Medicare Q&A: Your Cost and Coverage Questions Answered
1. Can You Contribute to an HSA Once Enrolled in Medicare?
Once a person enrolls in Medicare, they are no longer eligible to contribute funds to an HSA. If a person is still employed at 65 (or covered as a spouse by an employer plan) and eligible for Medicare but delays their enrollment while they remain on group coverage, they can continue to contribute to an HSA as part of a qualifying high-deductible plan.
2. What are some situations where you can defer your Medicare enrollment without paying an additional fee?
As long as a person is covered by an employer-sponsored health plan they can delay enrolling in Medicare. For anyone who delays enrolling in Medicare because they have employment-based coverage for themselves or through a spouse, if they lose that coverage, they then have a Special Enrollment Period (SEP) open to them for eight months. Once someone loses employment-based coverage or it shifts to “secondary coverage”, goes onto COBRA, or is receiving a retiree health insurance plan, Medicare is considered the “primary coverage” and the individual must apply within their IEP or SEP windows to avoid delays in coverage or penalties.
3. Can you use your saved HSA funds to pay for Medicare expenses, like coinsurance payments and monthly fees? If the answer is yes for some and no for others, please specify and indicate which. Thanks!
Once a person is on Medicare they can no longer contribute to an HSA, but any money accumulated prior to that point can be used to pay for any qualifying health expenses including Medicare premiums, co-pays, deductibles, and coinsurance.
4. What are the qualified Medicare expenses for each part/plan?
- Part A Hospital Coverage – When a person joins Medicare (or Social Security) they are automatically enrolled in Part A. This part provides coverage for hospital stays and expenses, short-term rehabilitation services in a skilled nursing facility, and hospice care. There are no premiums charged, but there are deductibles that are paid out-of-pocket with a current max in 2022 of $1,556 per individual as well as co-insurance costs after the first 60 days of coverage in a hospital or a skilled-rehabilitation facility. Most people will purchase private Medicare Supplemental insurance (Medigap) to help cover these out-of-pocket costs.
- Part B Doctor and Outpatient Coverage – Provides coverage for doctor visits, outpatient treatment, medical equipment, diagnostic/lab testing, and transport by EMS/ambulance. Part B involves more costs for the individual and some people will delay enrolling for as long as they have other primary health insurance coverage. The minimum monthly premium in 2022 is $170.10 which is automatically deducted from an enrollee’s Social Security benefit and $233 annual deductible and 20% co-insurance for all charges. But based on income, monthly premiums can increase to as high as $578.30.
- Part D Prescription Coverage – For a person enrolled in “traditional Medicare” they would purchase separate Part D coverage. For those on an Advantage Plan, they would typically secure the coverage as part of the package. The premium for a Part D plan is $33 in 2022 and currently, out-of-pocket costs can reach $10,048. However, the Inflation Reduction Act will put an out-of-pocket cap in place of $2,000. There are numerous Part D plans, so it is very important to compare and contrast what drugs are covered and the associated costs so any needed changes can be made during the Annual Enrollment Period.
5. What Is Medicare Advantage (Part C)?
Part C Medicare Advantage Plans – Medicare can be secured as the “traditional” federally managed program, in a manner more similar to private health insurance. Advantage Plans are managed as HMO or PPO programs by health insurance companies providing all the services under one roof. Participants still enroll in Part A and B and pay the premiums, but then they enroll in their choice of a wide variety of Advantage Plans to best meet their needs. Advantage Plans provide the advantages of lower out-of-pocket costs for staying in-network, prescription services (replacing Part D), and extra services such as dental, vision, hearing, care-related home improvements, transportation and even meal services.
6. What Does Medicare Advantage Cover?
Medicare is not a “one-size-fits-all” proposition. There are specific differences between traditional Medicare and Medicare Advantage that are important for people to understand when making the best enrollment choice. The current divide between enrollment in the two options is 2/3 “traditional” and 1/3 Advantage Plans. Medicare Advantage is administered by private insurance companies and not the government, but still offers the exact same Part A and Part B coverage. It will also offer Part D prescription coverage and has the flexibility to also offer dental, vision, and wellness options that traditional Medicare does not. Advantage Plans impose no lifetime coverage limits and provide a Maximum Out of Pocket (MOOP) limit guarantee protecting enrollees from costs of expensive treatments spiraling out of control, whereas traditional Medicare does not.
7. Pros And Cons of Medicare Advantage Plans
Medicare Advantage has grown to cover about 26 million Medicare enrollees and for many, Medicare Advantage boils down to plan variety, choice, and costs. These are people who value the group coverage experience that they had when they were working. Medicare Advantage tends to benefit healthier people who use fewer services with lower costs. Enrollees are looking for the cost protection of an out-of-pocket limit, the variety of plan options with different premium, co-pay and deductible schedules, and the range of service options available such as dental, vision, pharmacy, and wellness benefits. But a drawback to Medicare Advantage compared to traditional Medicare is being restricted to in-network HMO or PPO coverage which becomes difficult for seniors who travel or live as snowbirds between the north and sunshine states. For seniors who prefer to be able to choose a Medicare provider anywhere they go, traditional Medicare is the better option.
8. How Much Does Medicare Advantage Cost?
The total costs of Medicare Advantage plans will vary widely like private health plans based on the level and variety of services selected, premium-to-deductible ratios and out-of-pocket cost limits, and penalties going outside of in-network coverage. The average monthly premium for a Medicare Advantage plan in 2022 is $19, which according to CMS is lower than the $21.22 in 2021. The out-of-pocket limit is $4,972 for in-network services and $9,245 for out-of-network services.
9. Does Medicare Cover Home Health Care?
Home-based care can be covered by Medicare under a number of conditions. The person must be certified by a physician as “homebound” and receiving care from a doctor licensed skilled-nursing practitioner under a care plan that has been specifically designed and regularly reviewed by a doctor.
10. Which Medicare Parts and Plans Cover Home Health Care?
Coverage in a home-based setting is covered under both Parts A and B.
11. What Are the Medicare Eligibility Requirements for Home Health Care?
The person receiving care must be considered to need intermittent or part-time skilled care and can receive services such as physical or occupational therapy, speech pathology, medical social services, intermittent home health aide, injectable osteoporosis drugs for women, or durable medical equipment and medical supplies.
12. What Types of Home Health Care Are Not Covered By Medicare?
Medicare will not cover 24-hour-a-day care, delivery of meals, homecare services such as cleaning and laundry unrelated to a care plan, or support with activities of daily living (ADLs) such as bathing, toileting, or dressing if it is all that is required and unrelated to a medical care plan.
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