Understanding Medicare

Medicare is not Medicaid. Medicaid is a joint federal and state program that gives health insurance coverage to people with limited income and financial resources.

Medicare is care for the elderly.

Medicaid is aid for the needy.

You can have both Medicare and Medicaid.  

Part A  

Most people do not pay for Part A.  This is because you or your spouse have earned enough credits through working to pay for it via payroll taxes. The full Part A premium in 2024 is $505. 

Part B

The monthly premium is per person and is based on your modified adjusted gross income (taken from your IRS tax return from 2 years ago). 
 
The monthly premium changes each year and is announced in mid-November.  
 
The 2024 base monthly Part B premium is $174.70. For high-income earners (above the base threshold), you will pay more each month for both Part B and D (assuming you purchase a drug plan). 
 
If you don't qualify for Medicaid but have limited resources, you may be eligible for LIS (Low Income Subsidy), also known as Extra Help, which helps pay for your prescription drug costs. 
 
You can apply for the Extra Help program here: Medicare Part D Extra Help 
 

There are a few different ways to enroll:

1. Auto enrolled ONLY if you receive Social Security benefits at least four months before your 65th birthday (you can opt out).
2. Apply during your IEP (Initial Enrollment Period) unless you qualify for an SEP (Special Enrollment Period).
3. Apply online, by phone, or in person at the local Social Security office.

Social Security determines eligibility for Medicare and handles Medicare applications. Why? Medicare eligibility is based on working credits during your lifetime (or your spouse's).

• Premium: Monthly premium paid to the insurance carrier.
• Deductible: Annual amount you pay before you have cost-sharing.
• Cost-sharing: Copays, coinsurance you pay for your medications.
• Out-of-pocket: The maximum you spend each year before Medicare and Insurance cover 100%.
• Formulary: List of covered drugs (every drug plan has a different list).
• Extra help: The Federal Government offers financial help for those who qualify. Your annual income must fall below 150% of the FPL (Federal Poverty Limit) based on household size.  

Part A: Hospital Insurance

• Semi-private room hospital stays
• Hospice
• Skilled nursing facilities
• Home health care
• Blood transfusions that require more than three pints of blood

Part B: Outpatient Services

• Doctor visits
• Lab tests and diagnostic imaging
• Preventive care
• Emergent and urgent care services, including ambulance
• Chemotherapy and radiation

Part C: Medicare Advantage

Privatized Medicare option sold by private insurance companies. By law, you will receive Original Medicare benefits, but your cost sharing will differ from what Original Medicare offers and you will be subject to the plan terms and agreements.  

Part D: Prescription Drug

Privatized options sold by private insurance companies. The federal government does not provide a drug plan option.

Supplement or Medigap Plans

These plans are sold by private insurance companies and help with costs not covered by Original Medicare.

Part A

Enroll any time after you become eligible.

Part B

• IEP (Initial Enrollment Period). This is your first opportunity to enroll in Part B. This period is the seven months surrounding your 65th birthday, regardless of current coverage.
• Enroll in months 1-3: Part A and B effective on month 4
• Enroll in months 4-7:
  • Part A, effective on month 4
  • Part B effective FOFM
• The GEP (General Enrollment Period) is from January 1 to March 31 each year. It is used for those who did not enroll in Part B during their IEP or SEP. Coverage will begin the FOFM after the application is submitted. Individuals using the GEP will likely be subject to a Part B late enrollment penalty. The Part B penalty adds an extra 10% for each year you could have signed up for Part B but didn't.
• SEP (Special Enrollment Period) is for those who qualify for coverage through active employment. You will have eight months to enroll in Part B once your group coverage ends.  

We recommend that your Part B effective date starts the day after your group coverage ends so there is no lapse in coverage.

Part C and D

• ICEP (Initial Coverage Election Period) ICEP is seven months around your 65th birthday.  
• Enroll in months 1-3: coverage starts on month 4
• Enroll in months 4-7: coverage starts on FOFM
• Allowed one election request to enroll in a Medicare Advantage plan or stand-alone drug plan
• AEP (Annual Election Period): Occurs each year between October 15 – December 7. Coverage begins on January 1. You can make as many election choices as you want, with the last one being the final enrollment.  
• MA OEP (Medicare Advantage Open Enrollment Period): Between January 1 and March 31 of each year, you can make a change if you are enrolled in a Medicare Advantage plan (with or without drug coverage). You can switch Advantage plans or enroll in Original Medicare and add a drug plan.

• SEP (Special Enrollment Period) is for those who experience a life event (move outside your plan's service area, move back to the US, move in/out of a facility, qualify for or lose Medicaid). Generally, you will have two months to make a new enrollment choice.

Medigap

Open Enrollment Period (6 months): This occurs for the first six months following the Part B effective date and allows you to enroll guarantee issue (no health questions) into any Medigap plan. Other circumstances may allow you to enroll in a Medigap plan guarantee issue, but if you miss them, you will need to fill out the health questionnaire, and you could be declined coverage.

If you purchase your insurance privately, either through the Exchange (marketplace) with or without a tax credit or directly from an insurance carrier, you will need to enroll in Medicare at age 65. 
 
If you have dependents enrolled on your plan with you, you will need to change the primary insured on the policy.   

These do NOT mix in any combination.    
 
For delayed Medicare enrollment, you need to end HSA contributions six months before your Part A and/or B enrollment. This includes contributions from you and your employer.   
 
Delayed Part A enrollment is retroactive six months prior. The IRS will penalize you for HSA contributions during the year for months you had both an HSA and Medicare enrollment.   
 
We strongly advise that you speak to your tax or financial advisor. 

If you or your spouse are still working when you turn 65 and plan to continue working, deciding to enroll in Parts A and/or B can get tricky. Most will enroll in Part A since there is no premium and no harm in doing so unless you are enrolled in HSA.

You also need to confirm that your plan has creditable drug coverage. If you are not enrolled in creditable drug coverage, you can incur a penalty when you enroll in a drug plan later on. Your employer should send you a notice each year letting you know if your drug coverage is creditable.

Creditable drug plans:

You must be ACTIVELY working and not retired or on COBRA.  

Medicare coordinates benefits in this order:

Secondary: enrolled on a large group plan (20 or more employees)

Primary: enrolled on a small group plan (19 or fewer employees)

This means that if you are enrolled on a small group plan, you will need to be enrolled in Parts A and B (pay any premiums) for your claims to be paid properly.  

However, in 2023, Oregon passed a rule that does not allow carriers to pay claims secondary to Medicare if you are NOT enrolled in Part B.

What does all that mean?  

If you are enrolled on an OR group contract and have turned 65, you can enroll in Part A (decline Part B), and claims will continue to be paid.  

However, if your group plan is NOT PART D CREDITABLE (e.g., the drug plan is NOT as good as Medicare), you will need to enroll in Part B and buy a Part D plan to avoid a future penalty.

.  

In addition to Parts A and B, you can purchase additional coverage from an insurance company.

Supplement or Medigap

This type of plan sold by a private insurance company covers the gaps in Medicare. With these types of policies, Medicare will pay its share of your Medicare-approved expenses before your Supplement or Medigap policy pays. Depending on the plan, you may also be responsible for your Part B deductible.

With this option, you can see any provider in the country. As long as you pay your premium, it is guaranteed renewable, and the benefits will not change.

You will need to purchase a Part D plan separately.

Medicare Advantage

This is an alternative way of getting coverage from a private insurance company, and it is not a supplement or Medigap. This is privatized Medicare. When you join this plan, Medicare pays the Medicare Advantage (MA) plan to manage the risk or pay the claims as a monthly stipend. You may also have a monthly premium. You will always have to pay your Part B premium.  

These plans will have rules, provider networks, and cost-sharing when you seek services. Some plans may also offer extra benefits in addition to what Medicare offers.  

You will be notified of any benefit, premium, and network changes each year, and you are allowed to change plans or carriers each year.Some plans include the Part D benefit.

Part D or Drug plan

Part D (drug) plans are only sold by private insurance companies. You can purchase them in two ways:

1. PDP: Stand-alone drug plan that is paired with your supplement or Medigap.
2. MA-PD: Included with your Medicare Advantage plan.

Part D plan benefits have been updated through legislation and rule-making many times since 2006.  

If you are ready to enroll in Medicare and select a private insurance plan, you will need to enroll in Parts A and B.

You enroll in Medicare A and/or B through Social Security. Do not delay in enrolling--you can apply up to 3 months ahead of your requested effective date.  

Note: If you elect to begin your Social Security benefits at age 65, enrollment in Medicare should be automatic, and your premium will be deducted from your payments. If you delay your retirement benefits, you will receive a statement from Social Security to pay your Part B premium.

Steps:

1. Enroll in Parts A and B using the link above.
2. Email us when you have submitted your application to SSA.
3. We will send you a secure link to gather some additional information from you (doctor's, medications, etc.).
4. Once that is completed, we will send you a link to select a virtual meeting time to discuss our recommendations.

If you are unsure what to do in your specific situation, let's schedule a brief consultation to discuss.