Medicare 101: What Medicare is and Who is Eligible

By Deirdre R. Wheatley-Liss, LL.M, CELA

It’s often assumed that the benefits from Medicare just happen. People get older, they sign up, and benefits begin to flow.

For most of us that’s not true. Maximizing Medicare health benefits in retirement requires education and careful planning.

To plan adequately, I counsel clients to begin thinking about Medicare well before they need it and to understand some key principles.

In this first installment of Medicare 101, I’ll talk about what Medicare is – what the various parts of it are and their benefits.

But first, let’s look at eligibility. Who’s eligible?

Medicare Eligibility

Medicare is available to all U.S. citizens age 65 and over as well as to people who are under 65 and disabled. (For purposes of this Medicare 101 discussion, I will talk only about Medicare for those age 65 and over.)

Types of Benefits or the “Parts” of Medicare

Medicare is an individual plan for health insurance and services. It is not a group plan or family plan.

Each individual must enroll herself or himself. For married couples, that means that each spouse must enroll separately and choose individually how she or he is going to use Medicare.

Medicare has four parts:

• Part A – Hospital Insurance. Part A of Medicare is paid for and administered by the federal government and state governments.Part A provides inpatient coverage for someone who has a hospital stay, including semi-private room and board, food, nursing services, lab tests that are done in the hospital, drugs that are taken in the hospital and some other charges related to a hospital stay. It will also cover hospice care.In addition, Part A will cover, in part, up to 100 days in a skilled nursing facility for rehab. (Only the first 20 days are covered in full.)To avoid billing surprises, it’s important always to speak with the hospital directly about what is and is not covered by Medicare.

• Part B – Medical Insurance. Part B of Medicare is paid for and administered by the federal government and state governments.Think of Part B in terms of outpatient Part B covers doctors and facilities and care received outside a hospital. This could include physical therapy, speech therapy, diagnostic tests including MRIs and EKGs, durable medical equipment, and ambulance service.

• Part C – Medicare Advantage Plan. Part C of Medicare is called Medicare Advantage which is a combination of Parts A and B and supplemental coverage. Medicare Advantage Plans are sold and administered by private insurance companies.If you enroll in a Medicare Advantage Plan, you combine all of your hospital and medical coverage from Parts A and B, and usually prescription your drug plan (Part D) into your Medicare Advantage plan. You can think of it as a Medicare HMO or PPO.

There are a huge variety of Medicare Advantage plans, each with different features and benefits which depend on the company offering the plan as well as where you live and other factors.

This is where the planning comes in. It pays to shop around with insurance carriers serving the area where you live each year to see what they offer in terms of pricing and benefits you need.

• Part D – Prescription Drug Coverage. Part D of Medicare is comprised of prescription drug coverage. Part D policies are sold and administered by private insurance companies.

Part D can be provided either as a stand-alone prescription drug plan, or as part of a Medicare Advantage plan.

While Medicare does require Part D plans to cover many categories of drugs, it allows insurers latitude on how they cover those categories. For example, some Part D plans will cover some brand name drugs as well as generics, other plans may only cover generics.

It’s important that you know what drugs you need covered and that you check the formulary for the Part D plan you buy to be sure they are covered. If the drugs you need change, and your insurer does not cover the new drugs, you can change to another plan with a different insurance company – but you can only do that during the appropriate enrollment period. (I will address the specifics of enrollment and enrollment periods in a future post.)

Knowing what Medicare covers and does not cover is important, and this blog post provides just a summary of the various parts of Medicare. In the next installment of Medicare 101, I will address in more detail what Medicare does and does not cover.

This post is for general informational purposes only. The specifics of your situation could affect your eligibility for Medicare and the specific benefits you receive. For a video presentation of this information, please visit Medicare 101: Maximizing Your or Your Loved One’s Health Care in Retirement. For more detailed information, please visit www.porzioplanning.com or contact us for a free 20 minute telephone consultation.