More than 365,000 Californians will turn 65 this year. Turning 65 is a lot like turning 16. When you turned 16, you didn’t automatically get your driver’s license; instead you had to take an exam and prove that you were a safe driver. There was a specific procedure for getting your driver’s license and the same is true for enrolling in Medicare for the first time when you turn 65. Much like you anticipated turning 16 and getting your driver’s license, you must anticipate and plan for becoming a Medicare beneficiary. Don’t wait until you’re 65 to start thinking about your Medicare choices. Start now and let Bridlewood Insurance Services help you with all your Medicare needs.
Bridlewood Insurance Services is San Diego’s leader in providing no-cost, unbiased information about Medicare and other insurance-related issues. It is recommended that you review your Medicare options before you need to enroll so that you don’t make any hurried decisions at the last minute. Your Medicare choices will depend on several factors, including:
- Are you retired, or will you or your spouse continue to work?
- Will you have access to medical and/or prescription drug coverage through an Employer Group Health Plan?
- How does your Employer Group Health Plan compare with Medicare Supplement Insurance plans and Medicare Advantage plans?
Of course there are other things to consider when determining your Medicare options. Bridlewood has an easy to read guide to help you navigate the Medicare system and initial enrollment process. Bridlewood has easy-to-read reference materials to help you navigate the Medicare system and initial enrollment process. Our licensed agents can help outline the decisions you’ll need to make and the options that are available to you. For more information, call Bridlewood at 1-877-267-5514.
The “Medicare 101 Workshops” will be held monthly in various parts San Diego. Mark your calendar for the upcoming workshops and bring your questions. Our friendly agents have years of experience and have helped thousands of members join Medicare right here in San Diego. You can also meet with a licensed and certified agent that specializes in Medicare Insurance in the comfort of your own home to discuss your Medicare options. To arrange an in-home appointment with a Bridlewood agent, contact Bridlewood at 1-877-267-5514.
Don’t wait to make your Medicare decisions — you can and should start the process before you become eligible for Medicare. Let Bridlewood help you understand your options and get you on the road to Medicare.
What Is Medicare?
Medicare is a Federal health insurance program. It was established by an act of the Federal government as part of amendments to the Social Security Act that were signed into law on July 30, 1965. The provisions in this 1965 law created “Original Medicare,” although later laws expanded on it. The same 1965 Federal act also authorized the creation of Medicaid.
In keeping with the goals of the original Social Security Act to provide a social safety net for vulnerable populations, Medicare sought to address massive gaps in healthcare affordability for senior citizens, a population with some of the most intensive healthcare needs.
Senior citizens are not the only beneficiaries of Medicare. Medicare benefits are also available to some US citizens and permanent residents under the age of 65 who suffer from conditions recognized as disabilities by the Social Security Administration. Many younger recipients of Medicare pay more premiums and deductibles than senior citizen recipients.
What Impact Did Medicare Have?
Medicare went into effect in 1966. In 1962, before the implementation of Medicare, only 51% of senior citizens had private health insurance. Another 18%-26% received some form of government assistance, some of it tiered to favor more “deserving” populations like veterans and government employees.
Dorothy Penchant Rice, former director of the National Center for Health Statistics, described much of this coverage as “terrible insurance—it didn’t do much to cover them.” 8 in 10 senior citizens found themselves personally responsible for their own medical costs, paying from savings or incurring massive medical debts.
In 1962, assuming no hospitalization, married couples incurred $173 in medical expenses per year or about $1,289 in today’s money. In a year that required hospitalization, that figure shot up to $938, or nearly $7,000 in today’s money.
Today, 99.9% of all senior citizens are covered by Medicare health insurance. Nearly all medical services are covered under Medicare, but some restrictions apply. Some recipients find that the basic level of Medicare (now known as “Medicare Part A”) is still not affordable or insufficient to cover their healthcare needs. To provide options for more comprehensive care, Medicare Parts B, C, and D were added as optional supplemental insurance.
How is Medicare Paid For?
Medicare pays for healthcare costs out of a Medicare Trust Fund, administered by private companies under contract with the Centers for Medicare and Medicaid Services (CMS), a division of the US Department of Health and Human Services. The trust fund gets funded by a 2.9% payroll tax, half paid by the employer and half by the employee. Funding for Medicare also comes from member premiums, although not all Medicare parts require payment of a premium.
Who is Eligible for Medicare?
US citizens and permanent residents may become eligible to enroll in Medicare at no less than 65 years of age. Eligibility is not automatic once the applicant reaches the required age.
Applicants become eligible when they have reached the required age, and when they earn 40 “credits” from payment of income taxes throughout their careers. Each fiscal quarter usually grants a taxpayer one “credit,” so 40 credits is roughly equal to ten years of continuous work, paying taxes into the system the whole time.
This is sometimes referred to as “buying into” the program, and it is meant to ensure that people who reap the benefits of the system contributed to it when they were tax-paying workers.
People who have not earned the required credits may still buy into Medicare, but premiums payments may apply that would not have applied if the beneficiary had earned the full 40 credits. Since 2012, those premiums have been:
- 30-39 credits: $248 per month.
- Fewer than 30 credits: $451 per month.
Despite the need to pay into the system before becoming eligible, Medicare recipients are not getting “their tax money” back in the form of Medical services in their senior citizen years. Today’s taxpayers pay for today’s Medicare recipients. Medicare recipients only get “their money” back if they pay premiums for supplemental Medicare insurance.
The Basics of Medicare Health Insurance.
The base level of Medicare is also known as “Medicare Part A.”
If you enroll in Medicare with no extra services, you will automatically be enrolled in Medicare Part A.
Medicare Part A covers healthcare essentials like:
- Hospital Stays
- Hospice Care
- Some Skilled Nursing Care
Skilled nursing care can be covered by Medicare Part A in the aftermath of a major event like a stroke, a broken hip, or other event resulting in a qualified hospital stay. Patients whose hospitalization meets the requirements are entitled to full payment for the first 20 days of care after the illness or injury, and up to a maximum of 100 days of care.
Medicare Part A is health insurance, but members do not pay a premium. The lack of premium often leads people to believe that Medicare is “free.” The reason other “Parts” of Medicare exist is that many enrollees cannot afford their treatment with Part A alone.
The reason is that while Medicare Part A enrollees do not pay premiums, they do pay deductibles, often hefty ones. The statutory deductible can change year over year, but the 2020 deductible is $1,408.
Medicare Supplemental Insurance Plans
Because of affordability and eligibility concerns in Medicare Part A, supplemental insurance plans were implemented under Medicare to help recipients enhance or customize their coverage.
Medicare Part B
Medicare Part B was established under the Original Medicare program signed into law in 1965 and implemented in 1966.
Unlike Part A, enrollees of Medicare Part B owe a monthly premium, set by law at $144.60 per month as of 2020, with some recipients able to maintain the lower 2019 premium of $135.50 as part of a “held blameless” clause. Higher premiums may be set for recipients with incomes over $87,000 per year. If an enrollee receives Social Security benefits, the premium will be deducted directly from the benefit payment.
US citizens and permanent residents become eligible for Medicare Part B at 65 years of age. Enrollment is not mandatory, but failing to enroll at first eligibility incurs a 10%-per-year lifetime penalty if an eligible person enrolls later.
Still, because of the extra expense, persons who are still working and receive health insurance from through their work may be better off waiting to enroll.
What do recipients get in exchange for their premiums? A much lower deductible, for starters—Part B insurance kicks in at a deductible set at $198 for 2020. Medicare then pays for 80% of RUC-established rate, with the remaining 20% the responsibility of the patient, or potentially covered by Medigap or other supplemental insurance.
Medicare Part B covers a different range of services from Part A. Outpatient services, visiting nurses, lab tests, diagnostic screening, chemotherapy, vaccinations, and “durable medical equipment” (DME) like canes, walkers, and lift chairs fall under Medicare Part B coverage, among other services critical to some patients.
More comprehensive than Medicare Part A, Medicare Part B is sometimes referred to as the “health insurance” arm of Medicare, while Part A is designated as “hospital insurance.”
Medicare Part C
Medicare Part C is another name for Medicare Advantage Plans, which is an option for eligible recipients to get their Medicare Part A and Medicare Part B coverage from private insurers, rather than directly from the CMS.
As with normal private health insurance, this could take the form of a Health Maintenance Organization (HMO) or a Preferred Provider Organization (PPO).
Medicare Advantage (MA) Plans were provided for by the Balanced Budget Act of 1997. MA Plans are required by law to meet or exceed the standard of direct, or “fee for service,” Medicare Part A and B coverage. MA Plans often include extra coverage, like dental, and usually include Medicare Part D prescription drug coverage.
Medicare Part C Plans are “capitated health insurance,” meaning the CMS pays the provider a fixed amount. Capitation funding varies by county, and each provider sets its own rules and prices, which means that although Medicare covers the majority of the expenses, the beneficiary’s out-of-pocket expenses will vary based on which Medical Advantage Plan is chosen.
One of the key benefits of a MA Plan over Original Medicare is the opportunity to choose a plan with an out-of-pocket maximum. Original Medicare has no out-of-pocket maximum, meaning you owe the deductible in every applicable circumstance. An out-of-pocket maximum can help patients who face multiple treatments or hospitalizations avoid financial ruin.
Medicare Part D
Medicare Part D was authorized by the Medicare Modernization Act of 2003 and went into effect on January 1, 2006.
One medical need not covered by Original Medicare (Part A and Part B) is prescription drugs. Medicare Part C (aka Medicare Advantage) plans often cover prescription drugs, meaning no extra Part D coverage is needed.
However, beneficiaries who first sign up for Medicare Part A and Medicare Part B become eligible to sign up for a Prescription Drug Plan (PDP) established by Medicare Part D. Failing to sign up at the time of first eligibility may result in increased premiums.
PDPs are purchased through private insurers. Coverage varies but must meet a standard established by Medicare. Plans include a premium and yearly deductible and may include coinsurance or copayments. Costs vary based on the drugs needed and the specific plan.