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What Is Medicare Insurance?
Medicare insurance is health care for people who are 65 or older, younger people with certain disabilities, and some children under age 18 with special needs. The program covers a variety of medically necessary services and provides access to care in hospitals, skilled nursing facilities, hospice, home health care, and more.
The main type of Medicare is called “Original” Medicare, which has two parts: Part A (hospital insurance) and Part B (medical insurance). Many Medicare beneficiaries also enroll in a Medicare Advantage plan, which is an alternative to traditional Medicare.
A Medicare Advantage plan is run by a private insurance company that contracts with Medicare to provide all of your Part A and B benefits. These plans usually have lower out-of-pocket costs than Original Medicare.
Medicare Advantage plans have yearly contracts with Medicare and must follow the rules set by the government. These contracts must include a limited annual out-of-pocket spending limit and may include supplemental benefits not covered by Original Medicare, such as vision and dental coverage.
These plans can vary in cost, specific drugs covered, and how they place drugs into different “tiers” on their formularies. They also have monthly premiums and other costs throughout the year.
About 20% of Medicare beneficiaries have some type of additional insurance in addition to Original Medicare. Almost all of them have some kind of private supplemental indemnity insurance, like a Medigap plan.
One-third of Medicare beneficiaries have a subsidized or free prescription drug coverage that they receive through a public or private supplemental Medicare Part D program. These beneficiaries are often in their early 60s or older and live in a low-income area.
Another group of beneficiaries are dual eligibles for Medicare and Medicaid, about 10% of all beneficiaries. This includes some who are receiving group retirement insurance through a former employer or union (about 30%), and some who choose a public Part C Medicare health plan, like a Medicare Advantage plan.
Those who are eligible for both programs can choose to enroll in either program and avoid the other, or they can delay enrollment until after age 65. Those who delay enrollment can do so without paying a penalty for not enrolling in time.
The main reason to sign up for Medicare is to ensure that you have coverage when you need it most. This is particularly true if you have health issues, or are elderly and may not be able to afford the extra costs of prescription drugs.
There are three enrollment periods for Medicare: the initial enrollment period, the general enrollment period, and the special enrollment period. The initial enrollment period is the three-month period before your 65th birthday or the three months after your 65th birthday.
If you are still working or covered by an employer group health plan, you can delay enrolling in Part B until the special enrollment period. This period begins the month you leave your employer’s group health plan or the month that your employment ends, whichever comes first.