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Medicare explained

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Al Waller: It’s been reported fewer than one in four Baby Boomers have "a great deal" of knowledge about Medicare, according to a 2020 survey by nonprofit Transamerica Center for Retirement Studies®. So doing the math, that's only 24 percent of the generation that is nearing or has already entered retirement. When you think of it, it’s alarming given that Medicare is the national health insurance program for all those 65 and older. I’m your host, Al Waller.

Joining me today is Mihaela Vincze, public health expert for Transamerica Institute®, and she’s here on this episode of ClearPath—Your Roadmap to Health & WealthSM to break down Medicare, what it is, the different parts—A, B, C, and D—and how they fit together. She’ll then describe and explain how to enroll in Medicare, how to take advantage of open enrollment season, as well as some new changes for 2022.

It’s good to have you with us again, Mihaela.

Mihaela Vincze: Good to be here, Al.

Al Waller: Mihaela, could you walk us through this topic? Why is Medicare, specifically, important for listeners of all ages?

Mihaela Vincze: I recently asked my mother what she knew about the program. She’s not yet eligible, but it is on the horizon. She let me know she doesn’t know that much about it because she doesn’t think it applies to her.

I learned she’s also unaware that without Medicare, many families would be unable to afford doctor’s visits, health care, or obtain their necessary prescription drugs. Importantly, she also isn’t aware of the costly penalties that may arise from not signing-up when she’s initially eligible.

There are so many complexities and considerations associated with Medicare, so it’s important for me, as her daughter, to know as much as I can, so I can help her through her decision-making process when the time comes for her to enroll.

I’m hoping with this episode others will be inspired to do the same.

Al Waller: I think it’s great you’re assisting your mom and keeping her up to speed with this. Before you know it, the time will come and it’s obviously important because it is date sensitive.

We are also being inundated on television and through the phone with robocalls regarding supplemental plans. So, a lot of this can seem really overwhelming.

Mihaela, why don’t we start at the beginning and have you define for our listeners, what exactly Medicare is?

Mihaela Vincze: Medicare is our country’s health insurance program for people age 65 or older and younger people receiving Social Security disability benefits.

Al Waller: That’s a great point, Mihaela. It’s important to know that younger people are sometimes eligible. So, thank you for reminding us.

Now let’s jump in—some of us may have heard about the Medicare alphabet—Parts A, B, C, D. What are they? How do they work together?

Mihaela Vincze: The most popular programs are Part A and Part B, which make up Original Medicare.

Part A covers inpatient hospital care and limited coverage of hospice, nursing home care, as well as home health care. Most people do not pay a monthly premium for Part A.

Part B covers outpatient hospital care, such as physical therapy, doctor bills, and preventive care, including screenings, shots, vaccines, and wellness visits. Part B is optional and costs an extra monthly fee or premium, which depends on income.

Al Waller: Given that Part B covers a lot of additional services, how much is the extra monthly fee for Part B?

Mihaela Vincze: Part B costs are determined by your annual income from two years prior. For example, those who made $88,000 or less in 2019 paid the standard premium of $148.50 per month in 2021. Those who made more than $88,000 in 2019 had higher costs, determined by their income brackets. If you are shopping for a 2022 Medicare plan, keep in mind that the cost will be determined by your income in 2020.

Al Waller: Now that we’ve covered Part A and Part B which make up Original Medicare, could you talk to our listeners about Part C?

Mihaela Vincze: Yes, Part C programs are also known as Medicare Advantage plans and are managed by private insurance companies. Plans may offer some extra benefits that Original Medicare doesn’t— like hearing, vision, and dental services. Costs vary for these types of plans, but most of them include Part D coverage.

Al Waller: Now, what exactly is Part D?

Mihaela Vincze: Part D plans provide extra coverage for prescription drugs, which is easy to remember if you make a mental note to recall “D” for “drugs.” Joining a Medicare prescription drug plan is voluntary, and you pay an extra monthly premium for the coverage. It can also be added to Original Medicare.

Al Waller: Well, with all these different Medicare options, how does one choose which is best for them?

Mihaela Vincze: Make sure to consider all costs, not just the monthly premium. Think of all and any major medical procedures you expect to have in the next year when making this decision. Medicare Advantage plans often have less out-of-pocket costs than Original Medicare, and some plans offer additional benefits that Original Medicare does not—like hearing, vision, and dental services.

Al Waller: Now that we’ve covered the different Medicare parts, when can you initially enroll?

Mihaela Vincze: You may initially sign-up for Medicare during the 7-month period that starts 3 months before the month you turn 65, includes the month you turn 65, and ends 3 months after the month you turn 65. You may be eligible to get Medicare earlier if you have a disability or end-stage renal disease.

For those wondering how to apply, you can apply online, by mail, or over the phone by contacting your local Social Security office. About 2 weeks after you sign up, Medicare will mail you a welcome package with your Medicare card.

However, keep in mind that if you’re close to 65 and are already getting Social Security or Railroad Retirement Board benefits, you’ll automatically enroll in Medicare Part A and Part B coverage once you're eligible. Also keep in mind, Part B has the monthly fee or “premium”, which you can drop if you want to.

Al Waller: What happens if you miss the initial enrollment period? Is there anything to be concerned about?

Mihaela Vincze: Good question. If you missed your Initial Enrollment Period (IEP) and need to enroll in Medicare, you likely will have to enroll during either a Special Enrollment Period (SEP) or the General Enrollment Period (GEP). The GEP runs from January 1 through March 31 each year, with coverage starting July 1. You may face a Part B late enrollment penalty and gaps in coverage if you sign up during the GEP.

Al Waller: Really?! How much is the penalty for Part B?

Mihaela Vincze: Your monthly premium will go up 10% for each 12-months you were eligible for Part B but didn’t sign up for it. Since we’re on the topic of penalties, I want to flag that there is also a penalty for Part D—if you do not enroll when you’re initially eligible, you’ll have to pay a penalty for as long as you have Medicare.

Remember, the time to change and review your coverage is during the Medicare Open Enrollment season.

Al Waller: Listening to these fees, it sounds like these are important dates to write down, then circle on your calendar.

What exactly is Medicare Open Enrollment, and when is it happening this year?

Mihaela Vincze: Medicare Open Enrollment is the seven-week period that gives eligible individuals, or those receiving Medicare, a chance to change and review their coverage for 2022. This year, the period runs from October 15 to December 7.

Al Waller: Are there any new changes in 2022 that listeners should be aware about?

Mihaela Vincze: Yes, Medicare now covers several items and services related to COVID-19. These include diagnostic tests, antibody tests, and even vaccines. This year, cognitive assessments and blood-based biomarker screening for colorectal cancer have also been added to the list.

Al Waller: That’s great news, especially hearing that Medicare is covering so many new and relevant services. Are there any services or items not covered by Medicare that listeners should be aware of?

Mihaela Vincze: Yes, there are a few items and services not covered by Medicare. One common misconception is that long-term or custodial care, which includes day-to-day activities like bathing, dressing, and eating, is covered. Unfortunately, it is not. Other items not covered include hearing aids, eye exams, and routine foot care. So, its good to know what’s covered when making decisions for your plan.

Al Waller: Thanks for that intel. It’s important to know that Medicare doesn’t actually cover everything like many may have incorrectly assumed.

Now, switching gears, something I’ve always wondered about is working when you turn 65. Do you still need to sign up for Medicare if you’re currently employed?

Mihaela Vincze: Generally speaking, if you have job-based health insurance through your or your spouse’s current job, you don’t need to sign up for Medicare while you or your spouse are still working. You can wait to sign up until you or your spouse stop working or you lose your health insurance—whichever comes first.

However, if you have health insurance that’s not available to everyone at the company or you’re self-employed, ask your insurance plan provider if your coverage is employer group health plan coverage. If it’s not, sign up for Medicare when you turn 65 to avoid a monthly Part B late enrollment penalty.

Further, if your employer has less than 20 employees, you should check with your employer to see if you need to sign up for Medicare when you’re first eligible. If you have COBRA coverage, you should sign up for Medicare as soon as you turn 65.

Al Waller: There are certainly lots of complexities to Medicare. To that point, where should someone turn if they want to access additional resources?

Mihaela Vincze: For more details, they can turn to medicare.gov, the official U.S. government site for Medicare which contains the handy Medicare & You 2022 handbook. The State Health Insurance Assistance Program, known as SHIP, also offers free counseling, which is unbiased and not connected to any health insurance plan. Lastly, be sure to check out our Transamerica Institute Medicare guide at transamericainstitute.org/Medicare.

Al Waller: Thank you Mihaela for an informative and enlightening episode. And to our audience, thank you for listening to ClearPath—Your Roadmap to Health & Wealth.

Next week, we’ll be delving into the implications of caregiving and the growing need for caregivers among our aging population. In two weeks, we’ll be discussing employee benefits and health care enrollment for people who are not yet retired. If you haven’t done so already, please make sure you subscribe so you don’t miss these insightful episodes.

ClearPath: Your Roadmap to Health & Wealth is brought to you by Transamerica Institute, a nonprofit private foundation dedicated to identifying, researching, and educating the public about retirement security and the intersections of health and financial well-being. You can find our weekly podcast on WYPR’s Podcast Central and mobile app, wherever you get your podcasts, and at transamericainstitute.org. I’m your host Al Waller. Until the next time, stay safe, be well, and thanks again for joining us.
This podcast is produced by Transamerica Institute with assistance from WYPR.

Al Waller is a long-time Baltimore native and employment expert with a 30-year career in leading and advising locally and globally based corporations on matters including: Talent Acquisition and Retention, Employee Relations, Training and Development.
Mihaela Vincze is a public health expert and experienced health care educator. Serving as Transamerica Institute’s health care content developer, she shares insights on health and wellness on ClearPath—Your Roadmap to Health and WealthSM. Mihaela earned her master’s and bachelor’s degrees in public health at California State University, Northridge.