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What is Original Medicare?

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I. A brief history:

Original Medicare was signed and became law under Lyndon B Johnson in 1965. 

II. What is Original Medicare?

A national health insurance program for those who are age 65 and older or for those younger than age 65 and have a qualifying disability as determined by Social Security. 

  • Those who have end stage renal disease (ERSD) or amyotrophic lateral sclerosis (ALS or Lou Gehrig’s disease) are also eligible for Medicare.

III. When do I first get Medicare?

A: At Age 65… 

  • When you’re first eligible (when you turn age 65) you can sign up 3 months before the month you turn age 65, the month you turn age 65 and ends 3 months after the month you turn age 65, so there is a 7 month window. Keep in mind it could take from 60 to 90 days to process your Medicare application which could delay your coverage for Part B. This could cause a gap in your insurance coverage which means you have no Part B coverage during this time and you may have to pay a penalty.

B. Under Age 65 and disabled… 

  • Even if you are younger than age 65 you will be eligible to enroll in Medicare Part A and B after 24 months from the date of a disability provided your disability is approved by Social Security. (The clock starts from the date of your illness or injury and not when Social Security finally approves your disability. It could take many months to be approved.) If you have End Stage Renal Disease (ERSD) or Amyotrophic Lateral Sclerosis (ALS) you can begin the Medicare program right away starting with the first dialysis treatment. You will need to apply for Medicare when first diagnosed with ERSD or ALS because it will probably take between 60 and 90 days to get squared away in the system. You can apply in person at your local Social Security office.

C. What if I don’t sign up for Medicare when first eligible?…Penalties! 

         Penalties for not starting Medicare when first eligible:

  • Part A: For most people Part A will be free. Technically, it’s not free. You actually paid the premiums in advance because while you were working you paid Medicare taxes, hopefully! To receive “free” Medicare Part A coverage the minimum number of hours to work and pay Medicare taxes is 40 quarters. For people who have worked less than 40 quarters there will be a premium to pay. The penalty for those who are required to pay a Part A premium, not enrolling in Part A when they were first eligible, will pay an additional 10% for twice the number of years they were delinquent. So if someone is 2 years late in signing up for Medicare Part A will pay an extra 10% of the premium for 4 years.
  • Part B: The penalty for not starting Part B when you’re first eligible is an increase of 10% in premium for every 12 month period. This penalty will be in effect as long as you have Part B.
  • Part D: Part D is not part of Original Medicare, nevertheless, it is important to have. If you do not have Part D when you’re first eligible you may have a penalty to pay. The penalty for not starting Part D when you’re first eligible is an increase in 1% of the “national base beneficiary premium” (which is established every year by the Center for Medicare and Medicaid Services or CMS and is currently $32.74 in 2020) times the number of full, uncovered months you did not have Part D or creditable drug coverage. (learn more)

          Creditable Drug Coverage is defined as drug coverage you may have from an employer group plan or from some other source that’s expected to pay, on average, at least as much as Medicare’s standard prescription drug coverage. In general, folks who have creditable coverage usually keep that coverage without paying a penalty, if they decide to to later enroll in Part D.

IV. How do I get Original Medicare Parts A and B?

Some people get Original Medicare automatically and others have to sign up for it. In most cases it depends on whether you’re getting Social Security Benefits.

A. If you’re receiving benefits from Social Security or the Railroad Retirement Board at least 4 months before you turn age 65…

You probably will not need to sign up if you’re already receiving Social Security benefits. In most cases you’ll automatically be starting Original Medicare Part A and B starting the first day of the month in which you turn age 65. If your birthday is on the first of the month you will begin Original Medicare on the first day of the prior month. 

  • You should automatically receive your Medicare packet and information in the mail about 3 months before your 65th birthday. Some folks actually mistake the envelop to be some marketing piece and unknowingly toss it in the trash. It will be colored red, white and blue. In it, you’ll find information about the Medicare program along with your brand new Medicare card. This card is very important as it will have your new Medicare Claim number that has been assigned to you. The card will also have printed at the bottom two dates; one for Part A and one for Part B. Keep your card with you in safe place and keep it confidential. It is a good idea to make a copy of your card and keep it with your important papers.

Important! If you’re receiving Social Security benefits at least 4 months before turning age 65, and do not receive your Medicare card in the mail within 60 days of your birthday, call WCBurke Insurance immediately to avoid penalties!

B. I will NOT be getting benefits from Social Security or the Railroad Retirement Board at least 4 months before I turn age 65…

  1. …Because I’ll still be working and covered by my employer group plan.

            a. Part A: You will need to at least enroll in Medicare Part A. If you’ve worked in the U.S. for at least 40 quarters (10 years) your Part A will cost nothing to receive at age 65. If you have not worked for at least 40 quarters in the U.S. there will be a cost to Part A. 

  • Requirement for Medicare Part A

    Cost

    Paid Medicare taxes and worked 40 or more quarters

    US$0

    Paid Medicare taxes and worked 30 to 39 quarters

    $252/month

    Paid Medicare taxes and worked less than 30 quarters

    $458/month

    If you’re still working you will need to sign up for Medicare Part A yourself. This will not happen automatically. You can do this by calling us at WCBurke Insurance or going to your local Social Security office in person.

         b. Part B: It is possible to delay your Medicare Part B (do not delay Medicare Part A, go ahead and sign up) and therefore not have to pay the Part B premium (or be assessed a Part B penalty if you sign up for Part B later on) if you have health insurance coverage through your employers group health plan, but first double check with your employer. Why double check with your employer? The employer may presume you will find your own health coverage and dis-enroll you from the group plan. Then you may have to pay a late enrollment penalty for not starting Medicare Part B on time. 

  • If employer has 20 or more employees: After double checking with your employer accept Medicare Part A and you should decline Medicare Part B for now. You will have 8 months to apply for Part B later when you retire.
  • If employer has 19 or fewer employees: Accept Medicare Part A and Part B and do nothing if your new Medicare card has both Part A and Part B dates printed correctly.

         There is a monthly cost for Part B premiums and most people will pay $144.60/month (if you file a tax return as a single making more than $87,000 per year or you file a tax return as a married couple making more than $174,000 you’ll pay more…

  • What you will pay in 2020 for your Part B premium if your yearly income in 2018 was:

    File Individual tax return

    File Joint tax return

    File Married and separate tax return

    Cost for 2020

    $87,000 or less

    $174,000 or less

    $87,000 or less

    $144.60/mo

    above $87,000 up to $109,000

    above $174,000 up to $218,000

    not applicable

    $202.40/mo

    above $109,000 up to $136,000

    above $218,000 up to $272,000

    not applicable

    $289.20/mo

    above $136,000 up to $163,000

    above $272,000 up to $326,000

    not applicable

    $376.00/mo

    above $163,000 up to $500,000

    above $326,000 up to $750,000

    above $87,000 up to $413,000

    $462.70/mo

    $500,000 and above

    $750,000 and above

    $413,000 and above

    $491.60/mo

         2. …Because I’ll still be covered under my spouses’ employer group health plan. See above…the same scenario as if “I’ll still be working and covered by my employer group plan.”

  • See above…the same scenario as if “I’ll still be working and covered by my employer group plan.”

         3.  …Because I am still working and have a MarketPlace health plan.

  • This would be the case because your employer does not provide an employer group health plan or if you were self employed or an independent contractor and received your health insurance through the Marketplace. Sign up for both Medicare Part A and Part B. Notify the MarketPlace that you will be terminating your health plan on the first day you start coverage with Original Medicare Part A and B.

         4. …Because I have TRICARE:

  • Do not wait to enroll in Medicare Part A and B. You should be enrolled in Medicare when you turn age 65. You must have Medicare Part A and B in order to keep TRICARE.

        If you have TRICARE (health care program for active-duty and retired service members and their families), you generally must enroll in Part A and Part B when you’re first eligible to keep your TRICARE coverage. However, if you’re an active-duty service member or an active-duty family member, you don’t have to enroll in Part B to keep your TRICARE coverage. For more information, contact TRICARE at 866-773-0404 or TTY: 1-866-773-0405

        5. …Because I have Veterans benefits:

  • Do not wait to enroll in Medicare Part A and B. You should get enrolled in Medicare when you turn age 65.

V. What does Original Medicare cover:

A: Part A: covers inpatient hospital stays, care in a skilled nursing facility, hospice care and some home health care.

B: Part B: covers certain doctors’ services, outpatient care, medical supplies and preventative services.

VI. How much are Original Medicare premiums?

A: Part A: Most people will pay nothing if you’ve worked in the U.S for at least 40 quarters (10 years) and paid Medicare taxes on the income you’ve earned. If you’ve worked less than 40 quarters… 

  • Requirement for Medicare Part A

    Cost

    Paid Medicare taxes and worked 40 or more quarters

    US$0

    Paid Medicare taxes and worked 30 to 39 quarters

    $252/month

    Paid Medicare taxes and worked less than 30 quarters

    $458/month

B: Part B: Currently, most people will pay $144.60/month, however this may fluctuate from year to year. If filing an individual income tax return making more than $87,000 or filing a joint income tax return making more than $174,000 per year…

  • What you will pay in 2020 if your yearly income in 2018 was

    File Individual tax return

    File Joint tax return

    File Married and separate tax return

    Cost for 2020

    $87,000 or less

    $174,000 or less

    $87,000 or less

    $144.60/mo

    above $87,000 up to $109,000

    above $174,000 up to $218,000

    not applicable

    $202.40/mo

    above $109,000 up to $136,000

    above $218,000 up to $272,000

    not applicable

    $289.20/mo

    above $136,000 up to $163,000

    above $272,000 up to $326,000

    not applicable

    $376.00/mo

    above $163,000 up to $500,000

    above $326,000 up to $750,000

    above $87,000 up to $413,000

    $462.70/mo

    $500,000 and above

    $750,000 and above

    $413,000 and above

    $491.60/mo

VII. What if I do not receive my Medicare card?

You should receive your Medicare card and information packet about 3 months before you turn age 65.

If you do not receive your Medicare card call WCBurke Insurance or go to your local Social Security office no later than 2 months prior to your 65th birthday.

If you’re disabled and it’s been more than 22 months since your disability started call WCBurke Insurance or go to your local Social Security office.

VIII. Is this all there is to Original Medicare, Parts A and B?

That’s all there is regarding Original Medicare, technically speaking, however, Part A and B do not cover drug costs. Part D is not considered Original Medicare, however, it is very important to have. You may not currently have medications prescribed to you however, at some point it will become almost inevitable. Not to mention there will be a penalty for a gap in coverage of more than 63 days.

Part D: coverage for prescription drugs also referred to as Prescription Drug Plan or PDP.) You’re not required to purchase drug coverage but if you do not purchase Part D when you’re first eligible you may pay a penalty for as long as you live if you later decide you want drug coverage. 

  • Part D Penalty is 1% of the “national base beneficiary premium” (currently $32.74 in 2020) times the number of full, uncovered months you did not have Part D or creditable drug coverage. This is an add on penalty. This is in addition to your regular monthly drug plan premium.

IX. Summary:

  • Original Medicare Part A and B is the basic health plan for seniors in the U.S. once they turn age 65.
  • Disabilities approved by Social Security allow people under age 65 to receive Original Medicare Part A and B.
  • Be aware some people start Original Medicare Part A and B automatically and some don’t. Call WCBurke Insurance to find out.
  • Be aware that there are penalties for late enrollment into Original Medicare Part A and B. That’s your incentive to call WCBurke Insurance!
  • There are lots of folks who are unaware of what to do. Now you know what to do but you probably have friends that do not…tell them about WCBurke Insurance!
  • This summary is mostly all about Original Medicare Part A and B. Is there anything else I need to be concerned about?

Yes! You should get a Medicare Prescription Drug Plan (also known as PDP or Part D) to avoid a penalty if you later want to add drug coverage.