Get started With These Medicare Basics

Why It Matters:

  • It’s important to know what Medicare does and doesn’t cover.
  • It’s important to know who Medicare does and doesn’t cover.
  • You can use HSA (health savings account) funds to pay for some Medicare expenses.

Greg Glasgow tkc.profilePicture Written by: Greg Glasgow | Transamerica
Oct. 16, 2017

3-4 Min readClock Icon

Along with Social Security, Medicare is a benefit you have been paying into all of your working life. As you move from private health insurance to the federally funded plan for older Americans, here are five things to know about what Medicare does and doesn’t cover.

Medicare is divided into a few main parts

There are four main parts of Medicare, one of which is the option to get coverage through a private insurer instead of the federal government .

  • Part A covers inpatient care, nursing facility care, hospice care, and home health care. For most people, there is no monthly premium, though deductibles and co-insurance costs apply.
  • Part B covers medical services, outpatient care, home health care, medical equipment, and many preventive services. The standard Part B premium amount is $134 per month, but most people end up paying closer to an average of $109.
  • Part C is a Medicare-approved private health insurance plan that offers the same benefits as parts A and B but may have different rules and costs. Most Part C plans (also known as Medicare Advantage plans) also include the prescription drug coverage of Part D. Costs vary by plan.
  • Part D covers prescription drugs. Costs vary by plan.

Most people have been paying into Medicare long enough to get Part A premium-free. Monthly premiums apply to parts B and D, if you choose to sign up for them, and all parts require copays. You can choose Medicare coverage provided by the federal government, or under Part C, you can choose a Medicare Advantage plan from a private insurer that offers the services under Part A and Part B, and potentially additional coverage. More on that later.

Although it covers a lot, Medicare doesn’t cover everything

Among the services it does not cover are most dental care; eye examinations related to prescribing glasses; dentures; cosmetic surgery; hearing aids; and long-term care.

You can also get a Medicare Advantage plan .

Sometimes referred to as Medicare Part C, these Medicare-approved private health insurance plans combine parts A and B and generally may offer additional benefits, such as vision, dental, hearing and prescription drug coverage. These plans often have networks, which mean you may have to see certain doctors and go to certain hospitals in the plan’s network to get care. Also, out-of-pocket costs in these plans can be lower than with parts A and B.

Who is eligible for an HSA?

Health savings accounts (HSAs) are for people who have high-deductible health plans. If you’re covered by Medicare, you can’t contribute pretax dollars to an HSA. However, you can use your existing HSA funds to pay for Medicare Part B and D premiums or other qualifying health care expenses. Because Part A coverage can start six months back from when you apply for it, Medicare.gov suggests you stop contributing to an HSA at least six months before applying to Medicare to avoid tax penalties. Medicare also has its own health savings account program in which Medicare gives the plan an amount of money each year for your health care. Money left in your account at the end of the year stays in the account and may be used for healthcare costs in future years.

Are spouses and families covered?

Medicare does not offer spousal or family coverage. If you have a younger spouse who is covered by your employer’s insurance, it may make sense for you to keep working until he or she turns 65 and becomes eligible for his or her own Medicare coverage.

Get familiar with how Medicare works. It can help you be better prepared before you enroll. Medicare should also be part of the discussion you have with your financial professional.

What have you already learned about using Medicare? Share your knowledge on our community.

  • Visit medicare.gov to find out the exact date you are eligible to enroll.
  • Think about how a younger spouse will obtain coverage if you plan to retire and get coverage through Medicare.
  • Learn about supplemental health insurance for costs not covered by Medicare.

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