The basics of Medicare eligibility are simple. First, you must be a United States citizen or a permanent, legal resident for at least five years. Second, you must meet at least one of the following criteria:
- Be age 65 or older and eligible for Social Security; or
- Be permanently disabled and receive Social Security disability insurance benefits for at least two years; or
- Have End-Stage Renal Disease (ESRD) and require dialysis treatment or a kidney transplant; or
- Have Lou Gehrig’s Disease (Amyotrophic Lateral Sclerosis).
Most people are automatically enrolled in Medicare Part A (hospital insurance) as soon as they meet the eligibility requirement. Most people are not required to pay a monthly premium for Medicare Part A. As long as you or your spouse paid Medicare taxes while working for a minimum of 10 years, you’re covered. If you did not pay your fair share of taxes, you will be required to pay a monthly premium, up to $441 (at the 2013 rate; 2014 premiums may increase).
Medicare Part B (medicare insurance) is different. Most seniors turning 65 will get their Medicare Part B automatically, and most pay the full Part B premium. If you live in a U.S. territory, or if you qualify for any reason other than age, enrollment is not automatic. The Part B premium changes each year. In 2013, seniors earning up to $85,000 per year pay $104.90 per month. High-income earners pay more, up to $335.70 per month. The 2014 Part B premium is expected to increase to $123.10.
In all cases, you must enroll in Medicare Part B as soon as you become eligible. Your reason for qualifying determines when you are required to enroll. The General Enrollment Period is 1 January through 31 March. Your Individual Enrollment Period is within two months (before or after) of the qualifying event (e.g., your 65th birthday or 25th month receiving Social Security benefits).
If you fail to enroll in Medicare Part B when you are first eligible, you may be asked to pay a penalty equal to 10 percent of the premium for each 12-month period you were not enrolled. Some exceptions apply, including credible insurance through an employer.
As you likely already know, Original Medicare — that’s your Medicare Part A and Part B combined — does not pay for 100 percent of your healthcare needs. In fact, it only pays for a little less than 80 percent of the health benefits that it does cover, and it does not cover prescriptions, hearing, vision, or dental insurance.
To pay for some or most of the fees, deductibles, copays and coinsurances not covered by Medicare, many seniors buy a supplemental policy called a Medigap plan (aka, “Medicare Supplement“). A Medigap plan can’t offer additional health benefits, but it will shield you from the liability high health care costs, should you become hospitalized or critically ill for an extended period.
The key to a Medigap plan is your guaranteed issue right. You have a six-month window when you are first eligible for Medicare Part A and B to buy a Medicare Supplement plan without underwriting. In other words, the insurer of your choice can’t turn you down, regardless of preexisting conditions. If you miss your guaranteed issue right window, you can be turned down and your monthly premium will likely be higher.
Medicare Advantage (Part C) Eligibility
Medicare Advantage (Part C) is the private health plan alternative to Medicare Part A and Part B private fee for service health insurance. To qualify for Medicare Part C enrollment you must be enrolled in Medicare Parts A and B. You can buy a Medicare Advantage plan through Medicare.gov or through a qualified Medicare insurance agent.
With Medicare Part C coverage, you don’t need and can’t buy a Medigap policy. That’s because Medicare Advantage plans typically cover more than Original Medicare. When you buy a Part C plan you are dis-enrolled from Medicare Part A and B.
Medicare Part C is optional coverage. You are not penalized for not signing up, and you can switch back and forth between Part C and Original Medicare annually.
Coverage, deductible, copays, and coinsurance vary by the insurance carrier and specific plan, so you must do your homework. Most counties with Medicare Advantage plans have at least on $0 or low-cost plan. However, be aware that these plans typically have a high deductible or high copays, so make sure it’s in alignment with your true health needs.
Also, be aware that the Medicare Advantage plan premium is above and beyond your Part B premium. The Social Security Administration will continue to deduct your Part B premium from your Social Security check each month. So, if you choose a Part C plan that has a $74 premium, and your Part B premium is $104.90 (2013 rate), then your actual monthly payment for the health plan is $178.90 per month.
Medicare Part D Eligibility
Medicare Part D covers your prescription medications. Like Medicare Advantage plans, Part D is an optional coverage that’s available through private insurers, and you must already have Medicare Parts A and B to qualify. Also, Part D plans are regional. That means you must be living in a plan’s service area to enroll.
Even though Medicare Part D is optional, Medicare can penalize you if you don’t enroll when first eligible and then want to enroll later. The only exception is if you have credible prescription drug coverage through another group plan, such as your employer’s health coverage. You will have to pay this penalty for as long as you have a Medicare Part D plan.
If you have a Medigap plan you can enroll in a Part D plan. These two types of insurance policies are completely compatible.
Individuals with low income can qualify for Extra Help with Medicare prescription drug costs through the Social Security Administration. If you qualify, Extra Help will cover some or all of the costs for your Part D copays, coinsurance, deductibles, and all or most of your monthly premium.