Medicare 101: A Must-Read Guide to the Basics
Answers to frequently asked questions about the health insurance program for people 65+
En español l When the prospect of becoming a Medicare beneficiary looms on the horizon, you suddenly become aware — if you’re like most people — of how little you know about the program. And can you be sure what you think you know is accurate?
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Based on the questions I receive as the Ask Ms. Medicare columnist for AARP, I can tell you that a lot of perceptions about the program are way off base. Often, they’re gleaned from the Internet or even mass emails that are deliberately misleading. And if you’ve had health insurance in the past, especially from an employer, you may naturally be nervous about how Medicare coverage compares with it.
In writing the new AARP book Medicare for Dummies (see the box below), I include questions people frequently raise about the program. Here is a sample:
Q: As a government-run system, will Medicare provide me with inferior care?
A: No — or at least, not inherently. The federal government runs and regulates Medicare, and also pays around 75 percent of the cost of the medical services you use. Even so, those actual services are almost wholly private. The doctors you go to are not government employees; the hospitals and laboratories that provide services to you are not government-owned. Instead, they’re free to enter (or not enter) into contracts with Medicare as they choose. Those who accept you as a Medicare patient are the same kind of private practitioners you would have seen for care before your Medicare coverage began.
Q: Is Medicare free?
A: No, you pay monthly premiums unless you qualify for low-income assistance from your state. (If your income is over a certain level, you pay a surcharge on your premiums.) You also pay deductibles and copayments, which vary according to the type of coverage you choose.
Q: Will Medicare allow me fewer choices than I have now?
A: No. In fact, the reverse may be true. If you’ve had health insurance from a private employer, for example, you probably had only two or three plans to choose from each year. In contrast, Medicare offers a choice between the traditional program — which allows you to go to any doctor or other provider in the United States that accepts Medicare patients — and a variety of Medicare Advantage private health plans (such as HMOs and PPOs), which are likely similar to plans you’ve known in the past. Depending on where you live, you may be overwhelmed by the number of options. In some areas, as many as 50 Medicare Advantage plans are available. Also, at least 25 private Part D plans in each state offer Medicare prescription drug coverage.
Q: Will my out-of-pocket expenses be capped in Medicare?
A: Not necessarily. Traditional Medicare sets no limit on out-of-pocket expenses during a year (although many people buy separate medigap supplemental insurance to cover them). However, all Medicare Advantage plans are required by law to set annual caps on these expenses (up to $6,700 in 2013). In Part D, after you’ve spent a certain amount out of pocket on prescription drugs in a year, you qualify for catastrophic coverage, which greatly lowers your costs for the rest of the year.
PART A: Coverage for hospital stays, home health services and hospice care.
PART B: Coverage for doctors' services, outpatient care and medical equipment.
PART C (Medicare Advantage): Private plans that provide Part A, B and (often) D services, as an alternative to traditional Medicare, usually through managed care.
PART D: Prescription drug coverage, offered through private "stand-alone" drug plans or Medicare Advantage plans.
TRADITIONAL MEDICARE: The original program that covers Part A and B benefits by paying providers directly for each service.
MEDIGAP: Private, optional supplemental insurance that covers many of traditional Medicare's out-of-pocket expenses.
Q: Will I pay a large deductible before getting Medicare coverage?
A: Medicare does have some deductibles, but they’re relatively small compared with the ones many people pay in high-deductible health plans outside of Medicare. In 2013, the annual Part B deductible is $147; the maximum annual Part D deductible is $325; and the maximum Part A deductible for a hospital stay is $1,184 in traditional Medicare. (Medicare Advantage health plans charge differently for inpatient care.)
Q: Will my health issues and preexisting medical conditions count against me?
A: No. Current and past health problems don’t bar anyone from Medicare coverage or cause anybody to pay higher premiums or copays than somebody who is in perfect health. That kind of discrimination has never existed in Medicare. A history of smoking, alcohol use or obesity doesn’t increase rates either.
Q: Can I get Medicare if I haven’t worked long enough to qualify?
A: It’s possible. You may qualify on the work record of your current, divorced or deceased spouse. (In states that recognize same-sex marriage, this would include same-sex spouses.) If so, you’ll be entitled to Part A services without paying a monthly premium. Or you can choose to buy into the system by paying premiums for Part A. Regardless of your work record, you can get Part B and Part D services by paying the same premiums as anybody else.
Q: I plan to take my Social Security benefit early. Can I sign up for Medicare at 62?
A: No. Nobody can get Medicare benefits before age 65, except for those who qualify at an earlier age because of disability.
Q: Will Medicare cover my younger spouse or other dependents?
A: No. Family coverage doesn’t exist in Medicare — not for spouses, dependent children or other family members. Also, if you and your spouse are both in Medicare, each of you must pay premiums separately and in full unless you receive government assistance to help pay them. Medicare doesn’t give price breaks to married couples, even in its private Medicare Advantage health plans and Part D drug plans.
Q: Do I have to sign up for Medicare if I continue working after 65?
A: Yes, unless you’re covered by health insurance from an employer for whom you or your spouse is still working (and the employer has 20 or more employees). If so, you can delay Medicare enrollment until you or your spouse stops work, without risking any late penalties. (This rule may be different if you’re in a same-sex marriage or live abroad.)
Q: Can I see the doctors of my choice in Medicare?
A: Maybe. If you’re in a Medicare HMO, you must go to doctors in the plan’s provider network and you need a referral to see a specialist. In a PPO you can go out of network for a higher copay and don’t need specialist referrals. In traditional Medicare, you can see any doctor who accepts Medicare patients. The national shortage of primary care physicians is affecting Medicare as well as other insurance programs, and Medicare’s payment system has driven some doctors out of the program. But more than 90 percent of doctors still accept new Medicare patients, according to a recent government report. You’re free to see doctors who don’t accept Medicare, but only at your own expense.
Q: Do I have to sign up for Medicare again every year?
A: No, your coverage just rolls over from year to year unless you choose to change it. But you do have the opportunity to select a different kind of coverage during Medicare open enrollment, which runs from Oct. 15 to Dec. 7 each year. In this period, you can switch from traditional Medicare to a Medicare Advantage (MA) health plan and vice versa, or from one MA plan to another, or from one Part D drug plan to another. In some circumstances, you can make these changes at other times of the year.
Q: Will Medicare coverage be cut off when I grow old?
A: No! Medicare coverage is based on medical necessity, not age. So if you need a hip replacement when you’re in your 90s and can physically tolerate the procedure, Medicare will pick up most of the cost in the usual way. The idea of Medicare rationing care and denying coverage for people over a certain age has been spread through mass emails designed to discredit the 2010 Affordable Care Act (commonly called Obamacare). In fact, the act doesn’t allow rationing, and no Medicare regulation limits care for people based on their age.
Q: Will Obamacare reduce my benefits?
A: No. The Affordable Care Act guarantees all current Medicare benefits and provides more. It makes many preventive services, such as mammograms, free of charge and slashes the cost of prescription drugs by gradually closing the Part D “doughnut hole.” People with Medicare are not eligible for Obamacare.
Patricia Barry writes the AARP Ask Ms. Medicare column and is the author of Medicare for Dummies.
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