Center for a Secure Retirement
6 Medicare Facts to Know Before Turning 65

6 Medicare Facts to Know Before Turning 65

Are you approaching 65 and trying to make sense of Medicare? There's so much to understand — who qualifies and when, when you can sign up, what is and isn't covered, what the benefits look like, how much it costs — that it can easily seem as though you're missing out on critical Medicare facts.

Here are six Medicare facts you should know to make the most of your benefits and keep your costs down.

1. Medicare Is a Federal Insurance Program

Medicare is divided into three main parts.

  • Medicare Part A (hospital insurance). Part A covers inpatient hospital services, skilled nursing facility care, hospice care and some home health care. Part A is usually free if you or your spouse paid Medicare payroll taxes while you were working. If you don't qualify for premium-free Part A, you can still receive coverage by paying a premium based on your Medicare tax history.
  • Medicare Part B (medical insurance). Part B covers eligible doctors' services, outpatient care, medical supplies and preventive care. Everyone pays a premium for Part B. If your modified adjusted gross income exceeds a certain amount, your premium might be higher. Taken together, Medicare parts A and B are called Original Medicare.
  • Medicare Part D (prescription drug coverage). Part D helps cover the cost of prescription drugs, including many shots and vaccines. To get Part D, you must join a Medicare-approved plan that offers drug coverage. Different plans cover different prescription drugs.

2. Medicare Has Different Open Enrollment Periods

Signing up for Medicare is like signing up for a group health plan through your employer — you can only do it at a specific time.

If you're collecting Social Security benefits when you turn 65, you're automatically enrolled in Original Medicare.

If you aren't collecting Social Security benefits when you turn 65, you'll have to sign up for Original Medicare during your initial Medicare open enrollment period. Your initial open enrollment period begins three months before you turn 65 and ends three months after you turn 65.

If you miss your initial enrollment period, you can sign up during the general enrollment period between January 1 and March 31, and your coverage will begin July 1. But if you don't sign up during your initial enrollment window, you could pay higher Part B premiums for life, unless you can provide proof of adequate coverage. Review your coverage needs and sign up during your initial enrollment period to avoid penalties or missed benefit opportunities.

You might also be able to sign up for Part A or Part B during a special enrollment period.

3. Medicare Doesn't Cover Everything

Medicare's not much different from most health insurance plans. It pays for some services, but you'll pay out-of-pocket costs, such as co-payments and deductibles, for others. Certain services and care needs might not be covered, including:

  • Dental care
  • Vision care
  • Hearing aids
  • Medical expenses while traveling outside of the United States
  • Long-term care

Medicare pays a portion of long-term care costs — up to 100 days in a skilled nursing facility — but only under certain conditions and a co-pay might also be required. To be eligible for long-term care coverage, you must be admitted to a skilled nursing facility within 30 days of a qualifying hospital stay, and you must be admitted for the illness, injury or condition related to that hospital stay.

Long-term care expense planning and insurance are more reliable options.

4. Alternative or Supplemental Insurance Policies Can Fill Coverage Gaps

Because Medicare doesn't cover everything, you might want to find an alternative or a supplement to fill any coverage gaps.

Medicare Advantage plans, also known as Medicare Part C, are privately offered all-in-one alternatives to Original Medicare. They usually include Medicare parts A, B and D. They also usually include things Medicare doesn't cover, like vision, hearing and dental coverage. Medicare Supplement insurance, or Medigap, plans can also help fill the out-of-pocket gaps in Original Medicare.

Medicare Advantage and Medigap plans help cover specific needs and provide additional financial assistance, but they have limitations. You can't be enrolled in both programs simultaneously, and there are restrictions on which providers you can choose for full coverage. And if you have a Medicare Advantage plan and want to switch back to Original Medicare, you can only do so during the annual enrollment period.

Other government programs, such as Medicaid, Veterans Affairs benefits and state and local programs, can help cover health care costs, too.

If you dream of spending time abroad during retirement, consider purchasing a traveler's insurance plan, as Medicare doesn't cover care costs incurred in a foreign country, except under limited emergency circumstances.

5. Medicare Eligibility Is Separate From Social Security

Just because you're eligible for Social Security doesn't mean you're also eligible for Medicare, and vice versa.

The programs intersect at several points. Each is managed by the federal government. You're automatically enrolled in Medicare if you're receiving Social Security benefits when you turn 65. And if you receive Social Security benefits while enrolled in Medicare, your Medicare premiums will likely be deducted from your Social Security payments.

But each program is run by a different agency. The Centers for Medicare and Medicaid Services runs Medicare; the Social Security Administration oversees Social Security benefits. As each program serves distinct purposes, criteria for eligibility and benefit levels differ.

  • Medicare. You're eligible to receive Medicare once you turn 65. (You might be eligible earlier if you have certain disabilities or medical conditions.) Medicare extends full benefits at the age of eligibility, and coverage is not limited by prior earnings nor is it capped if you continue to work. However, your Part A premiums can be affected by your Medicare tax history, and your premiums for parts B and D can be affected by your income.
  • Social Security. Eligibility for Social Security benefits varies between 62 and 70. You can claim Social Security when you turn 62, but you won't receive your full benefits. The longer you wait to claim, the higher your monthly benefits. When you reach your full retirement age, you're eligible for 100% of your monthly benefits. Your benefits continue to grow past your full retirement age, but they max out when you hit 70.

6. You Might Not Need to Sign Up for Medicare at 65

What if you're still working and still have health insurance when you hit 65?

You could sign up for Original Medicare, or you could delay it — and, depending on the health coverage you have and the size of your employer, you might not have to pay a penalty when you sign up for Medicare Part B.

Talk with your workplace benefits administrator to learn how the group plan might work with Medicare. You must enroll in Part B while you're covered by the group plan or during the eight months after your employment and coverage end, whichever is first. Get proof of your benefits coverage in writing to avoid penalties for late Part B and Part D enrollment.

As health care costs rise, making the most of your senior years can hinge upon affordable access to quality care. Medicare can help you manage expenses, even if you're still working. There are many plans and options available, so take time to plan for your health care needs before making any decisions.

If you have specific questions or concerns, consult a Medicare expert.

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