Medicare represents a crucial part of our nation’s healthcare infrastructure. According to Statista, more than 18.4% of the country’s entire population is reliant on the medicare program for their personal healthcare needs. Medicare also represents a relatively large portion of our yearly federal, weighing in at 12% of the nation’s budgetary expenditures as of 2020. 

Medicare is big business. It is also an integral part of our nation’s health and wellbeing, especially for those age 65 and older. If you or a loved one has recently reached retirement age, you may be wondering what the enrollment process looks like. To a novice entrant, the world of Medicare can be a confusing one. Below, we’ve compiled everything you need to know from enrollment to the types of coverage available and even contingency planning if you find yourself in need of medical care but aren’t eligible for the program.

Our goal: to demystify the world of Medicare enrollment. 

What is Medicare?

You may have heard the term Medicare and confused it with Medicaid. You might not understand how the program differs from the traditional employer-sponsored plan that you’ve been on for years. If you’re confused about what Medicare is and why it matters to you, don’t worry. Millions of Americans find themselves in the same boat every year. 

Medicare is federally run health insurance. It serves as a social safety net to aid retirees (and younger participants with certain qualifying diagnoses) in securing healthcare services at the time in their lives when they need it most. The program got its start back in 1965 as part of the Social Security Act. While there is a great deal of nuance surrounding the way in which the program is financed, it is generally driven by payroll taxes placed into a government run trust fund. 

Under Medicare, qualifying individuals may obtain help paying for:

• Inpatient services
• Outpatient services
• Prescription drugs 

Types of Medicare Coverage

There are four main types of Medicare coverage that potential participants should be aware of. Those Medicare subtypes include:

• Part A (Inpatient coverage)
• Part B (Outpatient coverage)
• Part C (Medicare Advantage plans)
• Part D (Prescription drug coverage)

Together, Part A and Part B, also known as hospital insurance and healthcare coverage respectively, are called “Original Medicare.” They are the oldest portions of the program and were originally codified in the 1965 Social Security Act. As our healthcare system has changed and matured over the years, Part C and D were introduced in response to demand.

Medicare Enrollment Requirements

Now that we have a basic understanding of the different Medicare products available, as well as the general history of the program, the burning question remains: how does a person become eligible for Medicare enrollment?

When we talk about the enrollment requirements that go along with Medicare, we are talking about Part A and Part B and how they work together. In order to be eligible for Medicare Part A you must meet the following requirements:

• Be 65 or older 
• OR Have a spouse 65 or older
• Worked and paid taxes for at least 10 years
• Be eligible to receive either Social Security or Railroad Retirement Board benefits  
• Be a US citizen

Certain extenuating circumstances also constitute eligibility even if you are under 65 years old. Those circumstances include medical diagnoses such as:

• ALS (Lou Gehrig’s Disease)
• End-stage renal failure

The Cost of Medicare Premiums

If you have maintained steady work history throughout your life, contributing to the Medicare payroll tax as is required, then you will have amassed the 40 credits (i.e. 10 years of payroll tax history) necessary to buy Part A and B coverage. It should be noted that Part A and Part B go hand in hand; buying one requires you to buy the other. 

If you adequately meet your tax and work history obligations then the premiums for Medicare Part A are free. Premiums for Part B, however, start at $148.50 and increase depending on your income level. 

Part C and Part D are types of extra insurance; coverage is extended by a third party, so their cost will differ. For reference, the average part D prescription plan costs approximately $30 per month. Part C, or Medicare Advantage plans roll Part A, B, and D benefits into one package, all managed by a third party so prices differ significantly between plan providers. 

Timing Your Enrollment

Once you reach age 65, you become eligible to enroll in Part A and Part B. However, careful attention and timing are necessary to complete your enrollment. The good news? If you are receiving Social Security benefits you’ll automatically be enrolled in Medicare Part A. You will receive more information about taking —or declining— Part B. 

If you’re still working when you turn 65, enrollment is slightly more complicated. There is a narrow window in which to sign up before incurring a penalty. In order to make the transition from employer sponsored benefits to federal benefits as seamlessly as possible, contact Medicare three months prior to your 65th birthday. The initial enrollment period begins three months before your birthday and ends three months after. 

If you fail to sign up during the enrollment window you still may be eligible to buy coverage but at a higher price. For example, Part B will be 10% higher for every year you were eligible but failed to enroll.  

What to Do if You’re Not Qualified for Medicare

Even if you aren’t eligible for zero-cost Part A coverage, there are contingencies built into the Medicare program to help you obtain it. As long as you are 65 years or old, whether or not you have the requisite work credits, you have the option to directly purchase a Part A plan. As of 2021, the maximum premium is $471 per month. Part B offers a similar payment structure for those that lack proper tax history.  

Enrollment Assistance

The world of Medicare enrollment can be confusing. Different scenarios often have different rules. For example, enrolling yourself requires a different process than enrolling your spouse. From timing your initial application to making informed choices regarding your coverage, signing up for Medicare is tricky. Sometimes it’s in your best interest to hire a professional like Health Coverage Solutions to help you cut through the red tape to ensure that you have the healthcare that you deserve in your retirement.