Medicare can be pretty confusing to understand. Millions of people become eligible for Medicare yearly, and many have no idea how it works or their options. Whether you are getting ready to retire or looking for answers while helping your parents apply for Medicare, let’s simplify what you need to know about Medicare for 2023.
What is Medicare?
Medicare is a federal health insurance program for those age 65 and older. You can also qualify for this insurance if you have end-stage kidney failure, ALS, or certain disabilities. Medicare is divided into multiple parts, so you want to understand how these sections work so you don’t make a mistake when it’s time for you to transition.
Original Medicare consists of Part A and Part B. Part A provides coverage for your inpatient stay at a hospital or skilled nursing facility. It also covers things like hospice and home health care. Part A does not cover all services that occur in a clinical setting. Services like outpatient surgeries are covered under Part B.
Part B covers outpatient services and treatments such as lab work, physical therapy, doctor visits, and outpatient surgeries.
Medicare Part D provides coverage for prescriptions you pick up at a pharmacy. This program is technically voluntary, but if you do not have creditable coverage for Part D, you will face a late penalty if you are not enrolled in a plan when you are eligible.
How much will Medicare cost me?
How much Medicare will cost you will vary from person to person. Medicare costs also change yearly, so let’s see what you can expect to pay in 2023.
Part A is free for most people as long as they have paid Medicare taxes and worked at least 40 quarters (10 years) in the U.S. If you have worked at least 30 quarters but do not quite meet 40 quarters, Part A will cost $278 a month. Less than 30 quarters will mean you have to pay $506 monthly.
Part A’s deductible must be met per benefit period, which is $1,600 for 2023 every 60 days.
Part B has a monthly premium. Social Security determines what your premium will be based on your income. Most people pay the standard amount, which is $164.90, in 2023. However, if you make more money, you could pay higher premiums.
Part B also has a yearly deductible that must be met, which will be $226.
Part D has monthly premiums. Social Security also determines your standard amount based on your income.
What are my plan options?
Since Medicare Part A and Part B do not cover the total cost of your healthcare services, you have a couple of plan options to choose from to help with cost-sharing. Medicare Part B pays for 80% of the cost of your outpatient services, leaving the remaining 20% for you to pay. To help with these expenses, you can enroll in either a Medicare Advantage or Medigap plan.
When do I need to start?
Seniors receive a 7-month window to apply for Medicare, known as their Initial Enrollment Period (IEP). This application period is based around your 65th birthday month and begins three months before your birthday month and ends three months after. If you don’t want to wait for your coverage to begin, enrolling during those first three months can help ensure your coverage starts on the 1st of your 65th birthday month.
There is a late penalty for not enrolling in Medicare when you are eligible. We mentioned earlier there is a Part D penalty if you don’t have prescription coverage, and the same rule applies to Medicare Part B. However, creditable coverage for Part B is only active employer insurance from an employer with 20 or more employees. If you have this creditable coverage, you can delay Medicare until you lose that coverage. You will receive a Special Enrollment Period to apply for Medicare once you lose coverage and provide forms proving that you had creditable coverage.
No insurance is ever without its complications, and it can be challenging to figure things out independently. Before you dive headfast into Medicare, check out resources to learn more about how this insurance works so you have a better idea of how your Medicare journey will go. You can also connect with a Medicare broker who can help you understand your Medicare plan options and provide you with support if any issues arise.