You’re 65th Birthday and Medicare

A 65th birthday is the start of something special – reasonably priced health care! Most people pay $148.50 a month ($170.10 for 2022) for Medicare which provides 80% medical coverage.  80% coverage sounds fantastic, yet, if you experience a major medical problem, your 20% can be thousands or tens of thousands of dollars out of your own pocket.  To protect your financial health as well make the most of the many available Medicare options, we’ll start with how Medicare works and then review what your options are to limit your financial risk while meeting your long-term health goals.

Do I Quality for Medicare?

The most common way to qualify for Medicare is to have worked forty (40) quarters, roughly the equivalent of 10 years,  in your lifetime or be married to someone who worked forty (40) quarters. There are other ways to qualify, such as being permanently disabled or being on dialysis.

Original Medicare

Medicare, often referred to as Original Medicare, consists of two parts.  Medicare Part A (Hospital Coverage) is funded by payroll taxes,which in addition to in-hospital coverage, includes skilled nursing care, hospice, and a few other services.  You’ve been paying all along for your future medical coverage costs simply by you or your spouse working and paying into Social Security and FICA payroll taxes and now you can start to get those benefits!

The second part of Original Medicare is Part B (Medical Insurance). This covers physician services, laboratories services and more, and it is paid for by a combination of funds from the Federal government and a Part B premium.  You pay this when you decide to take your full Medicare benefits, and it is usually deducted from your monthly Social Security benefits.  If you are not yet receiving your social security benefits, you will receive a quarterly bill.  Since Part B is subsidized by taxes, higher income earners pay more for their Part B premium. There are Part B subsidies provided by the federal government to help people with lower income.  If you are eligible for Part B and do not have creditable coverage (e.g. employer coverage) you may have a fine later if you choose Part B.

40% of Californians Choose Customization

While the baseline Original Medicare and the complexities of managing health care through a government agency are fine for many, 40% of Californians in 2020 chose to enroll in Medicare Part C or Medicare Advantage^1..  Recognizing that everyone’s health care needs are unique, Medicare developed Medicare Part C or Medicare Advantage, in partnership with private health care insurance providers to allow you to choose a customized plan that’s based on your preferences. The Original Medicare federal funding is rolled into these plans, so you only pay the difference to get the optimized health care coverage you need. And you have the added benefit of the ease of working with a trusted health care provider versus the federally managed Medicare agency.  In Santa Clara County most of these plans are HMOs, so you work with a network of physicians.

Medicare Part D and MediGap

There are additional Medicare plans to complete your health strategy.  More than three-quarters (77%) of all Medicare beneficiaries participate in the highly successful prescription drug coverage plans provided through Medicare Part D. Like Medicare Advantage (Part C) these plans are available through private insurers.  The federal government subsidizes Part D coverage, and the Medicare beneficiary pays a premium directly to the insurance provider of their choice. For convenience, some Medical Advantage plans include Part D coverage.  If you are eligible for Medicare and you do not have creditable coverage (e.g., employer coverage or VA coverage) for Part D you may have a fine levied against you if you choose a Part D plan later.

If you do not want to work with an HMO style plan, and still want to have coverage for the approximately 20% Medicare does not cover you can choose a Medigap plan, also known as a Medicare Supplement.  Medigap plans are offered through private insurers and give you the freedom to see any physician who accepts original Medicare.  They cover a wide array of health-related costs which can include foreign travel medical expenses, out of pocket costs, deductibles, excess charges and other costs not covered by Medicare.

What Are the Next Steps?

You have options depending on whether you decide to keep working or retire by 65.  If a Medicare beneficiary works for a company with more than 20 employees and has creditable employer-based health care, you do not need to join Medicare until your employer coverage ends. Medicare-eligible people who are receiving their Social Security benefits at 65 will be automatically signed up for Medicare.  Those who have not elected to start receiving their Social Security benefits must sign up either over the phone at 1-800-MEDICARE or online at www.medicare.gov . 

Medicare.GOV – the Official Source

Please remember to go to the Medicare.GOV site as your official source of Medicare information. Misleading direct mail, digital communications and full websites that look Medicare.GOV “official” are often generated by third parties in hopes of capturing your hard-earned money.

Ensure Your Health and Financial Well Being

Welcome your red, white and blue Medicare card with confidence you’ve made the right decisions. There are many nuances to Medicare coverage and an honest mistake can cost tens of thousands of dollars.  There are advantages to both Medicare Advantage or Medicare Supplements, so it helps to have a local Medicare Specialist as a guide in this important decision making process. Medicare beneficiaries can turn to their local HICAP office (Health Insurance Counseling Advocacy Programs) or find a qualified local Medicare Specialist who understands the local Physicians, Medical Groups, and insurance options.

Cheri Brown is a former executive with a national insurance carrier with decades of experience in Medicare sales and training.  Morgan Hill has been her home for over forty years, she volunteers for the Morgan Hill Chamber of Commerce Friday Night Music Series and Morgan Hill Freedom Fest.  Email her at MedicareCheri@gmail.com.

1. Fugelsten Biniek, J. et al. (Oct. 29, 2020). Medicare Advantage 2021 Spotlight: First Look. Kaiser Family Foundation. Retrieved from www.kff.org/issue-brief/medicare-advantage-2021-spotlight-first-look.

SOURCE: KFF analysis of MPR, “Tracking Medicare Health and Prescription Drug Plans: Monthly Report,” 2000-2005; Medicare Chronic Conditions (CCW) Data Warehouse from 5 percent of beneficiaries, 2006-2017; CCW data from 20 percent of beneficiaries, 2018; and Medicare Enrollment Dashboard 2019-2021. Enrollment numbers from March of the respective year.  Juliette Cubanski and Anthony Damico, (6/8/21) Key Facts About Medicare Part D Enrollment, Premiums, and Cost Sharing in 2021 | KFF