There are many resources that help simplify Medicare for seniors, but the ultimate guide is at Medicare.gov. Understanding everything there is to know about Medicare basics is a moving target, so it’s important to locate your favorite sites and books to help you navigate.
Meanwhile, Retiree Health Choices wants to ensure you understand Medicare basics before you enroll.
We’ve taken the tips below directly from Medicare.gov. We encourage you to go there once in awhile and begin to learn the basics; hopefully, this blog series will help in the interim!
Remember, too, that our new consumer site, Easy Medicare Choices.com provides a solid tour of researching and considering the purchase of Medicare Supplement plans. The site should be on your list of ones to visit before making a buy decision.
Understanding Medicare Basics
If you’re 65-years-old and already collecting Social Security, then Medicare Part A and Medicare Part B are automatic for you. The mail will deliver your Medicare card that shows coverage for both Part A, which covers hospital benefits (should you need to go into the hospital) and Part B, which covers physician visits. If, for some reason, you don’t want to keep the Part B coverage, you are permitted to cancel it.
If you are not already using the Social Security system at age 65, then you need to enroll in both Social Security and Medicare. You will apply for both Part A and Part B coverage if you’re not already getting Social Security. It’s more critical to sign up for Medicare right away; at least three months prior to your 65th birthday.
There is a seven-month window to enroll in Medicare. It is three months prior to turning 65-years-old and four months after. Be sure you make enrollment happen during this time period or you will have to wait for an enrollment period that is typically the first quarter of the year. Also, the cost may be higher for premiums if you miss your grace period as well as a delay in benefits!
We want people to understand how critical it is to apply for Medicare Parts A and B early and during the proper enrollment period.
If you delay applying for Medicare Part B by 12 months, then you suffer a permanent 10% premium hike, which is a penalty for your delay.
Example: In 2010, the monthly premium for Medicare Part B was $110.50. If you delayed enrolling in Part B for 12 months, the penalty is $11.05 tacked on to the monthly premium. You would then pay $121.55 per month instead of the base premium rate with no penalty.
(For those still getting health care coverage from an employer at 65-years-old, there is an entirely different set of rules.)
As a working person in the United States, taxes on payroll include 1.45% for Medicare. There is also a Social Security tax on wages, too. Employers match the tax; they pay the same into your Medicare kitty as you do. What if you entered the workplace late and didn’t have an opportunity to pay into Medicare for the appropriate length of time?
Anyone with fewer than 40 quarters (10 years) paying into Medicare are not eligible unless they are married to someone who has worked and paid into Medicare for 10 years.
With 40 quarters paying into Medicare (and it can be longer than 10 years to meet that requirement), then Medicare Part A benefits are provided to you without a premium.
You can buy into Medicare at age 65 if you have not earned 40 quarters of paying the Medicare tax via employment, but here’s what it will cost you at 2010 rates:
• Fewer than 30 quarters: Medicare Part A premium is $443/month (2010 figures) + Part B monthly premium of $110.50
• Between 31 and 39 quarters of Medicare-covered employment: Medicare Part A premium is $244/month and Part B monthly premium remains at $110.50
To recap these basics:
• Medicare has traditionally been available to employed workers who contribute to the system.
• The Medicare payroll tax has not been adjusted for some time.
• You only need 10 years/40 quarters of paying the Medicare tax via payroll to enroll in Medicare coverage.
• You should not delay applying for Medicare; whether you cancel coverage or elect to buy the bare minimum is up to you. Delaying enrollment costs you more later.