Medicare Basics

What is Medicare?

Medicare was started in July of 1965. It is provided by the government and pays fees for your care directly to the doctors and hospitals you visit. Part A helps with hospital cost and Part B helps with doctor and outpatient care. In 2005, the government added part D and this helps pay for prescription drug costs. Part D is covered later in this newsletter, but you need to know you’re required to have “credible drug coverage” as part of your plan.

Part A (Hospital Coverage)

Part A helps with the cost of your inpatient hospital stays and skilled nursing care after a hospital stay. Medicare part A premium is free to you as long as you have worked at least 10 years in this country. Although the monthly premium is free, the deductibles and copays are not. To walk into a hospital will cost over $1,400 and if your stay is longer than 60 days, then a copay of over $300 is added on for days 61-90 and over $600 per day for days 91-150.

Part B (Doctors Visits)

Part B helps with doctor visits including outpatient care at hospitals and clinics, lab tests and some skilled nursing care. The nice part is you can see any qualified doctor who is eligible to participate in Medicare and who is accepting new patients. There is a monthly premium for Part B and most people pay $148.50 per month, but if you’re single and making more than $88,000 per year or married making over $176,000, you will pay a higher monthly premium. As far as copays, you’ll pay the first $203 then generally Part B pays 80% of your doctors’ fees and you are responsible for the remaining 20%. In our experience, the Part B 20% that you are responsible for puts you at unlimited financial risk. (We’ll talk later about ways to limit your risk.)

Initial Enrollment Period

This period consists of a 7 month window. It starts 3 months before your birthday month, the month of your birthday and three months after your birthday month. Keep in mind that if you wait to enroll in the last 3 months it can delay the start date of your Part B Medicare.

Part D (Prescription Drug Coverage)

Part D helps with the cost of prescription drugs. Part D plans are sold by private companies and range in price anywhere from $15 to over $100 per month. WORD OF WARNING: You will read that Part D is optional. The problem is if you don’t sign up when you first become eligible and decide to at a later date, you will be assessed a penalty and that penalty will stay with you the rest of your life. For example, a person turns 65 and doesn’t take medication and decides against enrolling in Part D. When they turn 70, their doctor prescribes an expensive medication and this individual decides to enroll into Medicare Part D. Shortly thereafter they receive a letter from Medicare stating their late enrollment penalty. In this example that person’s penalty would be roughly $25 per month for the rest of their life.

Charts for 2022 – What You Can Expect to Pay by Activating Your Medicare B & D

(IRMAA) Income Related Monthly Adjustment Amount