Before Medicare was rewritten, the health plan approach for seniors in the U.S., there was only one version. Then, in an attempt to control costs and separate coverage to categories of basic preventative treatment, pharmaceuticals and full-blown complex care, the Medicare parts we know today were created. Medicare Part B is the modern version of what used to be the original Medicare which paid for actual hospital treatment, long-term services and recovery from serious injury or illness. Today, this includes medical equipment, in-home care, and chronic treatment as well. It represents the closest thing to what historical medical insurance for seniors used to be.
A bit of background is in order here. Everyone has to sign up for Medicare coverage after a specific age. If a person doesn’t do this, they get penalized later on when they do eventually enter the system as a late arrival, being charged higher costs. This is intended to offset higher medical costs from uncovered folks coming in late and costing a higher coverage expense. The program was and is intended to make sure seniors always have some kind of health coverage as administered by the government. However, today’s version is actually provided through middlemen entities which are no different from medical clinics, health insurance companies and regular health providers.
What is Medicare Part B Versus Other Parts?
Part B provides coverage for two specific areas: medically necessary services and preventative services. Medically necessary are those needed to determine your condition as a physician or medical provider and which meet standard medical practice. Preventative services are those intended to stop you from getting sick. This includes everything from vaccines to early treatment that stops a condition from growing worse. Within these category various services are included, such as ambulance coverage, medical equipment, mental health services, second opinion reviews for surgery, and some outpatient pharmaceuticals.
For starters, a person has to be eligible to sign up to even access Medicare services. Members cannot sign up earlier than age 65. Even if a person has retired and might be sick or injured and need care, Medicare is not available until the minimum age limit is reached. Second, the enrollee has to be a U.S. citizen or a U.S. permanent resident. Temporary visitors are not allowed, which may be a surprise to some who come from countries that automatically provide care for anyone in the country’s territory. For those who are a permanent resident, they must have been so and resided in the U.S. for at least five years in a continuous period as well. In other words, one can’t be an approved U.S. resident, then go and live in Africa for two years, and then come back and sign up. Vacation status, on the other hand, doesn’t nullify continuous residency.
Where an enrollee has an approved disability, however, he or she can sign up for Medicare earlier. An approved disability means your status has been vetted and approved by either the Social Security Administration or the Railroad Retirement Board for disability status. After being disabled for two years (24 months), Medicare part B kicks in automatically among other benefits. Other exceptions to the 65 years of age requirement include having end-stage renal disease or suffering from Lou Gehrig’s Disease (ALS). Documentation of such by a medical physician is a necessity.
As noted earlier, once a person turns 65, he or she is required to sign up for Medicare. It doesn’t matter if the person has health insurance through another method; that form is either converted to a Medicare plan or replaced by Medicare. Failure to enroll is typically punished by higher coverage charges that are billed monthly than would otherwise occur. And there is a late enrollment penalty as well.
Enrollment doesn’t have to be automatic through some kind of condition. One can sign up for Medicare at the same time he or she signs up for Social Security benefits, for example. This can be done online or by phone (1-800-772-1213 (TTY users 1-800-325-0778).
Extra Point to Remember During Sign Up
One of the key aspects to pay attention to during initial signup is the opportunity to pick up a Medical Supplemental Insurance Plan. An MSIP is a guaranteed right during your first six months on Medicare, and you don’t have to go through any kind of filtering for pre-existing conditions or underwriting review. Afterwards, such filters do kick in, which can make your premiums for the MSIP higher. This one-time opportunity only occurs during the initial sign-up for Medicare B.
Delaying Medicare B
An enrollee doesn’t necessarily have to sign up for Medicare B; the person only needs to be enrolled in Medicare. This situation can happen where health insurance is already provided by an employer, and the person wants to keep working longer than age 65. In these situations, their existing PPO or HMO style coverage would convert to Medicare Part A plan. It makes sense not to switch to B, especially when the employer is paying the cost of coverage; Medicare Part B requires an enrollee’s premium out-of-pocket cost.
The above said, folks might be worried then that a delay would trigger a penalty when one finally does have to switch to Medicare Part B. However, due to being covered by an employer, a new enrollee gets a special eight-month period to sign up for Part B without the late sign-up penalty, whether still employed or separated. After eight months, then the late penalty returns. Where the confusion comes in has to do with COBRA or a retiree plan coverage. Neither can be counted as an employer coverage. So folks in these situations end up realize a late penalty and get surprised by the different treatment versus what they heard would occur. In a COBRA situation, a person is separated from an employer but chooses to retain coverage out-of-pocket. At the time of separation, the person needs to apply for Medicare Part B, not 8 months later, even when on a COBRA coverage extension.
As mentioned earlier, Medicare Part B charges a cost on the enrollee as a copay. The premium amount will vary annually, and most folks who aren’t working see it in the form of a charge to their Social Security benefits for the same month. For 2019, for example, the charge is $135.50 per month. That said, if a person decides to earn money when on Medicare, the cost could be higher. Again, if not working and receiving retiree benefits from the government, the premium costs will be taken out of the monthly benefit paid, i.e. deducted. Otherwise, if a person insists on paying it separately, he or she will get an invoice in the mail every three months. Most choose the automatic deduction and forget about it. Remember, if one signs up late, it will trigger a higher premium than would otherwise be charged. For every 12 months one failed to sign up, the premium charge goes up by 10 percent. So, if an enrollee delayed signing up for three years, his premium will be 30 percent higher than a similar person who signed up right away at 65.
Simply because an enrollee pays a premium charge doesn’t mean there aren’t other costs. In addition to the basic premium, even if one has signed up timely, many services provided require an additional 20 percent copay. The exact amount depends on what services under Part B are actually needed by a patient.
First, the best way to keep costs down is to work with a doctor or medical provider who is Medicare-approved. These folks agree not to charge service costs higher than what Medicare allows for the given treatment. Second, some geographic areas are going to cost more than others. Depending on the zip code involved, services can cost more due to the cost of provision being higher in that location.
Second, if you work with a doctor or provider who is not Medicare approved, the coverage may still work and apply, but only for that portion that Medicare would pay for. That means the difference then would be out-of-pocket for the patient choosing this path. Some folks are okay with this approach because they can afford it and want to retain a specific physician or service.
Do Your Own Research
There is a library of information provided directly by the government as well as by multiple non-profit sources who advocate for seniors. Anyone nearing their time to sign up or in the process of considering how to enroll should take time to research differences and how the different parts of Medicare work. The Federal government’s own information can be found at Medicare.gov.
The insurance agents at Aines, Carter & Associates can help you wade through all the confusing information out there. Call or contact us to see what we can do to help.