Medicare can be a confusing topic for many. Here are the top 5 things your parents don’t know about Medicare.
5 Things Your Parents Don’t Know About Medicare
Medicare isn’t free
Original Medicare is divided into 2 parts; Part A which covers hospital stays, and Part B which covers physician visits. Part A has no additional premium if your parent or their spouse worked and paid Medicare taxes for 10 years. (It’s not free because someone paid taxes to get the benefit!) Most people fall into this category. However, if no one worked the required 10 years or 40 quarters, then the premium for Part A is between $252 -$458 per month. Part B premiums range from $144 – $491 depending upon the annual income from the previous 2 years (2018 income determines 2020 premium).
Medicare doesn’t cover everything
Original Medicare is essentially an 80/20 insurance plan. Part A deductible for 2020 is $1,408 per benefit period. A benefit period extends 60 days from hospital or skilled nursing facility release. This means that a 4 day hospital stay in January followed by a hospital stay in April will result in two deductibles.
Part B is a true annual deductible, and is $198 for 2020. After the deductible, you are generally responsible for 20% of the costs. Unlike other insurance plans that have a Maximum Out of Pocket, there is no cap on the 20%. To protect yourself from this unknown you should evaluate a Medicare Supplement (also known as Medigap) or a Medicare Advantage Plan (also known as Medicare Part C). Both are available from a variety of private insurance companies. Original Medicare (Parts A and B) doesn’t cover prescription drugs at all. They must buy a Prescription Drug Plan, known as PDP or Part D from a private insurance company in order to protect themselves.
There are penalties for signing up late
This applies to Parts B and Part D if you don’t have other creditable coverage:
- If they don’t get Part B when they’re first eligible, their monthly premium may go up 10% for each 12-month period they could have had Part B. In most cases, they’ll have to pay this penalty each time premiums are due, for as long as you have Part B. And, the penalty increases the longer they go without Part B coverage, medicare.gov.
- The cost of the late enrollment penalty depends on how long they went without Part D or creditable prescription drug coverage. Medicare calculates the penalty by multiplying 1% of the “national base beneficiary premium” ($32.74 in 2020) multiplied by the number of full, uncovered months they didn’t have Part D or creditable coverage. The monthly premium is rounded to the nearest $.10 and added to the monthly Part D premium, medicare.gov.
One size doesn’t fit all
Buying a Medicare Supplement, Medicare Advantage Plan or a Prescription Drug plan because one’s spouse or neighbor has that plan is a recipe for disaster! Each Medicare Health plan can and should be tailored to each person’s individual needs.
If you or someone you know looked at Medicare Health Plans years ago, that is a huge red flag! Health circumstances change and more importantly, the Medicare Health Plans change every year. It is worth an hour of time to review the current situation with a licensed professional during the Annual Enrollment period (10/15-12/7).
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