What is Medicare
Medicare is the United States federal government program that provides health care coverage (health insurance) if you are 65 or older, under 65 and receive Social Security Disability Insurance (SSDI) for a certain amount of time, or under 65 and have End-Stage Renal Disease (ESRD). The Centers for Medicare & Medicaid Services (CMS) is the federal agency that runs Medicare. The program is funded by Social Security and Medicare taxes you pay on your income, through premiums that people with Medicare pay as well as funded through the federal budget.
Once you’ve become Medicare-eligible, you can enroll in Original Medicare, the traditional fee-for-service program offered directly through the federal government, or choose to enroll in a Medicare Advantage Plan, a type of private insurance offered by companies that contract with Medicare (the federal government).
Original Medicare is coverage managed by the federal government. Generally, there's a co-insurance cost or copay for each service.
How Does One Qualify for Medicare
Medicare is something that many older Americans take for granted, but you actually have to qualify to receive it. As long as you have worked long enough to collect 40 credits or an equivalent of a 10-year career (on payroll for at least 10 years), then you qualify for Medicare. In addition, if you're married to someone who has qualified, then you can qualify on your spouse's work history even if you wouldn't qualify on your own.
Those who haven't collected enough credits can still participate in the program, but they have to pay for certain portions of Medicare that others get for free. The most important example is Part A hospital insurance, which is included free of charge for most participants but for which those who don't have enough credits, they’ll have to pay monthly premiums.
How Does Medicare Work?
There Are Four Parts To Medicare, Some Of Which Are Optional:
- Medicare Part A - This part of Medicare covers hospitalization. You become eligible for Medicare Part A on the first day of your 65th birth month. As long as you or your spouse worked at least 10 years in the United States, you are eligible for Part A. There is no premium for Part A.
- Medicare Part B - This part of Medicare covers all physician charges and all outpatient charges. Basically, Part B covers any charge that is not considered hospitalization. In 2018, the standard premium for Part B is $134 per month. This amount can change from year to year and usually increases. This premium is also adjusted up for higher income individuals. If you are drawing your social security check now, this amount will be deducted from that check. If you are not drawing social security yet, the cost will be billed to you quarterly. You also have the option of setting up a monthly bank draft directly with Medicare. You also become eligible for Part B on your 65th birth month, but can defer Part B if you are working and have creditable coverage. You can then later enroll in Part B when you have retired. You will not pay any penalty as long as your prior coverage was credible.
- Medicare Part C - This part of Medicare was put into law in 2005 and is the considered the privatization of Medicare. Part C is also referred to as Medicare Advantage; a private Medicare type plan. When you select a Medicare Advantage plan, you are no longer covered by Medicare Part A and Part B, but by a private insurance company. Medicare Advantage plans can have drug coverage as part of the plan. These plans are not a Medicare supplement, but are a stand-alone plan. If you are interested in a Medicare Advantage plan, do your due diligence and research and make sure you have checked that your doctors will accept the plan you are considering.
- Medicare Part D - This part of Medicare refers to the prescription drug coverage. When looking for a Medicare drug plan, you can visit the Medicare government website and utilize their prescription drug calculator. This tool is relatively accurate and will help you find the drug plan that best suits you. However, this online drug research tool can be cumbersome to navigate and you can easily miss vital information. With the assistance of an independent Medicare Supplement Agent, you can obtain objective advice and avoid a costly mistake.
When Can You Sign Up for Medicare Part A & Part B?
When you're first eligible for Medicare, usually at age 65, you have a 7-month Initial Enrollment period to sign up for Part A and/or Part B. For example, if you're eligible when you turn 65, you can sign up during the 7-month period that begins 3 months before the month you turn 65, includes the month you turn 65, and ends 3 months after the month you turn 65.
If you didn't sign up for Part A and/or Part B (for which you must pay premiums) when you were first eligible, and you aren’t eligible for a Special Enrollment Period, you can sign up during the General Enrollment Period between January 1st - March 31 of each year. Your coverage will start July 1. You may have to pay a higher premium for late enrollment in Part B.
Signing up for Part B can easily be done online at Medicare or Social Security government websites. You can also sign up at your local social security office and you may need to do that in person if you delay either Part A or Part B.
What if You Miss Medicare’s Initial Enrollment Period?
Once your Initial Enrollment Period ends, you may have the chance to sign up for Medicare during a Special Enrollment Period. If you're covered under a group health plan based on current employment, you have a Special Enrollment Period or SEP to sign up for Part A and/or Part B any time as long as you or your spouse (or family member if you're disabled) is working, and you're covered by a group health plan through the employer. You also have an 8-month Special Enrollment Period (SEP) to sign up for Part A and/or Part B that starts the month after the employment ends. Usually, you don't pay a late enrollment penalty if you sign up during a Special Enrollment Period.
Why do Medicare Beneficiaries Need a Medicare Supplement or Medigap Protection?
Medicare Supplement plans help pay the costs that Medicare Part A and Part B don’t pay. Original Medicare Part A provides hospital protection and Medicare Part B covers doctor visits; preventive services like certain screenings and vaccinations; durable medical equipment; and other services. However, Part A can come with a substantial annual deductible and copayments or coinsurance for inpatient services. Medicare Part B also has copayments and coinsurance as a cost share to you, the beneficiary. Medicare Supplement, also known as Medigap insurance, can significantly if not completely eliminate your Medicare cost burden. Without a Medicare supplemental plan, your financial exposure can be as high as 35 percent of any service outside the hospital as well as up to 35% of all doctor charges inside the hospital. Without Medigap protection, you would be significantly exposed financially.
What is the Medigap Guaranteed Issue Period?
During a guaranteed-issue period, a private insurance company must offer you a Medigap Insurance policy at the best price (street price) for your age, without a waiting period or medical underwriting. Therefore, the plan is guaranteed to you regardless of your medical history, including the presence of any pre-existing conditions.
You can usually apply for a guaranteed-issued Medigap plan as early as 60 days before your current individual plan or employer sponsored benefits end to avoid a gap in coverage. You must also apply for one of these plans no later than 63 days after your coverage ends as a result of one of the events described below. When you submit your application, you are usually required to provide evidence of the date your coverage ends or ended. All covered applicants should appear on that letter of credible coverage that the insurance company issues to you.
You have the right to purchase Medigap plans following the 7 events listed below, which apply to Medicare beneficiaries of all ages:
- Termination of an Employer - Sponsored Retiree Plan: You have the right to purchase a Medigap Insurance plan when your employer-sponsored health insurance plan (including Cobra coverage) that is supplementing Medicare, terminates.
- Reduction of Employer-Sponsored Retiree Benefits or Loss of Eligibility - You have the right to purchase a Medigap plan if your employer-sponsored plan stops providing supplemental benefits to Medicare, yet continues to provide other benefits. You are also eligible for guaranteed issue Medicare Supplemental coverage due to divorce or death of a spouse or family member or if your retiree plan stops paying the Medicare Part B or the 20% coinsurance for services.
- Increased Premium, Increased Cost-Sharing, Reduction of Benefits or Termination of a Provider in Your Medicare Advantage Plan - You have the right to buy a Medigap plan outside the annual enrollment period If the Medicare Advantage plan you belong to increased your premium or copayments by 15% or more, reduced your benefits or terminated its relationship with your medical provider who was treating you. You have 63 days to purchase one of the guaranteed issue Medigap policies from the time you are notified of any reduced benefits, increased premium or cost-sharing, or that your plan is no longer contracting with one of your medical providers. You can change back to a Medicare supplement plan during certain periods when you’re allowed to dis-enroll from your Medicare Advantage plan. Since Medicare Advantage plans may not reduce their benefits or increase premiums or cost-sharing during the plan year, you will only be notified of any reduction in benefits or increase in premiums or cost-sharing for the new plan year during the Annual Election Period (AEP) which allows you to dis-enroll from your Medicare Advantage plan. The Annual Election Period is October 15 – December 7 each year. The effective date is always January 1st. If you dis-enroll during this period, the effective date of your disenrollment will be January 1 of the following year. A Medicare Advantage plan may, however, discontinue its contract with a provider anytime during the year. Even though you may have a guaranteed issue right to buy a Medigap plan when your medical provider no longer has a contract with your Medicare Advantage plan, you may not have a corresponding right to dis-enroll from that MA plan.
- Moving Out of Medicare Advantage (MA) Plan or PACE Organization Service Area - You have the right to purchase a Medigap plan if you move out of the service area of your Medicare Advantage (MA) plan or Program for All-Inclusive Care for the Elderly (PACE) organization. You have the right to buy a Medigap or Medicare Supplement policy even when that MA plan or PACE organization are available in your new area.
- Medicare Plan Fraud, Loss of Contract, Misrepresentation or Failure to Meet Contractual Obligations - You have the right to purchase a Medigap plan if your Medicare Advantage (MA) plan commits fraud, ends or loses its contract with Medicare, misrepresents the plan you bought or has failed to meet its contractual obligations towards its Medicare beneficiaries, as determined by the federal government.
- Medicare Trial Period #1 - You have the right to purchase a Medigap plans during the Medicare Trial Period #1: You joined a Medicare Advantage (MA) plan when you first became eligible for Medicare at age 65, and you want to switch back to a Medicare Supplement policy during your first 12 months in that Medicare Advantage plan. Note: If you were previously in an MA plan you are not eligible for this guaranteed-issue right.
- Medicare Trial Period #2 - You have the right to purchase certain Medigap plans if you switch from a Medigap policy to an MA plan, PACE organization or Medicare Select plan for the first time since becoming eligible for Medicare, and you dis-enroll from that plan within the first 12 months. You have the option to return to your previous Medigap policy if it is still available. If it is not available, you can choose other plans offered by a Medicare Supplement Insurance company. This can be somewhat complicated to do and it’s highly recommended that you work with an independent Medicare Supplement agent to make sure it is done thoroughly and properly. If you were previously in an Medicare Advantage plan or any other health care organization contracting with Medicare, you are not eligible for this guaranteed-issue right.
What are Other Advantages of Acquiring a Medicare Supplement Plan?
Listed Below Are The Many Advantages Of Purchasing A Medigap Plan.
- Large medical bill protection - Let’s say you regularly need to purchase Medicare-covered, yet costly, medical supplies. Under Medicare Part B, 80 percent of your total costs may be taken care of, but 20 to 35 percent of the bill is still your responsibility. You’ll need to reach the yearly Medicare Part B deductible before Medicare begins to pay its 80% cost-share. This deductible amount may change from year to year. If you’re protected by a Medigap plan, that extra 20 percent exposure will be completely covered by most Medicare Supplement plans.
- Coverage outside of the United States - If you’re on vacation outside the U.S. and an accident or sudden illness happens to you, some Medicare Supplement plans help cover medical expenses outside of the country.
- Guaranteed acceptance - Depending on when you buy Medicare Supplement insurance, the insurance company has to accept you as a policyholder if you have health problems, and it can’t charge you a higher rate because of your condition. This is true if you buy your Medicare Supplement plan during the Medicare Supplement Open Enrollment Period, (the six-month period starting the month you turn 65 and have Medicare Part B).You can apply for a Medicare Supplement policy anytime you like, but if you apply after the Medicare Supplement Open Enrollment Period, the insurer can refuse to sell you a policy, or charge you more, based on a review of your health history. In other cases, if you’re losing health or Medicare coverage, you have “guaranteed issue rights” to get a Medicare Supplement plan if you buy it after the Medicare Supplement Open Enrollment Period.
- Guaranteed renewability - Even if you have health problems, all standardized Medicare Supplement plans are guaranteed renewable, meaning insurance companies can’t cancel your plan if you’re making your premium payments. This also means your policy will automatically renew every year.
- Choice of any doctor who accepts Medicare - Under most Medicare Supplement policies, you’ll be covered if you visit any doctor and hospital that participates in Medicare. An exception is a Medicare SELECT policy, which is a type of Medicare Supplement plan that may require you to use providers and hospitals in its network.
- Wide variety of plans - Medicare Supplement plans offer a wide variety of coverage to help pay the gaps in original Medicare costs. Plans with the most coverage have higher monthly premiums.
- Standardized policies - All standardized Medicare Supplement policies are regulated by Federal law; all the benefits from each separate plan are the same, regardless of who your insurer is or (in most states) where you live. This is important to note when comparing prices with various insurance agencies. Plans are standardized somewhat differently in Massachusetts, Wisconsin, and Minnesota.
- Control over your options - With Medicare Supplement insurance, not only do you get to choose a plan that suits your needs - you also have the option of adding Medicare prescription coverage. You can buy any stand-alone Medicare prescription drug plan that services your area. A stand-alone Medicare Part D plan works alongside your Original Medicare coverage and isn’t part of the Medicare Supplement plan. (You may have a Medicare Supplement plan that offers prescription drug coverage if your plan had that coverage when you bought it, but you can’t buy a new Medicare Supplement plan with drug coverage anymore.)
- Portability - In most cases, you can keep your Medicare Supplement policy when you move anywhere within the U.S.
- Free look period - In some situations, you can switch from one Medicare Supplement policy to another. When coverage starts on your new Medicare Supplement policy, you will have 30 days to decide whether you wish to continue with that specific plan, or return to your previous plan.
What is the Medicare Supplement Insurance Exchange and What are the Benefits of Working with Agents Connected to This Exchange?
The Medicare Supplement Insurance Exchange (MSIE) is a team of highly trained, seasoned independent agents and brokers throughout the United States that want their clients to be completely satisfied with their Medicare and Medigap choices from the very beginning of when their Medicare starts. Medigap agents and advisors associated with MSIE want to get to know their clients well and will take as much time as is necessary to assist those asking for help and guidance. The Agents on the MSIE are 100% independent, are not controlled by any one insurance company and can represent your best interest without bias.
MSIE agents are local to your geographic region and ready to assist you with your Medicare options and decisions. By speaking with an independent advisor who is licensed in your state and who is both appointed and certified to discuss and offer various Medicare planning options, we’re ready to assist you so you can start taking all the appropriate steps that are in compliance with both federal guidelines and state laws.
Learning about Medicare and making the right decision about your healthcare can be stressful, confusing and frustrating. It is our intent that the information on this website coupled with the guidance of an experienced independent Medigap agent, will help you end that frustration and uncertainty.
We all live in a highly specialized world and as dedicated independent Medigap agents, we’re fully invested in understanding all the nuances, time periods, open enrollment periods and the many other parameters of Medicare and Medigap planning.
The team of agents connected to MSIE offer Medicare Supplement plans from all major insurers so that our advice to you is objective and free of any consultation fees. Rather than approach learning about Medicare and finding the best plan as a Do-It-Yourself project, let us help you. As independent Medigap insurance agents, we represent your best interest and it will never cost you anything extra to utilize our services.
Whether it’s acquiring a Medicare Supplement, a stand-alone prescription plan or a dental plan, we are here to provide qualified expert advice, guidance and support. We are not a call center and we are not employed by any insurance company. We are all Independent licensed agents and brokers and prefer to speak with you directly from the very beginning. The sooner we can pinpoint what you are looking for (even if you’re not totally sure), we can assist you in figuring out the next steps you need to take to assist you in reaching your goals and acquiring the best possible Medigap insurance protection based on your lifestyle and budget.