Medicare Costs 2023 Guide
Healthcare is the single largest ongoing cost that most people 65 and over face. Thankfully, there are tools to help reduce those costs, including Medicare. Of course, Medicare is notoriously difficult to understand. When can you enroll? What does Medicare even cover? What might you pay out of pocket with Medicare coverage? These are just some of the questions that seniors must answer, and all too often, they must try to find those answers on their own.
I’d like to take this opportunity to set a few things straight when it comes to Medicare coverage and what you can expect. Below, I’ve answered some of the most frequently asked questions concerning Medicare, how it works, and more.
When Can I Enroll in Medicare?
The official Medicare enrollment age is 65. However, if you have qualifying disabilities, you can enroll before reaching that age. If you’re eligible for Social Security Disability Insurance (SSDI) then you’re already eligible for Medicare. Note that there is a 24-month qualifying period.
What Happens If I Don’t Enroll in Medicare by Age 65?
While you’re eligible for Medicare starting at age 65, you may choose not to enroll. Doing so is your right, but it comes with some significant consequences. For instance, did you know that for every year that you don’t enroll but could have, you will face a permanent 10% penalty once you do? That’s right. Your Medicare premium increases by 10% per 12-month period if you fail to enroll at 65 (or at your point of eligibility).
As a note, if you have coverage available to you through an employer and choose to delay enrollment into Medicare, you can avoid that penalty.
How Long Do I Have to Enroll in Medicare?
The decision of whether to enroll in Medicare or not is a big one. Thankfully, you have a significant window of time during which to make that choice. You can enroll at any point during the three months leading up to your 65th birthday or the three months immediately following it, providing you with a six-month window to find the right plan for your needs.
If you’re of enrollment age and your employer-provided coverage ends, you have eight months during which to enroll in Medicare. Note that this period begins at the termination date of your employer-provided coverage and lasts for eight months. It’s not split before and after the date the way it is around your birthday.
What Happens If I Miss My Medicare Enrollment Period?
If you miss your enrollment window, there is an annual enrollment period that runs from January 1 through March 31. This is also the time of year when you’re able to make changes to your coverage, opt into different Medicare Parts, and make other changes that you might need.
Note that if you’re thinking about enrolling in Medicare Part C with a Medicare Advantage plan, the enrollment period is from October 15 through December 7 every year.
What Are the Different Medicare Parts?
Medicare has multiple types, called Parts. Each part has a specific purpose, so it’s important to know what they are when deciding on your coverage. I’ve broken them down below to make it simpler for you.
Medicare Part A
This is your hospital insurance. It’s usually free and you shouldn’t have to pay anything if you or your spouse are eligible for Social Security benefits. However, Medicare Part A only covers hospitalization-related costs, so you will need other Parts to handle other healthcare expenses.
Medicare Part B
Medicare Part B is your medical insurance. Unless your income exceeds the baseline, you’ll pay $134 per month for this coverage, and the premiums are always deducted from your Social Security benefits each month. That means you don’t have to pay anything out of your bank account, but your monthly Social Security check will be $134 less per month than it would be otherwise. However, Medicare Part B is considerably more affordable than most private insurance plans, so there are significant financial savings here.
Medicare Part C: Medicare Advantage
Medicare Part C is also called Medicare Advantage. This is a Medicare-approved plan offered by private insurance companies. It is an all-inclusive offering that includes Parts A, B, and D. Some plans can also offer other benefits, including vision coverage, dental coverage, and hearing coverage. Wellness programs, gym memberships, and other perks can be offered by private insurers, too.
Medicare Part D: Prescriptions
Neither Medicare Part A nor Part B covers your prescriptions. However, as you already know, those drugs can be incredibly expensive. That’s particularly true for drugs that you need to take regularly for chronic conditions like hypertension or diabetes. Medicare Part D offers the coverage you need through private insurance companies.
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Medicare Costs 2023: What Does Medicare Cover, Anyway?
Now we get to what is probably the most confusing part of the entire discussion – what’s covered? What isn’t? What gaps should you know about? Let’s dig deeper into these topics.
What’s Covered Under Medicare?
Medicare Part A should cover your inpatient hospital stays. It will also cover care delivered within a skilled nursing facility. Hospice care is covered, as is some home health care, but not all.
Medicare Part B covers other things, like ambulance services, mental health (inpatient, outpatient, and partial hospitalization), clinical research, and a very small selection of outpatient prescription drugs. Because many things aren’t covered by Medicare Part B, it’s important to speak with your doctor or with a Personal Benefits Manager to determine whether your needs are protected or not.
Medicare Advantage plans (Medicare Part C) are a way to get your Medicare benefits through a private insurer. These plans are very low-priced and come with a stop loss limiting your total out of pocket – something that Original Medicare does not offer.
Medicare Part D will cover prescription medications, but not all prescriptions are covered. That can include drugs for hair growth or fertility, those for sexual dysfunction, those for weight loss/gain, and more.
Critical Gaps in Medicare Coverage
Medicare is a vital tool, but it’s important to understand that it will never cover everything you need. There are always gaps in coverage, whether that’s a drug not covered by Part D, a lack of available vision, dental, and hearing coverage, long-term care, health coverage while traveling outside the United States, or something else.
How do you ensure that you can close some of those gaps? For a Medicare plan, the answer is Medicare Supplemental Insurance, usually referred to as Medigap coverage. These plans are designed to fill the holes in Original Medicare.
If you have a Medicare Advantage plan, you can add a hospital indemnity plan to cover the charges (potentially several thousand dollars) that your Advantage plan does not cover.
Just remember, with Medicare by itself, there is no out-of-pocket limit. A Medicare Advantage plan can help you reduce those costs, and a Medigap plan will reduce your exposure to a minimum.
What Are Medigap Plans?
Medigap coverage is available through private insurers. It’s not tied to your primary coverage, either. There are 10 different plans on offer, but they’re drastically different from each other. The most popular is Plan G, but your needs may mean another plan fits you better. It’s important to compare the benefits, coverage areas, and costs of each plan and then bump those against your healthcare needs and budget to make an informed decision.
You also need to understand other things about Medicare Supplemental Insurance. For instance, after you enroll in Medicare Part A and B, you only have six months from the first day of the month of your 65th birthday to apply for a Medigap plan. You can also apply during the open enrollment period. You have 30 days to try out your plan and if you find that it doesn’t work to your advantage, you can cancel it without penalty.
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Need Help with Medicare Costs in 2023?
Choosing a Medigap plan can be incredibly confusing. Comparing coverage areas and Medicare costs in 2023 can be very daunting, but there’s help available. Run a quote; schedule a call with one of our Personal Benefits Managers to learn more about Medigap plans and which ones might suit your needs and budget.
Tom Lockwood is a Personal Benefits Manager at MediGap Advisors. Tom has a passion for bringing clarity to those confused about Medicare. He is an authority on Medicare, Medicare supplement plans, Medicare Advantage plans, and Part D prescription drug plans. Read more about Tom on his Bio page.