Every day 10,000 people turn 65 years old in the United States, and the number will continue to rise over the next several decades.[1] When a U.S. citizen turns 65 years old, they become eligible for Medicare. Medicare is the United States national health insurance program for seniors aged 65 years and older and for others who qualify for Medicare early due to a specific disability.
The U.S. government expects seniors to enroll in Medicare on time and to know how every part works. Unfortunately, Medicare is not always easy to understand. If you are assisting your parents with their Medicare enrollment, here is how to help your elderly parents understand Medicare.
There is a certain time to enroll in Medicare
Many seniors believe they are automatically enrolled in Medicare once they turn 65 years old, which is not the case for all Medicare beneficiaries. If one receives Social Security benefits at least four months before their 65th birthday month, they will be automatically enrolled in Medicare. However, if they are not receiving Social Security benefits, they must enroll themselves in Medicare during their Initial Enrollment Period.
The Initial Enrollment Period is different for everyone. Your parents’ Initial Enrollment Period begins three months before their 65th birthday month and ends three months after their birth month. For example, if your dad’s 65th birthday is on July 12, his Initial Enrollment Period begins on April 1 and ends on October 31.
Your parents will enroll themselves individually through Social Security. They can either enroll in person at the Social Security office, online, or over the phone. If your parents were to delay enrolling in Medicare without creditable coverage, they will be charged a lifelong late enrollment penalty.
Medicare has parts
Original Medicare comes with two parts that covers different types of services.
Part A
Medicare Part A is hospital insurance that covers care for inpatients at a hospital. Part A covers hospital expenses such as the hospital room, three daily meals, necessary lab services, and medications. Part A covers some services post-inpatient stay, such as skilled nursing, hospice, and home health aide services.
Medicare does not cover all healthcare services at 100%. For example, your parents will pay the Part A deductible as an inpatient, which is $1,484 per benefit period in 2021. Many Medicare beneficiaries do not pay the Part A premium. If either of your parents worked 40 quarters (ten years) inside the United States and paid FICA taxes, they will pay $0 for Part A. However, if they have between 30-39 quarters, they will pay $259 per month for Part A in 2021. If they have less than 30 quarters, they will pay $471 per month for Part A in 2021.
Part B
Medicare Part B covers medically necessary services received at an outpatient facility. Part B covers doctor’s visits, ambulance rides, surgeries, chemotherapy, and much more. This part also covers preventative services, such as mammograms, colonoscopies, flu shots, and more.
Your parents must pay the Part B deductible before Medicare pays its share for outpatient services. The 2021 annual Part B deductible is $203. Medicare Part B has a monthly premium, which is $148.50 in 2021 for most beneficiaries. If your parents are in a high-income bracket, they may pay more for Part B and Part D.
Once your parents have paid the Part B deductible, Medicare Part B covers 80% of Medicare-approved services. Your parents will be responsible for the remaining 20% coinsurance. Luckily, Medicare beneficiaries can purchase a Medicare Supplement to help with Medicare’s out-of-pocket costs.
They have supplemental options
A Medigap plan, also known as a Medicare Supplement, will help cover the gaps that Medicare leaves a Medicare beneficiary, such as deductibles and coinsurance. Medigap plans are sold by private insurance carriers and are 100% optional.
Medigap plans do not have networks and work alongside Original Medicare. If a doctor accepts Medicare, they must take a Medigap plan, no matter the plan or carrier. Medicare would pay its share first, and then a Medigap plan would pay second (once the deductible is met), which often is the remainder of the bill.
They can opt-out for a Medicare alternative
A Medicare Advantage plan, also known as Part C, is another type of plan sold by private insurance companies your parents can purchase for cost-sharing help. However, if your parents were to buy one of these plans, they would receive all their Part A and Part B benefits through the private insurance carrier instead of the government.
Medicare Advantage plans typically have a network of doctors and pharmacies where your parents could receive their healthcare. Your parents would pay a copayment when they receive a healthcare service, and the insurance carrier would set all cost-sharing amounts.
Medicare does not cover prescriptions
As mentioned above, Medicare Part A covers inpatient services, and Part B covers outpatient services. Therefore, they will want to purchase a Part D drug plan for prescription drug coverage. Medicare Part D drug plans are also sold through private insurance carriers and are used solely for prescription medications.
Many Medicare Advantage plans include a built-in Part D plan. However, if your parents were to have Original Medicare or a Medigap plan, they would need to purchase one of these plans from a private insurance carrier.
When purchasing a Part D plan, you will want to ensure your parent’s medications are listed on the drug formulary. If they were to enroll in a drug plan and later find out their medications are not on the formulary, they would pay 100% of the drug’s cost.
Summary
Understanding Medicare can take some time, which is why it’s always beneficial to help your elderly parents understand the best they can. Once your parents understand the time to enroll in Medicare, the different Medicare parts, their Medicare plan options, and drug coverage, the rest should come easy.
[1] https://arc.aarpinternational.org/countries/united-states
