College 101

College 101: Understanding Medicare

The time has come for me to start looking at Medicare, but I'm very confused about how the whole thing works. It seems as if, at some point, everyone managed to learn what Medicare is, how it works, and how to get it — everyone, that is, except for me! I feel kind of silly, but I don't know where to start. Experts, can you help me figure out Medicare or point me toward the right places to start learning?

The American healthcare system is very complicated indeed, and the often complex Medicare system doesn't do much to simplify matters! It's understandable that you're having trouble grasping how Medicare works. Let's start from the top and explain why Medicare exists and what it's for, and then move on to helping you find the most effective way to get your own Medicare situation sorted out.

As you seem to recognize, Medicare is something that you start paying attention to when you reach a certain age. That's because Medicare is our nation's health insurance plan for the elderly. The United States has a private healthcare system, and it has long been "employer-based." Americans often receive health insurance from their employer as part of their employee benefits. Plenty of controversy about this system exist, but one obvious problem should jump out right away: what happens when you retire?

With pensions and lifelong benefits becoming a thing of the past, it's a good thing that the government noticed this problem, too. The government created Medicare, a program to insure the elderly, in 1965 (at the same time, the government also created Medicaid, a health insurance program for the economically disadvantaged — the programs do two separate things, despite their similar-sounding names, so don't get mixed up!). From the start, Medicare was available to those Americans age 65 or older who choose to enroll in the program. It was later expanded to cover other people, such as the disabled.

If you're approaching age 65, then it's time to start thinking about Medicare. You can choose to enroll, but you don't have to: you might choose not to if, for instance, you are still working and get great health insurance through your employer (most people do sign up for at least Part A even if they have other insurance — more on Part A and Part B in a moment!). If you do think Medicare is your best bet for healthcare coverage, then you should turn to the very helpful resources you'll find on the internet: there are websites available that will give you an easy Medicare experience and explain all of the details you'll need to know.

What sorts of details? Perhaps the biggest thing to understand is that two main parts of Medicare exist. Medicare Part A covers hospital stays and other essentials, and it will be free if you or your spouse paid Medicare taxes for at least 10 years. Medicare Part B covers more typical health needs, and often requires you to pay a premium.

Then, there is the enrollment period. Depending on your situation, you may have to wait for a certain time of year to sign up for Medicare. However, you may also be able to sign up right away thanks to the Medicare special enrollment period. Things like moving to a new home, losing your old coverage, and having a disability could qualify you for the special enrollment period.

Another important thing to know is what Medicare covers — and what it doesn't. Medicare coverage is extensive, but savvy seniors will want to keep an eye out for things like overseas coverage. If you're planning a trip abroad, you'll want to invest in travel insurance or a Medicare supplement plan to make sure that you don't end up stuck in a foreign country and on the hook for treatment costs. Medicare supplement plans (also called “Medigap” plans) also improve and patch other weak points in Medicare's coverage. What sort of supplement plan (if any) you might want to consider will depend on your personal health needs, travel plans, budget, and other personal details.

Medicare can seem pretty complicated and full of paperwork, but it doesn't have to be daunting. Now that you understand the basics and know what you need to do — sign up for Medicare and determine if you need any supplemental insurance — we think you'll find that it's manageable to get things sorted out using valuable internet resources and the government’s own Medicare websites and online sign-up options. If you need further help, we recommend seeking out advisors who work with seniors. Organizations like the AARP exist to help you if you're still confused, so don't be intimidated.

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