Beginner's Guide to Medicare

Joanne: we often talk about the battle between Medicare supplements and Medicare Advantage coverage, but what about the basics when it comes to actual Medicare? Part of a successful transition to Medicare is making sure that you have a general understanding and an overview of the Medicare system before finding the exact Medicare product that is right for you.

 So today's episode will focus on providing you with a beginner's guide to Medicare, and we'll give you a foundation for your Medicare knowledge that you'll build on over past and future episodes of ours. But 

Cameron: before we start, my name is Cameron Giardini, and together with my co-host Joanne Giardini Russell, we operate GIARDINI Medicare, which is an independent insurance agency based out of Southeast Michigan.

Although we are based in Michigan, we work virtually over the phone to directly help consumers in about 13 states to find the right Medicare coverage for them. If we do not work in your state, we will connect you with another trusted independent agent that will help you find the right coverage that you want.

 And of course, even if you choose not to work with us, we know that the information in this podcast will help you have a successful and stress-free transition to Medicare. So a very brief overview of today's episode. We will talk about what Medicare is. We'll talk about Medicare eligibility, the cost of Medicare, and original Medicare coverage.

We will also talk about Medicare enrollment for original Medicare. And then lastly, a brief overview of Medicare Advantage versus Medicare supplements and Part D coverage. So Joanne, what is Medicare? 

Joanne: Well, Medicare was signed into law by President Lyndon Johnson on July 30th, 1965, and I always throw in when I'm talking to people that I was born in April of 1965, so it's kind of funny to be as old as the program.

So another fun fact is that President Johnson enrolled former President Truman as the very first Medicare beneficiary. You didn't know any of that, but fun fact, it's just fun. medicare.gov actually defines Medicare as the federal health insurance program for those 65 or older, certain people, younger than 65 with disabilities, people with end-stage renal disease, also known as ESRD, and those with ALS.

And another acronym also is Lou Gehrig's disease fyi. Medicare is made up of two parts of coverage if you will. So when we refer to Medicare, Original Medicare, and traditional Medicare, any of those terms were referring to both part A and part B of Medicare. Medicare Part A is considered hospital insurance, but it does provide coverage for inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home healthcare.

Part B is considered medical insurance and it provides coverage for doctor services. Outpatient care, medical supplies, preventive services, durable medical equipment, specific prescriptions, and more. There's Medicare Advantage, which sometimes is referred to as Part C of Medicare. Medicare supplements and Part D coverages.

Those are all not part of the original Medicare, but we're gonna highlight those coverages later in the episode. We know Medicare can seem overwhelming and confusing, but sometimes we just find it helpful for people. If you think of. Medicare is just another type of health insurance. Okay. It is likely different than the health insurance that you're used to, but it can be understood by breaking it down step by step.

But just kind of in your head, think of it as just another insurance alternative

Cameron: Yeah. That's something that I know I like to say, Joanne likes to say. A lot of us just refer to it as another version of health insurance and it's kind of your, your next step in health insurance once you're in retirement.

So what about Medicare eligibility? So Medicare eligibility before age 65. Joanne mentioned that is an option, but here is a couple of those broken down. So if you are on disability and by disability, we are talking about Social Security disability, and this is a person that is entitled to Social Security or Railroad Retirement Board benefits based on disability, you would automatically be entitled to Medicare after you receive disability benefits for 24 months.

So if you have ALS individuals whose disability is based on aals, they are entitled to part A and Medicare the first month that they are entitled to social security or those railroad disability cash benefits. There's actually no time waiting period for this. Now. Lastly, if you have end-stage renal disease or ESRD, there are a couple of different factors that make someone Medicare eligible if you are diagnosed with this.

So we're just gonna link to those in the show notes. But again, just keep in mind disability, ALS, and ESRD, those are ways you can possibly get Medicare before age 65. So now what about eligibility at age 65? This is the vast majority of Medicare beneficiaries that will be eligible for Medicare, and this is due to age.

When you do turn 65, some people mistakenly think it has something to do with your social security eligibility for retirement benefits That starts at 62. That has nothing to do with Medicare. Medicare again is age 65 is when everyone is pretty much eligible based on their age. But I say pretty much everyone because there are a couple of restrictions or requirements.

 To be eligible for Medicare due to your age, you must meet the following requirements. Again, you have to be 65 or older. You have to be a US resident and you have to be either a US citizen or be an alien who has been lawfully admitted for permanent residence and has been in residing in the United States for five continuous years prior to the month of filing for Medicare.

So most people will meet these requirements, however, not everybody, and what we'll actually do to make this easy. We will link to a Medicare eligibility calculator that is directly through medicare.gov, and you can check your eligibility using that. If you can't find it in the show notes, just go to Google or go to medicare.gov and you can type in the Medicare eligibility calculator.

So now, if you are eligible, what about the cost of Medicare? Joanne, you can talk about that. 

Joanne: Okay, let's talk about first the cost of Medicare Part A. The vast majority of Medicare beneficiaries do qualify for Part A of Medicare with a zero monthly premium, which is why Part A of Medicare is commonly referred to as premium-free Part A.

However, we're gonna break down the premiums for Part A, just in case that doesn't qualify. 

Cameron: And Joanne said majority, that's 99%. So a really large majority, most 

Joanne: definitely, most of, we rarely, I don't think, only a couple times I've ever seen people pay for part A. The eligibility for free Medicare Part A is generally based on work history.

So if you or your spouse has worked and paid Social Security and Medicare taxes for at least 40 quarters, which is 10 years in the United States, you are likely eligible for premium-free Part A when you turn 65. According to the Social Security Administration, you can earn up to four credits each year.

And each credit represents a certain amount of earnings. In 2023, the amount needed to earn one credit is $1,640. You can work all year to earn four credits, which is $6,560, or you can earn enough for all four, in a much shorter length of time. Now, if you haven't worked the required 40 quarters to qualify for that premium-free Medicare Part A on your own, you still do have the potential to get eligibility for free premium, free Part A through your spouse's work history.

Age is gonna play a critical role when someone is using the spouse's work history to qualify for that. Premium-free Medicare Part A coverage. You need to be at least 65 years old and your spouse, this is the key. Your spouse has to be at least 62 years old, making them eligible for Social security 

Cameron: benefits.

Just to highlight that real quick, you, as the person applying for Medicare, have to be 65, and your spouse whose work history is using has to be at least 62, just in case that was. Not clear, 

Joanne: but your spouse does not have to be applying for those benefits. They just have to be eligible at that same age, 62.

So again, making that really clear, they have to be 62, but not necessarily applying for those social security benefits. But remember, you're using their work history for your premium. Free part A coverage. So if you don't meet those qualifications for the premium free Part A coverage, here's what you'd have to pay for that Part A.

If you have fewer than 30 working quarters, you're going to pay $506 a month for that part A coverage. If you have 30 to 39 working quarters, which is more than seven and a half or less than 10 years of coverage. You'll then be paying $278 per month for your Part A coverage. 

Cameron: Yeah. And just to talk about what Joanne had mentioned, each credit, again, it's only about $1,600 for 2023.

So if you're really close, if you are at, say, 36 credits, or if you're close to that other threshold, maybe you're at 29 credits. I'm not. Advising anybody of certain things, but you know, try to see if there's any way you can make that money and file taxes for the year. If you're so close, you can try to bump yourself up and save a lot of money on Part A if you don't qualify through a spouse's work history.

Now we'll talk about the cost of Part B of Medicare. This is going to be much more common and much more straightforward than Part A. So if you're eligible for Part B, based on the criteria that we've already mentioned, the base premium in 2023 is. $164 and 90 cents per month. And this is the part of Medicare that everyone associates with a premium, and this is what most people are used to paying.

We say the base premium, just because if your income using a two-year lookback is above certain thresholds, you may be charged more for Medicare Part B due to the income-related monthly adjustment amount, which is also called IRMAA. We do talk about Irma in much greater detail in other episodes, but we'll give you some basic numbers now.

So if you filed as an individual tax return in 2021 and your modified adjusted gross income was 97,000 or higher, or if you filed a joint tax return in that same year of 2021 and that was higher or the same as 194,000, you will likely be charged more for your part B due to IRMAA. The amount you pay is based on different income thresholds.

It can go up from that base premium, but it can go all the way as high as $560 and 50 cents per month for Part B. Again, that is much higher than the base premium we talked about that most people pay, which is $164 and 90 cents per month. That's all we'll talk about for IRMAA, but if it does apply to you or you think that you might be kind of close to those thresholds, make sure to listen to our detailed IRMAA episode and know that you may be able to appeal this if your income is reduced due to certain life-changing events.

Okay, so we talked about eligibility, and we talked about cost. What about enrolling in original Medicare? If you're listening to this episode, there is a good chance that you are turning 65 and looking to apply for Medicare. We will highlight that process now, but if you need to apply after age 65, that is going to be a different process that we will highlight in future episodes.

If you're turning 65, option one is that you are already collecting social security. Retirement benefits or monetary benefits from Social Security, and you're doing so before age 65. If you've been drawing SSA benefits at least four months before your 65th birthday, you'll automatically be enrolled in part A and part B of Medicare.

You can expect a welcome to Medicare package, which includes your Medicare card, and you can expect this about three months before your birthday month. If you plan to stay enrolled in both Part A and Part B, you don't have to do anything. Your coverage will begin when it says right on your Medicare card.

Now, option two is maybe you're turning 65, and you're not collecting Social Security benefits before age 65. If you are not receiving SSA benefits before turning 65, you will not be automatically enrolled in Medicare. And that's super important to remember because a lot of people not collecting benefits, they just sit back and wait because maybe a friend or somebody else said, oh, don't worry, your Medicare card will show up.

Not knowing that person was collecting benefits. So this is important. To enroll in Part A and Part B, if you are not collecting Social Security benefits, You can go apply online via ssa.gov, which is Social Securities' official website. Make sure you select both part A and part B if you want both of them.

During that process, you can also decline or just enroll in part A if you want to, but we'll talk about that in other episodes. And then you can also visit your local Social Security office in person. You can apply for Part A only, or both Parts A and Part B that way, or you can apply over the phone, but just be aware that this option, when you're scheduling an over-the-phone appointment, can at least take a few weeks or even a month or more ahead of time to schedule that appointment. And then, just a special note, if you were born on the first of the month, so let's say you're born on August 1st, your eligibility for Medicare, actually begins the first.

Day of the prior month, so August 1st birthday, July 1st is when you're actually first eligible for Medicare. So everything we talked about will happen about a month sooner than you're expecting. 

Joanne: Just remember with all of that too, we're just talking about the technical enrolling and not enrolling. We're not talking at all about do you need to enroll, should you enroll, all of that kind of decision-making. This is just strictly the little rules. Mm-hmm. And parameters. So just kind of keep that in 

Cameron: mind. Yeah. You certainly don't have to enroll in both parts of Medicare in certain circumstances when you turn 65, but this is just the basic overview.

Correct. And speaking of basic overview, what about Medicare coverage? 

Joanne: All right. Let's talk about Medicare Part A coverage first, again, as I alluded to before, Medicare Part A is going to cover inpatient hospital stays. This includes a semi-private room. Meals, general nursing drugs as part of your inpatient treatment, and other hospital services and supplies.

However, it does not cover private duty. Nursing does not cover a television or a phone in your room if they charge separately for those items. Now, Medicare Part A is also gonna cover inpatient care in a skilled nursing facility, but not long-term care or custodial care. And it's really important to note that this coverage is typically for a limited time.

Following a hospital stay and there is up to 100 days of coverage. Hospice care is another service that'll be covered under Part A. And if you are terminally ill and have six months or less to live, you can get hospice care to help manage pain and support for your family. This can be received at home or in a hospice facility.

Now, Medicare Part A provides coverage for home healthcare services, but these are usually limited. They must be ordered by your doctor, and they have to be medically necessary, and that sometimes can be looked at differently by the family versus the medical community. Always keep that in mind. But the covered services can include intermittent skilled nursing care, physical therapy, speech-language pathology services.

Continued occupational services, and it does not cover. This is a huge thing to understand. It's not going to cover 24-hour home care. It's not going to cover meals delivered to your home. Homemaker. Services such as shopping, cleaning, and laundry are all going to be considered custodial care, and you should really talk to your financial professional or someone else about those coverages if you'd like those.

Cameron: That is always a good thing to remind people so, It is a good benefit for the home healthcare that Medicare provides, but it is not typically as much as everyone thinks right now. On the flip side, again, the other part of Original Medicare is part B. So what about Part B coverage? Medicare Part B medical insurance, it covers a range of medical services and supplies that are essential for prevention, treatment, or diagnosis.

And I'm just gonna go through a list of these different services, and you can obviously find more on medicare.gov on their official website. It covers doctor and clinical lab services, which include outpatient doctor visits, specialist visits, lab testing services, and preventive screenings. There is.

Coverage for outpatient care. This covers services you might get as an outpatient in a hospital or in a clinic. This could also be in emergency room departments, but they're going to include things like observation services, surgical procedures, anesthesia, and laboratory tests that are linked directly to your care.

Preventive services are a big thing that are covered by Part B, and they cover most preventive measures, especially things like vaccinations, which are flu shots, hepatitis B shots, pneumonia shots, and a couple of other ones. There are also screenings for diseases like cancer, diabetes, and heart disease, and there's counseling to prevent tobacco use and alcohol misuse.

Now durable medical equipment is also covered by Medicare Part B. This can include items like wheelchairs, walkers, hospital beds for use at home, oxygen equipment and supplies that are also covered, and more. Now, mental health services are one thing I think. People don't think as much about when it comes to Medicare, but they are covered by Part B typically, and they can cover outpatient mental health services, including therapy, counseling, partial hospitalization, depression screenings, and more.

And Joanne already talked about this under the home healthcare side of things for Part A, but Medicare Part B. If you're doing outpatient services, then you can get physical therapy, occupational therapy, and speech therapy, also typically covered by Part B. So, these are covered when prescribed by a doctor and provided by a licensed healthcare professional and a couple of other ones to round this out.

There are ambulance services that occur when other transportation could endanger your health. Ambulance services should be covered in that case or can be covered. Medicare is only going to cover ambulance services to the nearest appropriate medical facilities, so just keep that in mind. You can't say, you know, take me a couple of states away to my favorite facility.

It's gotta be within reason. Lastly, there are clinical researches that can be covered by Part B in certain circumstances, and then certain prescription drugs may also be covered by Part B. Now, part B covers a limited number of prescription drugs. Typically, those are going to be ones that you would not give yourself, and these are drugs that would have to be injected or administered at a doctor's office.

It's not going to be the cholesterol pill or the simple medications. You're probably thinking that would fall under Part D of Medicare, which we talk about in other episodes. And just to talk about that and kind of wrap it up with the coverage, everything we talked about, all of those services we mentioned for part A and part B, they are going to depend on many factors, including medical necessity and more.

Please do not use this podcast to determine whether or not a service will be covered, but instead, it's just here to give you an overview of. Services that are typically covered by original Medicare. Always check with your doctor or healthcare provider to see if the care you need will be covered by Medicare.

You can also go to medicare.gov, like I said, for a broader list of Medicare-covered services. But I promise if you go to your doctor and you say, Cameron or Joanne told me this will be covered, they're gonna say, who? And it's not gonna fly. It's not gonna fly. Right. So just uh, use this as a general guideline.

Definitely, we've talked about premium cost eligibility, and we've talked about coverage. What are the actual out out of pocket costs? Medicare. That's up. Joanne, you can talk about that one. 

Joanne: All right. So it is vital to remember that when someone says Medicare covers a service, it only means in part and not in full. You know, you should still expect that you're gonna have out-of-pocket costs from deductibles, copays, co-insurance, and here's 

Cameron: an overview of those things.

The only, the only real exception to that is probably preventive services, but exactly like Joanne said, if somebody says Medicare covered, Just don't think covered in full. And many 

Joanne: people think that covered in your mind means something different in our mind. So it doesn't mean you're gonna be not forking over $8.

So here's an overview of some of those costs that we just talked about. The deductible for Part A in 2023 is $1,600 for each. Inpatient hospital benefit period. Note this, this is where it can kinda get confusing. A benefit period begins the day that you're admitted as an inpatient in a hospital or a skilled nursing facility, and it ends when you've been out of that hospital or skilled nursing facility for 60 days in a row.

What's confusing to people is every 60 days, you could conceivably get a new $1,600 deductible charge. So just keep that in mind. It can happen multiple times in a year. We rarely see it, but it can happen. Now, the co-insurance costs for a hospital stay in 2023 are zero for days one through 60.

After that initial deductible is paid, it's $400 per day for days 61 through 90. It jumps to $800 per day for days 91 through 150, and that's in the form of lifetime reserve days. For a skilled nursing facility stay, the co-insurance costs are zero for days one through 20 and $200 per day for days 21 through 100.

After day 100, you will be paying all costs. Now for home healthcare services and hospice care services that are covered by Part A beneficiaries generally don't have to pay for anything. You also don't pay for covered hospice services with Part A, but you may pay some for prescription medications and some respite care.

Part B is a little. More straightforward. The annual deductible for Part B beneficiaries this year is $226, and after your deductible is met, you're typically going to pay 20% of the Medicare-approved amount for all Part B-covered services. Original Medicare always remember this. It does not have an out-of-pocket limit.

That means that there's no maximum limit to what you could pay in any year for your part A and part B coverage services, and that's your 20%, 

Cameron: This is huge to remember. And it's exactly what I'll talk about here and why additional Medicare coverage comes into play. So although we took all the time to highlight the out-of-pocket costs, or Joanne just took all that time to talk about these out-of-pocket costs.

With original Medicare Part A and Part B, we really often tell consumers, don't overly fixate on these numbers. Don't worry too much about, okay, what is it, day 70 in the hospital, or how much exactly will my surgery cost? And the reason we say that is for one very simple reason, and that is because the vast majority of Medicare beneficiaries like yourself.

We'll enroll in either a Medicare Advantage plan or a Medigap plan, which is also called a Medicare Supplement, once you're actually enrolled in original Medicare. If you enroll in a Medicare Advantage plan, which is sometimes called Part C, it will provide an all-in-one bundled coverage alternative to original Medicare.

Pretty much all of your Medicare services will be administered by the private insurance company that provides the Advantage plan. These plans typically include prescription drug coverage, and their copays and costs are totally different than what Jo Ann just talked about. So each plan is very different, and you'd have to look at your specific plan to figure out those out-of-pocket.

Costs. Now, Medicare supplement insurance, also known as Medigap coverage, is a private insurance that instead it covers most of the out-of-pocket costs, not covered by original Medicare, which again is part A and part B. These include deductibles and co-insurances. Joanne just talked about this.

Coverage is purchased separately through a private insurance company, and it is used in conjunction or together. With original Medicare. Now, if you need prescription drug coverage, or if you want it, which you probably should, part D coverage is a prescription drug coverage that is a standalone benefit that you would purchase with a Medicare supplement plan.

Again, we will not go into more detail about these coverages during this episode, but make sure to listen to our other episodes that do dive much deeper into Medicare Advantage versus Medicare supplements because that is really your next step once you enroll or once you understand the basics of Medicare.

So that wraps up our beginner guide to Medicare Today. We touched on eligibility, cost, enrollment, and the basic coverages provided by original Medicare Part A and Part B. While this might seem overwhelming, remember it is just health insurance. With knowledge, you can navigate it effectively. For more detailed discussions on Medicare Advantage supplements and Part D, just tune into our other podcast episodes.

But for now, please leave us a review on your podcast app and subscribe so you can listen to future episodes. You can find more Medicare content from us by going to YouTube or even TikTok and searching G r Dini Medicare. And lastly, if you want to send us any feedback or questions, you can send an email to info g medicare team.com.

But thank you, and have a great day.