Because health insurance typically comes from an employer, retirement means a big change in healthcare coverage. For most Americans, that change includes Medicare, the American version of single payer health plans. This government administered health insurance is different from your other insurance, so it is important to understand your options and how Medicare works. Follow along with this guide to get a better understanding of the different options for Medicare.
Medicare 101
Medicare is a health insurance plan from the United States government. It is designed for both retired and disabled Americans to have a reliable option for health coverage outside of a traditional employer. Around 155 million Americans get their health insurance through an employer, while 76 million are covered by Medicaid and 55 million are covered by Medicare. At a high level, Medicaid is an insurance program designed for low income families and children while Medicare is designed for the elderly and disabled.
For most working adults, the Medicare qualification age is 65 years old. If you are disabled and receiving Social Security Disability Insurance (SSDI), you qualify for Medicare when you receive your 25th monthly payment. Certain medical conditions including ALS and kidney failure qualify for Medicare regardless of age and time on disability, and special rules apply for former railroad workers.
If you are 65 or older or face a long-term or permanent disability, you likely qualify for Medicare. But Medicare does not work like traditional health insurance from work. There is a lot more you need to know.
Medicare Parts
Medicare comes in four flavors, called parts. These are lettered Part A through Part D. Each works differently and many people have a combination of multiple parts to make up their full coverage.
Medicare Part A – Part A includes coverage for hospital care. Most Americans receive Medicare Part A automatically when registering for Medicare and receive this part with no cost for coverage, though there is a deductible if you use Part A. Covered services under Part A include surgeries, medical tests, some home healthcare such as in-home hospice care, inpatient care at hospitals and skilled nursing facilities, and other specified home healthcare services.
Medicare Part B – Part B covers non-hospital related healthcare services. Major categories include doctor visits, outpatient care, ambulance rides, medical procedures, mammograms, tests, rehabilitation, and cancer treatments. Some forms of home healthcare fall under Part B as well.
Medicare Part D – Part D is focused on prescription drugs and medications. The drug coverage under Part D is administered by private insurance companies and is required if you have Medicare and no other source for prescription medications. Depending on your Medicare plan and income level, you may have a monthly cost or deductible. Your state may offer additional supplements to your coverage.
Medicare Part C – Part C is known as Medicare Advantage. Typically, this includes a combination of Part A, B, and D under one plan to offer a complete level of health coverage. Medicare Advantage plans are administered by private insurance companies who collect payment directly from the government. Medicare Advantage plans work similarly to an HMO like Kaiser Permanente in most cases. But beware that these plans do not cover you outside of the United States and on some other travel, so make sure you know what you’re getting and what your limits are. In many cases, you will want to add additional coverage when traveling or a supplement to round out your care.
Medicare Supplements
The holes in Medicare coverage may leave you on the hook for medical expenses when traveling, paying for medications, and some doctor’s visits. Medicare leaves you with co-payments, co-insurance, and deductibles that may be quite expensive. This is known as the gap in coverage, or Medigap.
In addition to your Medicare Part A through Part D coverage, you can get a supplemental insurance policy called a Medigap insurance plan or Medicare supplement. These are typically private health insurance plans that kick in when Medicare does not meet your needs.
To qualify for a Medigap plan, you must be covered by a Part A and B plan. Prior to 2006, Medigap plans were able to offer supplemental coverage for prescription drugs, but as of 2006 those are all covered by Part D. If you have a Part C Medicare Advantage plan, you may not need a supplement.
These plans require a monthly premium that you pay out of pocket regardless of whether you take any benefits. Medigap policies are one per person, so if you have a spouse on Medicare and want a supplement, you both need your own policy. Once you sign up, the administrator is required to offer you a renewal regardless of any new health conditions, so once you’re in you can keep it as long as you pay the premiums.
Public/Private Administration
You may have noticed that a couple of examples require going through a traditional insurance company for administration. These are major, for-profit companies like UnitedHealthcare, Anthem, Aetna, Cigna, and Humana and some not-for-profit insurers like the Kaiser Foundation Health Plans.
In these health plans, you have a Medicare plan paid for by the government, but you go through a major health insurer to get your coverage. The main benefit of this is that you may be able to keep your same insurance company even when you go on Medicaid. The downside is that you may have to keep your same insurance company even when you go on Medicaid. Health insurance companies in the US get mixed reviews, and you are often stuck going through a for-profit company to get access to your healthcare and doctor even if you have a taxpayer funded health plan.
This can lead to piles of paperwork, seemingly endless bureaucracy, and other hoops to jump through to get your needed coverage. Overall the Medicare system works well, and runs similarly to the universal healthcare systems in almost every other country in the world. When you hear on the news that politicians want single payer insurance for every American, that effectively means Medicare for all.
Be Your Best Advocate
Whether you have traditional employer sponsored health insurance, Medicare, or something else, keep in mind that your health is your responsibility. No matter how great your doctor is or how wonderful your coverage, if you don’t take the steps to ensure your health needs are met, you can fall through the cracks.
Insurance is intended to make healthcare affordable by spreading the risks and costs of coverage among a large group of people. With Medicare, that group is every participating American. While coverage may be affordable, you still have to take charge, schedule your needed appointments and tests, and ensure you get the healthcare you need.
Medicare is a great way to help make that happen, but ultimately you have to be your best advocate for the best health coverage. With a good knowledge of your insurance plan and your healthcare system, you can ensure you get the best treatment and care possible. And that is what healthcare is all about.
