Medicare & Medigap
filed under: Retirement
Medicare is the federal health insurance program for senior citizens and other qualified persons. You usually qualify automatically for some Medicare coverage when you reach age 65. If you have been receiving Social Security disability benefits for at least 24 months, you also qualify automatically.
If you are in neither of these categories, you can file for benefits at the Web site of the Social Security Administration or you can call at (800) 772-1213.
Your dependents may also be eligible for Medicare, if they are at least age 65 or are disabled. If you are a federal employee and receive health insurance through the Federal Employees Health Benefit Plan (FEHBP), contact your plan to learn how to coordinate with Medicare.
The Centers for Medicare & Medicaid Services (CMS), formerly the Health Care Financing Administration, administers the Medicare and Medicaid programs. The CMS is an agency of the U.S. Department of Health and Human Services (HHS).
Medicare benefits consist of two main services: hospital insurance (HI) and medical insurance (MI). These covered services are also called Part A and Part B, respectively. Part A services cover inpatient hospital care and some skilled nursing care. These services are funded by the 1.45% payroll-tax (FICA) contributions you make during your working years. You are usually automatically eligible for Part A when you reach age 65.
If you plan on postponing Social Security benefits past age 65, you may still decide to enroll in Medicare's Part B. For 2008, monthly premiums are $96.40 if you are single and have income of $82,000 or less or if you are married and have income of $164,000 or less. Monthly premiums increase based on your income up to $238.40 per month if your income is above $205,000 (single) or $410,000 (married). You should contact your local office of the SSA to enroll. If you don't enroll when first eligible, your premiums will rise 10% for each 12-month period that you postpone enrollment.
Medicare offers three basic health insurance plans. These plan types resemble private health insurance. For the most flexibility in picking physicians and care providers, you may want to sign up for a fee-for-service plan. Medicare calls its own fee-for-service plan the Original Medicare Plan.
You can also elect to enroll in a private fee-for-service plan. A private plan's insurance company may pay different reimbursement rates for services, affecting amounts you pay for deductibles and coinsurance. A private plan may also offer additional coverage. A third choice of plans is to enroll in a managed care plan, which is similar to a health maintenance organization (HMO).
You will likely find that not all your health care expenses are paid by Medicare. To buy supplementary coverage, you may wish to obtain Medigap insurance. Medigap insurance policies are sold by private insurance companies to plug certain gaps in coverage that Medicare does not provide. These gaps include payments of some coinsurance and deductibles for services not covered by Medicare.
Medigap insurance policies that have a standard set of features are available in all but three states. (The three states that don't offer standardized policies are Massachusetts, Minnesota, and Wisconsin.) The 10 standardized policies are identified by a letter of the alphabet ranging from A to J. All 10 Medigap plans offer a basic benefit of paying your coinsurance amounts for Part A and Part B services.
Medigap insurance does not cover long-term care, vision or dental care, hearing aids, private nursing care, or unlimited access to prescription drugs.
For more information on Medigap insurance, see the Web site of Medicare. You may also wish to see the Web site of the National Association of Insurance Commissioners (NAIC). The NAIC maintains a directory of state insurance commissions and phone numbers.
The above information is educational and should not be interpreted as financial advice. For advice that is specific to your circumstances, see the Web sites of the Social Security Administration and Medicare.