Introduction to Medicare

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1. What is Medicare?

Medicare is a set of programs, administered by the federal government and private insurance companies, that provide medical and prescription drug coverage to seniors and people with disabilities.

The federal government provides basic health coverage through the Original Medicare program - the only part of Medicare which is administered directly by the government. Original Medicare pays for the bulk of your Medical costs, but has high deductibles and coinsurance, and does not cover prescription drugs. Because of this, most Medicare beneficiaries add on additional coverage from private Medicare plans - Medicare Advantage Plans, Medicare Supplement Plans, and Part D plans. We will learn more about these plans in the next lesson.

3. How do I sign up?

If you are already drawing your Social Security check, or if you have signed up to begin receiving it when you turn 65, you should be enrolled in Medicare A and B automatically. If not, you will have to sign up online, in person, or over the phone. The online method is the quickest.

4. When Should I Sign Up?

Medicare allows people to enroll or change plans at certain times, which they call ‘enrollment periods’. Each enrollment period has its own set of rules, and only lasts a limited time. If you miss your enrollment period, you could end up with fines, or gaps in coverage.

The most frequently used enrollment periods are the Initial Enrollment Period (IEP) and the Annual Enrollment Period (AEP). The Initial Enrollment Period is for people who are enrolling in Medicare for the first time and allows you to sign up for both Original Medicare and a private Medicare plan. The IEP is a seven month period that includes the month you become eligible for Medicare and the three months before and after it.

The Annual Enrollment Period (AEP) is for people who are already enrolled in Medicare, and who would like to enroll in a private Medicare plan. It lasts from October 15th to December 7th each year. If you enroll in a plan during AEP, your coverage begins on January first of the following year.

We will cover these and other enrollment periods in more depth in lesson three of the Fundamentals Series.

5. What if I’m Still Working?

If you have health coverage from your employer,  talk to them before you turn 65 about how Medicare will work with your existing plan. Medicare allows you to delay enrollment past your initial enrollment period, as long as you are currently employed, and receiving health and prescription drug coverage from a group policy with at least 20 members. You will be given a special enrollment period to sign up for Medicare later on, if you choose to delay enrollment.

Compare your employer coverage to what is available from Medicare to see which coverage will be best for you. Many people find that Medicare is a better deal than their employer coverage. Be careful though; once you drop your employer coverage for Medicare, you usually can’t go back.