As most people approach retirement age, they'll begin to qualify for Social Security benefits. Along with their Social Security, they should also be eligible for Medicare (as long as they are 65+ or have a qualifying disability). Not everyone is clear on what Medicare insurance coverage really means, or how much it costs. Medicare coverage insurance varies from the basic - and usually free plan - to optional coverage and other policy opportunities.
Basic Medicare or Part A is hospital insurance only, and most people will not be required to pay a premium. Generally, your ability to receive full Part A benefits premium-free depends on your past contributions through your employer. If you have 40 or more quarters of Medicare contributions through your employer, you pay no premium. Those with 30-39 quarters must pay $233 each month for Medicare insurance coverage for Part A, and those with fewer eligible quarters currently pay $423 monthly (2008).
Part B optional insurance is Medicare coverage for outpatient services and costs $96.40 a month for those who qualify by income. Those who make more than $82,000 per year (or $164,000 for a married couple) will pay higher premiums.
Part D is Medicare coverage that only covers the cost of prescription drugs; coverage varies with the policy you purchase. All Part D plans have a gap, usually called the "donut hole" when the plan does not pay past a certain dollar ceiling each year. The participant pays out of pocket for medications until reaching the next dollar amount.
Most Medicare insurance coverage has deductibles and coinsurance that must be paid out of pocket, but there are ways to reduce or pay these costs. The two main options are supplemental plans called MediGap policies, which are private insurance plans that pay some or all of the excess costs. The other option is Medicare Advantage, sometimes known as Medicare Select plans (or Medicare Part C plans), which operate similarly to MediGap policies, but are a managed care plan.
MediGap policies are Medicare coverage with the option to use any physician or hospital and are based on age and health and sometimes group membership. The Medicare Advantage plans are far less expensive as a rule but require using in-network providers to receive payment for any expenses. Another option for seniors is using Medicaid to supplement Medicare insurance coverage, but qualifying for Medicaid requires low-income status.
*You may be able to get extra help to pay for your prescription drug premiums and costs. To see if you qualify for getting extra help, call:
- 1-800-MEDICARE (1-800-633-4227). TTY/TDD users should call 1-877-486-2048, 24 hours a day/7 days a week;
- The Social Security Administration at 1-800-772-1213 between 7 a.m. and 7 p.m., Monday through Friday. TTY/TDD users should call, 1-800-325-0778; or Your State Medicaid Office.