Medicare Part A covers your hospital insurance. Some examples of this coverage are:
Without a Medicare Supplement, you are responsible for a deductible, coinsurance, and copayments.
The nice part about Medicare Part A is there is generally no monthly premium. As long as you worked and paid Medicare taxes for at least 10 years (40 quarters), you won’t pay for this service. In most cases, you will be automatically enrolled in Part A when you turn 65, regardless if you’re retired or still working.
Q Do I need Medicare Part A if I haven’t retired yet?
A Yes. As long as you’ve worked at least 10 years and have paid Medicare taxes, you’ll be automatically enrolled at age 65 at no cost.
Q What if I haven’t worked and paid Medicare taxes for at least 10 years?
A If your spouse has, you will be covered. If you’ve worked 30-39 quarters, the standard Part A premium is $227/month. If you’ve worked less than 30 quarters, the standard Part A premium is $13/month.
Q Do I need to sign up to receive Medicare Part A?
A In most cases, you’ll automatically get Part A starting the first day of the month you turn 65. The exception is if you aren’t getting benefits from Social Security or the Railroad Retirement Board at least 4 months before you turn 65.
Q When will I get my Medicare card?
A Three months before your 65th birthday.
Q Should I also sign up for Medicare Part B?
A It depends on your situation. If you’re retired or don’t have any other health insurance, you should enroll in Part B when you’re first eligible. If this isn’t the case, go to our Medicare Part B page for more information.
Medicare Part B covers services that are medically necessary to treat diseases and conditions as well as preventative services. Some examples of services Part B cover are:
Read a comprehensive list of items, tests, and services Medicare Part B covers.
In general, you should enroll in Medicare Part B when you turn 65. However, more and more people choose to continue working past the age of 65, which means you won’t need Part B until you lose your employer’s health insurance.
The first time you can enroll in Part B is called the “Initial Enrollment Period.” This is a 7-month window that begins 3 months before you turn 65, the month of your 65th birthday, and 3 months after.
If you don’t enroll for Part B during the 7-month window, you’ll have to pay a late enrollment penalty. The exception to this rule is if you’re still on some kind of credible health coverage, such as your employer’s group health insurance.
Medicare Part B does have a monthly premium, which is $134 per month as of 2017. If you make more than $85,000 by yourself or $170,000 as a couple, your monthly premium will be higher than that.
| Filing individual tax return | Filing jointly | Filing married & separate | Premium (2017) |
|---|---|---|---|
| $85,000 or less | $170,000 or less | $85,000 or less | $134 |
| $85,000-$107,000 | $170,000-$214,000 | N/A | $187.50 |
| $107,000-$160,000 | $214,000-$320,000 | N/A | $267.90 |
| $160,000-$214,000 | $320,000-$428,000 | $85,000-$129,000 | $348.30 |
| $214,000+ | 428,000+ | $129,000+ | $428.60 |
The deductible for Medicare Part B is $183 per year. After you meet the deductible, you typically pay 20% of the Medicare-approved amount.
Q Do I need Medicare Part B if I’m still working?
A If you or your spouse is still working and has employer-based group insurance, there’s no need to sign up for Part B. Since there’s a monthly premium, you don’t want to pay for it until you have to.
Q How do I avoid the late-enrollment penalty?
A If you’re older than 65 and haven’t signed up for Part B yet, the only way to avoid a late-enrollment penalty is to sign up during a penalty-free period. This occurs when you lose your employer’s health insurance plan. You have 8 months to sign up for Part B without a penalty, but if you miss this window, you may have to pay a penalty for as long as you have Part B.
Q Do I need Medicare Part B if I have CHAMPVA?
A Yes, you must get Part B to keep your CHAMPVA health coverage.
Q Do I need Medicare Part B if I have TRICARE?
A If you’re retired, yes. You must get Part B to keep your TRICARE health coverage. If you’re still active-duty service member, you don’t have to enroll in Part B.
Q How do I sign up for Medicare Part B?
A To sign up for Medicare, contact your local social security office.
Q Why is my Social Security number on my Medicare card?
A For many years, this has the been the method of identifying the members of the Medicare program. Within the next year, this should be changing so that you have a Medicare ID# instead.
Q What is the late enrollment penalty?
A Your monthly premium for Part B may go up 10% for each 12-month period you could have had Part B but didn’t enroll.
For example, if your Initial Enrollment Period ended September of 2014, but you waited to enroll in Part B until March 2017, your Part B premium penalty would be 20%. This is because there were 2 full 12-month periods. You would have to pay this penalty for a long as you have Part B.
Medicare Advantage, offered by private insurance companies and approved by Medicare, provides health insurance coverage after you turn 65, but it’s different from regular Medicare. While there are many benefits to this option, it can be quite problematic.
Q Do you generally recommend choosing the Medicare Part C plan?
A Unfortunately, no. One of the biggest issues with this plan is the network. We’ve seen people travel up to an hour just to see a doctor that was in the approved network. Unless you live in a metropolitan area with lots of doctors – and you like the doctors that are in your network – it’s a huge hassle. Not to mention the co-pays and deductibles you’re responsible for. We almost always prefer a Medicare Supplement policy, which has no networks and offers plans with no co-pays or deductibles.
Q How much does Medicare Part C cost?
A You must pay the Part B premium and the Part C premium. The Part B premium is standardized and tends to raise a little bit each year ($134 as of 2017). The Part C premium varies among plans, but is generally inexpensive. Don’t forget about co-pays and deductibles, though, which can range from $3,400-$6,700.
Q Who is eligible for Medicare Part C?
A You must be enrolled in Medicare Part A and B to be eligible for Medicare Advantage. You also must live in your plan’s network to be eligible. Those with End-Stage Renal Disease generally aren’t accepted into a Medicare Advantage plan.
Q Are Medicare Part C plans standardized by the government?
A No, they aren’t. This is what causes the big differences between plans. You’ll see varying amounts of coverage, deductibles, co-pays, and so on.
Medicare Part D is prescription drug coverage, which Parts A and B don’t cover. Part D is available to everyone that has Medicare. Medicare Part D is optional, but if you decide not to get it, there are late enrollment penalties involved.
Prescription drug plans cover most prescriptions, but each drug plan has its own list of covered drugs. In addition, most drug plans place drugs into “tiers,” and each tier has a different cost. The lowest tier is the least expensive while the highest tier is the most expensive.
To choose a drug plan, go to Medicare.gov, and click “Find health & drug plans.” If you get stuck, download our cheat sheet, which has screenshots and explanations of each step along the way.
When choosing a drug plan, you ideally want to search for a balance of the cheapest carrier vs. the carrier with the highest ranking. Carriers with low ratings are often culprits of raising their drug prices throughout the year.
Part D drug costs vary wildly depending on the following factors:
In essence, the more drugs you take, the more expensive your premium will be. There are 27 different insurance carriers to choose from, and they all have different prices. You can easily compare what your individual plan would cost by doing a comparison on Medicare.gov.
Please know that a lower monthly premium does not mean a cheaper drug plan. Medicare.gov’s comparisons will show you the total cost for the year, which is what you want to compare. Often times, a drug plan will have a higher premium, but a lower yearly cost.
The other major cost factor is the late enrollment penalty. The window where you may sign up for a drug plan is during your Initial Enrollment Period (the 7-month window around your 65th birthday).
If you choose not to sign up for a Part D drug plan – perhaps you don’t take any prescriptions – the penalty is 1% of the national base beneficiary premium ($35.63 as of 2017) multiplied by the number of months you didn’t have Part D drug coverage (or any other credible coverage). You then round up or down to the nearest 10 cents.
For example, your Initial Enrollment period ended in on May 31 of 2015. You didn’t join Part D until December 7, 2017, which means your drug plan will be effective January 1, 2018. Since you didn’t have drug coverage from June 2015 through December 2017, your penalty is 31% of $35.63.
In sum, you would pay $11 in addition to your regular monthly premium.
Q Why did my prescription drug cost go up in the middle of the year?
A Drug plans can make changes to their drug tiers during the year, which means your costs can unexpectedly change. Every insurance carrier must provide you with written notice at least 60 days before the change goes into effect. If you request a refill of your drug, the carrier must also provide written notice of the change along with a 60-day supply of the drug under the current plan rules before it changes.
Q What is a “donut hole”?
A The “donut hole” is another word for a coverage gap. This is a temporary limit on what your drug plan will cover. Not everyone will enter the donut hole, but if you do, it’s because your plan has spent over $3,700 on covered drugs (as of 2017). The amount may change each year.
Once you reach the donut hole, your prescription drug costs will increase drastically. As of 2017, you will pay no more than 40% of the plan’s cost for covered, brand-name drugs and no more than 51% for generic drugs. These percentages will start to decrease until 2020, when you will typically pay no more than 25% of the cost of your drug at any point of the year.
Example: You have reached the donut hole in your Medicare drug plan. You go to the pharmacy to fill a prescription for a covered, brand-name drug. The price for that drug is $500, and there’s a $2 dispensing fee that gets added to the cost. You will pay 40% of the plan’s cost for the drug and the dispensing fee, which means you would be responsible for $200.80 at the counter.
$502 x .40 = $200.80
Q Can you get out of the “donut hole”?
A Yes, when you have paid $4,950 in out-of-pocket drug costs since the start of the year. When you reach this figure (as of 2017), you reach what is called catastrophic coverage. At this time, you will pay either a 5% coinsurance for covered drugs or a copay of $3.30 for covered generic drugs and $8.25 for covered brand-name drugs, whichever costs more.
Q Can I plan for the “donut hole”?
A Yes, when you choose your drug plan on Medicare.gov, you will see chart showing you if and when you will reach the donut hole. This allows you to prepare for that time. The only exception is if your drug plan moves your prescriptions to a different tier, thus raising the cost unexpectedly. In that case, you could wait to switch drug plans during the next annual open enrollment period, or you could file an appeal.
Q My Part D drug costs went up! What do I do?
A Ideally, your agent will walk you through this and make it easy.
The plan of attack is:
If you’re doing this on your own (without an agent), which we never recommend, make sure you ask your pharmacist for a notice that explains how to contact your Medicare drug plan.
You can make your requests by phone or in writing if you haven’t bought the drug in question. If you have, you must send your request in writing. You can also send a completed “Model Coverage Determination Request” form.
It takes 72 hours for your drug plan to notify you of your solution. If you disagree with this decision, you can file an appeal.
Q How do I file an appeal with my Part D drug plan?
A You have the right to appeal. The first step is to request a redetermination, which has to happen within 60 days of your coverage determination.
You should send in a written request including the following:
It can take up to 7 days to hear back. If you disagree with this decision, you can move on to another request for reconsideration. This is done by an Independent Review Entity. From here, you can take legal action if you still disagree with the decision.
Throughout this process of appealing, we highly (highly!) recommend you speak with your agent to help you through the process. Our team has helped individuals file appeals (and win) in the past, and while it’s not a guarantee that you’ll win, you’ll have the guidance and support of an expert to give you the best chance.