On this KET Forum, host Renee Shaw and experts answered viewers’ questions about Medicare, the federal health insurance program for Americans age 65 and older. Panelists discussed enrollment eligibility and procedures, what is and isn’t covered by Medicare, supplemental coverage, and more. A summary of main questions and topics is below.
What are the age requirements to become eligible for Medicare benefits, and what types of Medicare plans are there?
“Most people are eligible for Medicare at the age of 65 because they’ve worked their whole career and they’ve paid into that system,” says Tihisha Rawlins, senior associate state director with AARP of Kentucky. “There are some people that are eligible for Medicare before 65, and they are eligible because they have a disability.” But she adds that these people must first receive disability benefits from the Social Security Administration and then go through a 24-month waiting period.
Medicare is different from Medicaid, Rawlins explains. Medicaid is a health insurance program run by both the federal government and each of the 50 states for low-income individuals, while Medicare is a federally-run program for all U.S. citizens over age 65. Medicaid eligibility and coverage therefore varies from state to state depending on each state’s requirements, while Medicare rules and benefits do not.
All enrollees in Medicare receive benefits through Parts A and B. Part A covers hospitalization while Part B covers physician/clinic services, outpatient procedures, some home health care and medical equipment, and many preventive services.
Aside from Medicare Parts A and B, there are two types of insurance packages offered by private companies to Medicare-eligible persons that provide additional coverage. These are known as Medicare supplement plans (or Medigap) and Medicare Advantage plans.
Medicare supplement plans are designed to fill in gaps in coverage not offered by Medicare Parts A and B and generally require a higher monthly premium but lower out-of-pocket expenses such as deductibles and co-pays than do Medicare Advantage Plans. Supplement plans also don’t have any prescription drug benefits, known as Medicare Part D, which means that persons who buy a supplement plan will have to purchase the Part D plan separately.
Medicare Advantage plans, on the other hand, are comprehensive insurance plans that combine Parts A and B benefits with additional ones such as vision, dental, and hearing, and in some cases include prescription drug (Part D) benefits. Medicare Advantage plans may have lower monthly premiums but higher co-pays during visits and deductibles depending on the plan. Furthermore, they generally restrict patients to getting services from in-network providers.
“What I try to tell people is... look at your peace of mind,” says Lindsay Medley, social worker with Lexington Senior Center. “Are you more comfortable with paying a premium where you do it up front at the first of the month and then don’t have co-pays – which is what a supplemental plan does – or are you comfortable with paying a co-pay depending on how often you see your doctor throughout the year?”
Limited in-network coverage constitutes perhaps the biggest drawback to Medicare Advantage plans, according to several panelists. For example, people who travel often might find out that they can’t access medical care in certain states if there are no in-network providers located there (those on Medicare and who have a supplemental plan can get treatment from any provider that treats Medicare patients). And in-network providers can also withdraw from a Medicare Advantage plan for financial reasons, says Blake Anderson, an insurance advisor and CEO of Triple Crown Management.
“In the past year, one of the major hospitals in Lexington and some of the providers left the network,” Anderson notes. “That caused a lot of trouble for a lot of patients when they got a letter in the mail saying that your doctor’s no longer in network.”
According to Angela Zeek, public benefits and ombudsman unit manager for Legal Aid of the Bluegrass, most people enrolled in Medicare receive Part A or hospitalization benefits at no monthly cost, assuming they have paid enough FICA (Federal Insurance Contributions Act) payroll taxes into Medicare through their employment years.
“Part B does come with a monthly premium – $174.70 – which is deducted from their Social Security check if they’re receiving Social Security,” Zeek says. This premium is for 2024 and is pegged to the Consumer Price Index, which means it usually will rise from year to year.
Zeek adds that there is also a monthly premium for Part D or prescription benefits – and as noted above, Medicare supplement plans may also have a monthly premium in addition to the Part B premium. Most (but not all) Medicare Advantage plans, on the other hand, do not have an additional monthly premium aside from the Part B premium.
With more people working later in life in jobs that provide health insurance, is it better to enroll in Medicare at age 65 and withdraw from an employer’s plan, or stay in?
The panelists advise persons facing this decision to carefully examine health benefits offered in their employer’s plan. “Typically, when someone is employed and have group health insurance coverage, that is usually better than what Medicare is offering,” says Angela Zeek. If that’s the case, she recommends to opt out of Medicare at age 65 and postpone enrollment.
“You can generally continue on with your group plan until you’re ready to retire,” adds Pete Alberti, agent for Kentucky Health Solutions. “However, you’ll want to compare the costs of your work plan versus the costs of Medicare to see which one’s better.”
Tihisha Rawlins explains that if an individual is already receiving Social Security benefits, he or she will get a Medicare notification card with A and B benefits information before turning 65. “In order to keep your group health (insurance) and not be penalized down the road with underwriting, you need to send that card back and decline Part B so you preserve your guarantee issue window,” she says. This window allows persons to enroll in Medicare supplemental coverage (described above) within six months after ending private insurance without being denied or charged more due to pre-existing medical conditions.
Some people who plan to work into their 70s might also want to keep their group employer coverage for Part B expenses such as physician appointments and outpatient procedures but enroll in Part A, the hospitalization benefit, when they turn 65. If they do so, Zeek says that employer group coverage would pay for initial Part A expenses and Medicare would do so once the employer coverage maxes out.
Many persons who have private group insurance also have health savings accounts (HSAs), which collect funds to use for medical costs not covered by insurance. Alberti says that once an individual enrolls in Medicare, he or she can continue to use money accrued in the HSA to pay for medical expenses but can no longer contribute to the account.
What if you’re over 65, have enrolled in Medicare, and started to receive benefits but then decide to take a job that offers group health insurance? Alberti says you could drop your Medicare coverage, but he generally advises against it. “It depends on how long you’re going to work, because you already have your plan, it’s already in place, you might not want to drop the plan you’ve set up when you go back to work,” he says.
Lindsay Medley agrees, cautioning “Think about how hard it’s going to be to try to explain (dropping coverage) when you’re trying to enroll into Medicare – it can be tricky.”
What are other benefits for Medicare recipients?
Lindsay Medley explains that there is a benefit called the Medicare Savings Program run by state Medicaid offices. This program assists in paying Part A and B expenses (premiums, deductibles, and co-pays). “If your income is no higher than $1,235 per month for an individual, you qualify for both Medicare and Medicaid,” she says.
The Medicare Savings Program has three tiers, Medley continues, with benefits reduced according to higher monthly income. The lowest tier offers assistance with both Part A and Part B expenses plus medication expenses, while the higher two tiers help with only Part B and drug expenses.
“I don’t want people to get hung up on the income guidelines,” Zeek says. “There are income and resource guidelines for most of these benefits, but not every dollar is counted, so I don’t want people to exclude themselves (from applying). They should always seek out more information.”
Beyond the Medicare Savings Program, another benefit assists with medication expenses. Medicare Extra Help is a program that lowers drug plan premiums and pharmacy costs. Zeek says people can learn if they qualify for Medicare Extra Help by contacting Kentucky’s State Health Insurance Assistance Program.
All Medicare enrollees benefit from an annual cap on prescription drug costs implemented as part of the Inflation Reduction Act of 2024. Alberti says this year’s cap was $3,300, and it will drop to $2,000 in 2025. This cap applies only to medications covered under an enrollee’s particular plan, and information about which medications are covered under every plan can be found on the Medicare website.
“Any plan you get, whether it’s a Part D plan or a Medicare Advantage plan, that’s the maximum out-of-pocket (cost) of Part D or prescription drugs. It’s a huge benefit,” Alberti says.
Due to this annual cap, the infamous “donut hole” in Medicare Part D coverage has finally been filled in, Tihisha Rawlins explains. As part of the initial implementation of Schedule D coverage in 2006, Medicare recipients were responsible for paying for medication expenses within a sizable range that started once the initial coverage limit was surpassed and then lasted until catastrophic coverage kicked in. After shrinking for several years, the “donut hole” is now a thing of the past.
What’s the procedure for enrolling in Medicare?
“You can enroll into Medicare when you are first eligible for it, usually on your 65th birthday – it’s a seven-month window of time, three months before your birth month, your birth month, and three months after,” says Angela Zeek. If a person misses that seven-month window, they can enroll each year from Jan. 1 to March 31. However, they may be subject to a penalty for late enrollment which is added to their monthly Medicare Part B premium.
“There are some special enrollment periods, like when a person loses their employer coverage, they have the ability to enroll into Medicare at that point,” she continues. “We have very few special enrollment periods, and there are parameters behind them.”
Once enrolled, persons will receive a Medicare card in the mail. Lindsay Medley advises viewers to inspect all incoming mail carefully once they expect a Medicare card to arrive soon. She says the envelope containing the card looks generic and lacks information.
Every year, persons already enrolled in Medicare have the option to examine their coverage plan, compare it with alternatives, and change coverage if necessary. This occurs during what’s called open enrollment. During this timeframe, Medicare enrollees are encouraged to examine their plan’s drug formulary to see if any drugs have been added or withdrawn, or have been moved into a different pricing tier.
This year, Medicare Advantage open enrollment began Oct. 15 and and continues through Dec. 7.
