What you need to know about Medicare enrollment

Medicare is a complicated program with many moving parts and variables. The annual election period is the period between Oct. 15 and Dec. 7 every year when beneficiaries may choose to switch their Medicare Advantage or prescription drug plans. This article will serve as the first in a series to help people disseminate this vital program in digestible bite size chunks. We will begin with basics about what Medicare is and what benefits Parts A and B offer.

Medicare is a government program run by Center for Medicare & Medicaid Services (CMS) providing limited health insurance coverage for seniors age 65 and those under age 65 with certain disabilities. The standard requirement to be eligible is for a beneficiary is to have worked and paid Medicare taxes for a minimum of 40 quarters, the equivalent of 10 years. Those under age 65 who have been on Social Security Disability Insurance (SSDI) for 24 consecutive months will become eligible on the first day of their 25th month of SSDI.

There is no premium for Part A for individuals who meet the minimum requirements. If the minimum is not met, then one may be able to receive Part A by paying a premium which would be determined by CMS.

Part A includes limited coverage for hospitalization, blood, skilled nursing limited to 100 days and hospice services. There is a deductible of $1,364 for hospitalization which resets every 60 days. This means that if you are admitted into the hospital, you will be responsible to pay the full deductible. If you are discharged and readmitted in the hospital within 60 days of that discharge date, there will not be another deductible. If on the other hand you are re-admitted after 60 days, there will be another deductible.

Part A also has co-payments for additional days of hospitalization. It is a bit complicated but be aware that hospital stays beyond 90 days begin additional co-payments which will be the responsibility of the beneficiary. While it is unusual to have long hospital stays it does happen.

Under Part A, skilled nursing will have no copayment for the first 20 days and then will have a co-payment of $170.50 for days 21 through day 100, after which all costs will be the beneficiary’s responsibility. As mentioned above Medicare does not include coverage long-term care.

Part A will cover the first three pints of blood if needed. However, any additional blood need will be the responsibility of the beneficiary. For hospice concerns, once a beneficiary meets CMS requirements, which include a physician’s certification of terminal illness then, all but very limited copayments and coinsurance will be covered.

Part B is limited coverage for doctor visits and outpatient services. The current premium for those who do not have an income adjusted amount (IRMAA) is $135.50. If you are receiving Social Security income you may have the premium automatically withheld from your Social Security check.

If you are not already receiving social security income, then you will need to make other arrangements to pay the premium. CMS will bill you typically for three months at a time. If you lapse in making required payments, then you will be involuntarily disenrolled. This is a complicated issue which we will cover in more depth in the follow up article regarding enrollment periods.

The Part B premium may be adjusted up or down depending on your income.

For those who have low income the premium may be reduced. For those who have higher income it may be increased. This is referred to as Income Related Monthly Adjustment Amount (IRMAA). To determine your income and premium, CMS will review your previous years’ tax returns. This can catch retirees off guard as their income may drop substantially when enrolling but getting rated for higher income while working. You may request an income adjustment by filing form SSA-44 which can be found on the Social Security website at ssa.gov. Submitting the form does not guarantee a favorable adjustment.

Part B has an annual deductible of $185. This is one time a year and does not reset as the Part A deductible does. After you meet the deductible, Medicare will pay 80% and the beneficiary would be responsible for twenty percent of CMS approved procedures and services. Generally, think of CMS approved in terms of medically necessary.

This example may help put the term medically necessary in perspective. If someone was to have a procedure to correct a deviated septum because of breathing difficulties, that procedure would likely be considered a medical necessity. However, a nose job to appease vanity would not, hence my profile will remain. Sometimes a medical procedure may not be so obvious. It is always recommended to address these concerns prior to having a procedure done. Part B also offers limited coverage for home health care after you have been discharged from hospitalization.

There are some additional basics to understand. Medicare does not have a maximum out of pocket. There is no cap for catastrophic expenses. Beneficiaries must use providers who contract with CMS otherwise the expense will not be paid. CMS sets prices for procedures but allows providers to charge up to fifteen percent over those set rates. This is called excess charges by CMS. Better to check with your service provider prior to a procedure.

Believe it or not this is just the tip of the iceberg regarding Medicare. In upcoming articles, I will cover Part D Prescription drug plans, Medicare Advantage sometimes referred to as Part C, Medicare Supplement or Gap plans, enrollment periods, MediCal eligibility and more so stay tuned. Until we talk again be well.

Dale Immekus is the owner of Dedicated Financial Services and an accredited wealth management advisor. Registered Representative offering securities and advisory services through Independent Financial Group, LLC (IFG), a registered brokerdealer and investment advisor. Member FINRA/SIPC. Dedicated Financial & Insurance Services and IFG are unaffiliated entities.