Medicare may not cover the majority of Americans, but with enrollment at about 60 million people, it’s certainly a major insurer — especially for those over the age of 65.
But just because a lot of people use it doesn’t mean it’s intuitive. Since Medicare encompasses various tiers and parts, some aspects cover services that others don’t, and it can be hard to keep it all straight.
That’s why it’s so important to understand your Medicare coverage options. Here’s what you need to know about Medicare, from when you become eligible to what different parts of Medicare actually cover.
A Primer on Medicare Eligibility
For the most part, qualifying for Medicare requires that you meet one of three criteria:
- Age. Starting at age 65, U.S. citizens who have paid into Medicare taxes for at least 10 years are eligible for premium-free Medicare Part A coverage. If you haven’t paid into Medicare taxes for at least a decade, you might still be eligible, but you’ll likely need to pay a premium. Green card holders are also eligible as long as they’ve either lived in the U.S. for at least five years or have been married to an insured green card holder or U.S. citizen for at least a year.
- Disability.People of any age who have been receiving disability benefits for at least two years are eligible for Medicare.
- Certain diseases.Regardless of age, people who have end-stage renal disease can qualify for Medicare, usually without having to be on disability for two years beforehand — check out this medicare coverage booklet for more details. The same is true for people with amyotrophic lateral sclerosis (ALS), also known as Lou Gehrig’s disease. They can qualify for Medicare as soon as they start receiving disability benefits.
Those aren’t the only deciding factors, so while the above guidelines can provide general direction, it’s also a good idea to double-check your eligibility. You can use an online tool like this Medicare eligibility calculator to see if you qualify for Medicare (or will soon).
Understanding Medicare Coverage
As you begin to explore your coverage options, you’ll see that in addition to “Original Medicare” (parts A and B combined), there are various parts within Medicare that cover different services. Most Medicare plans fall into one of the following four groups.
- Medicare Part A, known as hospital insurance, covers costs associated with hospitalizations, hospice, skilled nursing facilities and, in some cases, home health.
- Medicare Part B, known as medical insurance, covers the costs of doctors’ appointments, medical supplies, certain outpatient services and preventive care such as immunizations.
- Medicare Part D, known as prescription drug insurance, covers the cost of prescription medications.
- Medicare Advantage, known as Medicare Part C, is a way to get parts A and B coverage — and often part D, too — but through a private insurer rather than Medicare.
Filling the Gaps in Medicare Coverage
Even if you fully insure yourself by opting for Medicare parts A, B and D, there may be some things that aren’t covered. And you’re still responsible for certain costs associated with using your coverage, such as your deductible, coinsurance and copays. Those costs can add up, especially if you have ongoing health needs: More than 20% of Medicare cardholders have five or more chronic conditions.
To fill those gaps in coverage, you have options:
- Medicare Supplement insurance, known as Medigap, is a separate plan sold by private insurers to pick up some of the out-of-pocket costs Medicare plans don’t cover. In order to qualify, you have to have parts A and B.
- Medicare Advantage bundles Parts A, B and sometimes D, giving you fuller coverage than Original Medicare. These plans may also offer coverage for extras like vision, hearing and dental.
- Other Medicare programs, such as Medicare Cost plans, the Program of All-Inclusive Care for the Elderly (PACE) and pilot programs, may also be available. However, eligibility depends on where you live and what kind of care you need. Look into the full list of alternative Medicare plans for more information.
- Supplemental insurance like hospital indemnity and critical illness plans, can help cover the cost of any expenses — from deductibles to your mortgage to groceries — through lump-sum payouts in the event that you’re hospitalized or diagnosed with a life-threatening condition after purchasing the plan.
- Short-term insurance, also known as interim insurance, can help protect you when you’re between insurance plans, such as if you retire before you become eligible for Medicare at 65. And with recent changes to the law, you may be able to stay on short-term plans for a year or longer.
No matter what your plans for the future are, work to familiarize yourself with your insurance plan so that you know how to protect your health — and your pocketbook.