Who is eligible?
You are eligible for Medicare if you meet one or more of the following requirements:
- You are age 65 or older and eligible for social security or railroad retirement benefits.
- You are age 65 or older and are a current U.S. resident and either a U.S. citizen or a permanent resident who has lived in the United States for five continuous years before applying for Medicare.
- You have been receiving social security disability income for at least 24 months.
- You qualify for disability insurance because of ALS (Lou Gehrig’s disease).
- You have end-stage renal disease and you, your spouse, or your parent has paid Medicare taxes for a sufficient amount of time.
If you are eligible for social security retirement benefits but do not take them at age 65, or if you are working after age 65, you can still receive Medicare benefits.
If you are not eligible for social security or railroad retirement, you are eligible for Medicare if you meet residency and citizenship requirements, but you must pay Part A premiums. How much you pay for Part A depends on your work history (how long you paid Medicare taxes while working).
How Medicare works
Medicare is the federal health insurance program available to older Americans and to many adults with disabilities, regardless of income.
Medicare is divided into four parts: Part A, Part B, Part C, and Part D.
Medicare Part A (hospital insurance) helps cover inpatient care in hospitals, skilled nursing facility, hospice services, and home health care. Most people do not pay a Part A premium because they paid Medicare taxes while working. If you are not eligible for premium-free Part A, you may be able to buy Part A if you meet one of these conditions:
- You are 65 or older, you're entitled to (or enrolling in) Part B, and you meet the citizenship or residency requirements.
- You are under 65, disabled, and your premium-free Part A coverage ended because you returned to work. (If you are under 65 and disabled, you can continue to get premium-free Part A for up to 8.5 years after you return to work.)
In most cases, if you choose to buy Part A, then you must also have Part B and pay monthly premiums for both. If you have limited income and resources, then your state may help you pay for Part A and/or Part B.
Medicare Part B (medical insurance) helps cover reasonable and medically necessary services like doctor services, outpatient care, home health services, durable medical equipment, laboratory tests, X-rays, therapy, mental health, ambulance services, and some preventive care. Most people pay a standard premium amount for Part B. Social security will contact some people who have to pay more depending on their income. If you do not sign up for Part B when you are first eligible, then you may have to pay a late enrollment penalty!
Medicare Part C (Medicare Advantage Plan) is similar to an HMO or PPO, and these plans are offered by private companies. If you join a Medicare Advantage Plan, then the plan will provide all of your Part A and Part B coverage. Part C may also offer extra coverage such as vision, hearing, dental, and/or health and wellness programs. Most include Medicare prescription drug cover (Part D).
Medicare Part D (Medicare Prescription Drug Coverage) offers prescription drug coverage to everyone with Medicare. If you decide not to join a Medicare drug plan when you are first eligible, and you do not have other creditable prescription drug coverage, or you do not get "extra help," then you will likely pay a late enrollment penalty!
Please note: Medicare provides very limited coverage for long-term care expenses for chronic illness or disability. A separate long-term care insurance policy may give you more control over your options, help you live independently, and, in some states, allow you to protect your children’s inheritance.
Medigap (Plans A–N) is a medicare supplement insurance policy that is optional coverage available from private insurance companies. It helps cover deductibles and copayments. It may also cover health care provided outside the U.S. You do not need a Medigap policy if you enroll in Medicare Advantage.
Medigap policies come in several standardized versions, identified by the letters A through N. Each standardized Medigap policy must offer the same basic benefits, no matter which insurance company sells it. The only difference is cost, so shop around before choosing a carrier.
This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Investors should consult a tax or legal professional regarding their individual situations.