Every year, changes to Medicare are proposed, discussed and debated. Sometimes these changes are major, and other times it's only deductible and premium amounts that change. While there were no major changes for 2023, there was enough chatter and speculation out there to make things confusing. That makes this a great time to look at the status of the program today, focusing on Medicare eligibility age, qualifications, requirements 2023, and their impact on your private Medicare plan options.
There have been no changes to the Medicare eligibility age. The standard age at which you become eligible to participate in Medicare is 65. Although that’s when most Amerians enter, it is possible to become eligible at a younger age. This happens when you experience certain disability or health conditions, including:
When you fall into these categories, you’ll be able to enroll in Medicare no matter how old you are, even if you’re decades younger than 65.
Aside from age or health status, there is one other general rule about Medicare eligibility. Medicare is only open to citizens of the United States, or permanent legal residents. Permanent legal residents must have resided in the country lawfully for at least five years.
Another aspect of Medicare eligibility has to do with getting Part A on a premium-free basis. Most people are entitled to receive this benefit if they work and pay payroll taxes long enough. If you qualify for Social Security retirement benefits (generally you need a minimum of ten years of full-time work), you will also get Part A hospital benefits without paying a monthly premium. This is because you’ve actually been paying for Part A your entire working career though payroll taxes. You can also receive Part A without paying a premium if you’re married to someone who qualifies for premium-free coverage. This is still the case even if your spouse dies.
If you can’t get premium-free coverage through your work history or a spouse’s work history, you can voluntarily enroll in Part A and pay a monthly premium. For 2023, the monthly premium comes in two tiers, depending on how much work history you have:
When you elect to pay for Part A, one of the requirements is that you must also choose to take Part B.
Part B of Medicare isn’t paid for through payroll tax deductions. Instead, you start paying a monthly premium only when you actually enter the program. For most people, this happens at age 65. The 2023 standard Part B premium is $170.10 pe r month. This is the base premium, but it can be higher for certain higher earning people due to something called IRMAA - Income Related Monthly Adjustment Amounts. IRMAA is determined based on your taxable income plus tax-exempt interest from two years before. For example, your 2023 Part B premium is calculated based on your 2020 tax return . You will be notified if you’re subject to the higher premium amounts.
Now that you are more familiar with the eligibility requirements of Medicare, we can dive into some of the details of the actual enrollment process.
The easiest way to enroll is when you’re already receiving Social Security retirement income. If you elect to take your retirement benefit at or before age 65, your enrollment into Medicare will be automatic. You will receive your award letter and Medicare card from Social Security. Your coverage will be effective on the first day of your birth month.
There are three other ways that your Medicare benefits will start automatically, and they all have to do with early entry into Medicare. Your Medicare enrollment will be automatic when you’re receiving benefits from Social Security due to:
If you’re not already taking Social Security for retirement or for disability or illness, you’ll need to sign up manually. You will have a seven month window of eligibility called your Initial Election Period (IEP). This enrollment period spans:
You can enroll at any time during this window, but it’s best to do so during the three months before your 65th birthday. By doing that, your Part A and B coverage will start on the first day of your birth month. If you wait until the month of your birth or the three months after you turn 65, your actual entry into Medicare will be delayed (but will still be considered “on-time”).
When you enroll manually, you have several options, including:
The best and easiest way is to sign up online.
There may be situations, however, where you want to delay taking Medicare. This would be the case if you still have employer coverage, whether from your own employer or your spouse’s job. You can safely do this if you (or your spouse, if applicable) work for an employer with more than 20 employees. If you work for a small employer, you’ll probably have to enroll in Part B when you turn 65 to avoid late enrollment penalties.
However, if your employer has more than 20 employees, you can safely delay taking Part B for as long as you have the employer coverage. You will probably have to take Part A, though. This shouldn’t be a problem, because you likely are entitled to premium-free Part A, so this won’t cost you any money. You will, however, be able to avoid paying the Part B premium until you lose your employer coverage. Obviously, you would only do this if your employer coverage was less expensive than Medicare.
When you do lose your employer coverage, you will receive a Special Enrollment Period (SEP) to enroll in Medicare Part B. This enrollment period lasts for a total of eight months, and will begin no later than the month that you lose your employer coverage. Your Part B coverage will begin on the first day of the month after the month you enroll, so if you lose your employer coverage at the end of June, and you enroll in Medicare during June, your Part B coverage will start July 1st.
Whether you’re automatically enrolled, you enroll manually, or you enroll years after you turn 65 because you delayed your enrollment, getting Part A and B coverage is only the start of your Medicare story. Once you have the basic coverage in place, you’ll want to consider adding a private option to enhance your benefits.
All of the private Medicare Insurance plans available require you to be eligible for Original Medicare and actively enrolled to some degree. Before we dive into the specific requirements, let’s take a step back and discuss why you would consider adding a private option in the first place.
It all boils down to gaps in coverage under Part A and B. When we say gaps, we’re talking about any aspect of the system that exposes you to out of pocket spending. This can mean:
To help with some or all of these gaps in coverage, people usually use one or two of the private plans available:
Now that you’ve considered why private Medicare Insurance plans can be helpful, we’ll review the specific requirements and qualifications for them.
Medicare Supplement Insurance is coverage designed to work hand-in-hand with Original Medicare. This kind of insurance is also known as Medigap because it is designed to fill in many of the gaps in Parts A and B.
Medigap is designed and regulated to be standardized across the United States. There are a total of 12 standardized options available, two of which are “high deductible” versions. Each one of these plans covers a different blend of the gaps in Medicare (the amounts you’d normally have to pay by yourself). For instance, there are Medigap plans that don’t cover the Part A deductible at all, some that cover 100% of it, and others that provide partial coverage.
In the same way, some plans will provide emergency coverage for you while you’re outside the U.S. and others won’t. This allows you to thoughtfully consider which gaps you actually need covered, and choose the standardized Medigap plan that will best fit your needs.
Regardless of which specific Medigap plan you want, there are some general guidelines and requirements that will apply to all of them.
For one thing, you must be actively enrolled in Part A and B of Original Medicare. Also, you have to continue to pay your Part B premium each month. Besides this, there may be an age requirement; many states require you to be 65 years or older to enroll in Medicare Supplement Insurance.
Medicare Advantage plans, which were created under Part C of the Medicare program, are an alternative way to close some of the gaps in Medicare. You can’t have both Medicare Advantage and Medigap at the same time: you must choose one or the other.
Medicare Advantage plans work completely differently than Medigap. With Medicare Advantage plans, you’ll pay a fixed co-payment (defined by your specific plan) when you receive a covered service or procedure. The health care provider will collect your co-payment and then bill your plan directly for the rest of their payment. Payments to providers are set in advance; when a provider agrees to accept a Medicare Advantage plan, they’re agreeing to the prices for all services and procedures covered by the plan.
In this way, the Medicare program is not involved in any way. All payments are from you or the plan. Medicare doesn’t pay for the cost of your treatment.
One other big difference is that all Medicare Advantage plans provide an out of pocket limit on spending. You’re protected from runaway medical costs. Since Original Medicare doesn’t come with this protection, this is often seen as a major benefit to using a Medicare Advantage plan.
Another crucial benefit provided by many Medicare Advantage plans is prescription drug coverage. A Medicare Advantage plan that provides Part D drug benefits is called an MAPD plan - Medicare Advantage Prescription Drug Plan.
To enroll in a Medicare Advantage plan, you must be actively enrolled in Part A and B. You must keep paying for Part B, even when you’re in your Medicare Advantage plan. There are no age requirements, though, so if you gain Medicare eligibility before age 65, you can choose to enroll in Medicare Advantage if you’d like to.
The last private option is a standalone Prescription Drug Plan (PDP). Many people choose to pair a Part D plan with Medicare Supplement Insurance. In almost all cases, if you want a Medicare Advantage plan, you’ll have to choose an MADP; you usually can’t enroll in a standalone PDP and a Medicare Advantage plan at the same time.
There are also no age requirements for standalone Part D drug plans. If you’re actively enrolled in Part B, which could happen before 65, you can enroll in a standalone drug plan. On the other hand, if you’re eligible for Part A, because you’ve turned 65, you can enroll in a standalone drug plan, even if you’re not yet active in Part B (either because you’re delaying your benefits, or you just choose not to enroll). Standalone drug plans have the most lenient enrollment requirements available.
So far, we’ve discussed Medicare eligibility age, qualifications, requirements 2023, and their impact on your enrollment. While you’ll have the opportunity to enroll in the private Medicare plan of your choice when you first enter Medicare, you’ll also have chances to change your coverage from year to year. You’ll do this, if needed, during the Annual Election Period (AEP).
AEP begins on October 15th and ends on December 7th. During this window, you can make any changes to your coverage, including adding or switching Medicare Advantage plans. You can also switch your standalone drug plan. If you drop your Medicare Advantage plan, you may be able to enroll in a Medicare Supplement Insurance plan if you qualify. Any changes that you make will be effective on January 1st.
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