I’m a Brit who moved to the U.S. permanently. I’m retired but still well below 65, I pay for an Obamacare plan. I’m looking ahead to try to understand how Medicare will work for me when I reach 65.
Assume the worst case that I’m single and that I will have worked less than 30 quarters in the U.S., and that I will not qualify for any subsidies. Costs at present appear to be:
Part A (hospital) - cost $413 per month
Part B (medical) - cost $134-$428 depending on income
What is the underlying logic of a separate Part A & B? Are there circumstances in which somebody might take one but not the other for some reason?
What are the basic principles behind “Medigap” and “Medicare Advantage” plans?
For somebody like me who would have to pay in full for Part A, are there any options other than Medicare that make any sense past age 65?
Part A is free for those who meet the requirements which you don’t. So they are splitting the free, for most, out from the other piece with A and B split.
Medicare advantage is private insurance with government support so that is where your other options are. It it’s in lieu of A + B coverage.
Medigap coverages are supplemental insurance that are optional and pay against out of pocket expenses left after your Medicare coverage.
You might get a part-time job or become self-employed, for example selling stuff on the internet:
If you are self-employed, you earn Social Security credits the same way employees do (one credit for each $1,300 in net earnings, but no more than four credits per year). So 10 years of this will meet the Medicare requirements.
As to why hospital (Part A) and medical (Part B) are separate lines of coverage that’s because that’s just how health insurance worked back in the 1960s when Medicare was created. These days the only reason why someone would have Part A, but not Part B is if they’re still covered on an employer plan (either their own or a spouse’s) and get Part A automatically (99% of beneficiaries qualify for premium-free Part A coverage).
It’s not “in lieu of” Medicare A & B coverage; you still have both A & B to sign up for a Medicare Advantage (MA) plan, and you still have to pay your Part B premium (& Part A if applicable) to the government in addition to any premiums for the policy the insurance company charges. MA plans manage your coverage on behalf of Medicare (ie providers file claims to them instead of Medicare) and provide benefits that Original Medicare doesn’t. For example they may not have a deductible, have fixed copays for services (instead of the 80/20 coinsurance Medicare does), and they have an annual cap on out-of-pocket expenses (after this is met covered services are covered by the insurance at 100%). Most of them also provide prescription drug coverage (these are called MAPD plans).
On the other hands most MA plans maintain networks of providers you must use outside of emergencies (ie the provider must’ve signed a contract w/ the insurance company, you can’t just see any provider who takes Medicare). If you see a provider outside the network you usually either have to pay more than you would’ve at a in-network provider, or nothing will be covered & everything will be out of your pocket (not all plans offer out-of-network benefits). Also MA plans may require providers to get advance permission from the insurance before performing certain tests or procedures; this is seldom required under Original Medicare).
What Alphaboi said. The alternative to Medicare alone or Medicare Advantage is a Medicare Supplement(aka medigap) plan. These are usually (not always) more expensive than Advantage plans, but typically offer more robust coverage for part A and B than you will get from a Medicare Advantage plan. The benefits are regulated by plan type and all companies offering the same plan must offer identical coverage.
Reasons someone might take part A and not Part B. Hospital costs are a large part of any major medical expense. If you have an employer sponsored plan you will be able to keep that plan if it’s considered creditable, and just take part A as a backup to that plan (which for most people is free your situation is unusual).
There are other options than Medicare when you are over 64 but none would be as good as working 10 hours a week at minimum wage for 30 quarters.
(I do this for a living. Feel free to get as detailed as you want.)
Perhaps a bit simplistic but I look at Medicare Advantage vs Supplemental (aka Medigap) as - Advantage puts your healthcare in the hands of an insurance company and your in-network doctor while Supplemental simply pays any doctor you choose to use.
Unlike the insurance policy you have, ‘original’ Medicare requires that you pay 20% of all charges and there is no out-of-pocket maximum. If you add Medigap, that is covered.
Thanks, it sounds like this is definitely something I should think about. I had no idea that the earnings requirement for getting these credits was so low. I have worked about 3 years in the past, so I have some credits already.
If you are short of credits when you hit 65, can you still keep working to accumulate more credits, just paying for the years until you reach the 40 credits?
Or if they just don’t want, or can’t afford, Part B. My dad just applied for Medicare. He’s reasonably healthy, and doesn’t need to see a doctor very often. If he puts aside (for example) $50/month for the purpose of doctor visits, instead paying $134/month for coverage he doesn’t need, he saves money.
Does he know about the late enrollment penalty? Does he understand how part B works? He’s healthy now, what are the odds he stays healthy for the rest of his life? Does he have other creditable coverage for Part B?
This is a potentially financially disastrous decision. Also, I’m pretty sure you can’t enroll in Part D without Part B, though I would have to look it up. That can also be bad of he ends up needing prescriptions.