnings thresholds are:

  • $250,000 for married people filing jointly
  • $200,000 for single people, heads of households, or qualifying widow(er)s
  • $125,000 for married people filing separately

It’s up to the employer to withhold the extra 0.9% from employees who make more than these amounts.

The Net Investment Income Tax

Investment income was not always subject to Medicare tax, but the Affordable Care Act changed that. A Medicare contribution tax of 3.8% now also applies to “unearned income”—meaning interest or dividends from investments, as opposed to wages for labor.

In the end, many taxpayers only have to deal with that first 2.9% flat Medicare tax, unless they are high earners.

What Is the Next Step?

It is our mission to make the process of selecting the best 2019 Medicare Insurance Plan hassle-free. Licensed insurance agents representing only the top and most reputable insurance companies are ready to assist you in finding the right Medicare supplemental plan that’s perfect for your needs.

Our services are free and available to you with no obligation to purchase. Whether you’re just at the beginning of your Medicare enrollment or are shopping Medigap plans at any time of the year, the next step is to contact one of our expert agents at 1-844-374-1950.

 

What is Medicare? | Medicare Official Site | Medicare org | Medicare Qualifications | Medicare and You | Medicare Advantage Plans

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