Americans usually qualify for Medicare when they reach 65 years old. Most are automatically enrolled and have to choose a plan. However, some people eligible for medicare have to sign up.
Let’s take a look at the different types of Medicare, who’s eligible and how to sign up for Medicare.
What is Medicare?
Medicare is a federal health insurance program that provides coverage for senior citizens and people on long-term disability or who have specific health problems. The Centers for Medicare and Medicaid Services administer the program, which is divided into two overarching types: Original Medicare and Medicare Advantage.
Let’s take a look at the differences:
|Type||What It Covers||What It Costs|
|A (Hospitals)||Inpatient hospital, skilled nursing facilities, hospice care, home health care in some cases||Free for nearly all Americans. People who don’t pay Medicare taxes for at least 40 quarters have to pay a premium. If you must pay a premium, it costs up to $422 monthly. Part A has a $1,484 deductible.|
|B (Physicians)||Doctor visits, outpatient care, medical supplies, preventive services||Part B costs $148.50 monthly in 2021. However, premiums could be more than double depending on income. The annual deductible is $203. After you reach the deductible, you’re responsible for 20% of the costs.|
|C (Medicare Advantage)||Medicare plans through private insurers; includes supplemental benefits, including prescription drug coverage||Medicare Advantage premiums vary based on coverage and benefits. Average Medicare Advantage premium in 2021 is $21.|
|D (Prescription Drugs)||Prescription drug coverage||Available only for people with Parts A and/or B. Average basic Medicare Part D premium is $30.50 in 2021.|
If you choose Original Medicare, you may decide to go only with Part A if you get health insurance through another means, such as an employer or a spouse’s employer. However, if you skip Part B when signing up for Original Medicare, you’ll have to pay a late enrollment penalty for as long as you have that coverage.
The penalty will increase your monthly premium by 10% for each 12-month period that you skipped Part B. You’ll want to keep that in mind when deciding whether to sign up for Part B.
Whether Original Medicare or Medicare Advantage is better for you depends on many factors:
- Number of plan options.
- Costs, including premiums, out-of-pocket expenses and deductibles.
- Prescription drug benefits.
- Hospital and provider networks.
- Quality of plans.
You’ll likely have multiple Medicare Advantage plan choices. The Centers for Medicare and Medicaid Services said Americans will have an average of 47 Medicare Advantage plans in 2021. When deciding between plans, you can use the Medicare Plan Finder. The tool lets you compare both Original and Medicare Advantage plans in your area. You answer a series of questions that help narrow the number of plans.
Who’s eligible for Medicare?
The vast majority of Medicare beneficiaries are senior citizens. They become eligible when they turn 65.
However, younger people who get Social Security disability benefits are also eligible for Medicare. Medicare usually kicks in 24 months after a person receives Social Security disability benefits for 24 months. Also, people with end-stage renal disease or amyotrophic lateral sclerosis (ALS) are eligible for Medicare.
Signing up for Medicare
People who have enrolled automatically, such as those turning 65, have a seven-month window to choose a plan. The clock starts ticking three months before the 65th birthday and ends three months after your birth month.
You’ll likely get a packet that includes your Social Security card three months before your 65th birthday. That kicks off the open enrollment period for you to decide on a plan.
If you’re not signed up automatically, there are three ways to seek coverage:
- You can apply online at the Social Security site.
- You can call Social Security at 1-800-772-1213.
- You can go to a local Social Security office.
You can sign up through an online application if you’re at least 64 years and nine months old.
Making changes to Medicare after you sign up
One thing to not worry about is being locked into a plan for life.
Each year, Medicare has an open enrollment period that allows you to make changes. During that time, which runs from Oct. 15 to Dec. 7, you can:
- Not make any changes.
- Switch from Medicare Advantage to Original Medicare and vice-versa.
- Change Medicare Advantage plans.
- Change Part D prescription drug plans or drop that coverage.
Also, from Jan. 1-March 31 each year, Medicare holds a Medicare Advantage open enrollment. That enrollment is more limited than the one that starts in October. The Medicare Advantage open enrollment allows members only to change Medicare Advantage plans or move to an Original Medicare plan.