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Original Medicare (Parts A & B)

As the saying goes, Medicare covers a lot, but it doesn't cover everything.  In many ways, Original Medicare resembles an 80/20 health plan, where 80% of your costs are covered by Medicare, and the remaining 20% is "up to you."  Medicare Part A hospital insurance covers inpatient hospital care, skilled nursing facilities, hospice, and home health care, while Medicare Part B covers doctors and other health care providers' services, outpatient care, durable medical equipment, and some preventive services.  Physician administered medications such as injections, vaccines and IV infusions are also covered on an 80/20 basis, however outpatient prescription medications are not.  For a more detailed breakdown of the costs of Original Medicare, including it's premiums, copays and deductibles please visit the website by clicking here.

During the three months leading up to your 65th birthday, the month of your birthday, and for three months after your birth month, you will be eligible to enroll in Original Medicare Parts A & B.  This is called your Initial Enrollment Period (IEP).  During this time you will need to decide if you want both Parts A and/or Part B.  Part A is typically free for most people who have paid (or have a spouse who paid) Medicare taxes for 10 years or more during their working years, while Part B has a monthly premium that starts at $135.50/month in 2019, but can be more for higher-income individuals*.  To learn more about Part B (and Part D) premium costs for higher-income individuals, called the Income-Related Monthly Adjustment Amount, please scroll to the bottom of this page.  If you or your spouse are still working and have coverage though an employer group health plan, you may consider delayed enrollment in Part B depending upon how your health plan works with Medicare. You'll want to do your homework on this, however,  because late-enrollees can be subject to a Part B or Part D late enrollment penalty or have a gap in coverage if they forgo signing up when they're first eligible.  To learn more about when to enroll in Parts A & B based on your circumstances please visit the website by clicking  here.  To learn more about the Part B late enrollment penalty, please visit by clicking here, and to learn more about the Part D late enrollment penalty please visit by clicking here.

As for how or where to sign up, you can enroll in Medicare online via the Social Security website, by visiting your local Social Security office or by calling the Social Security Administration at 800-772-1213.  Note that if you're already drawing Social Security, you'll likely be automatically enrolled and receive your card about 3 months before your 65th birthday, with coverage effective the first of your birthday month. Once enrolled in Parts A & B, you'll have some additional coverage decisions to make, namely, whether to get a Medicare Supplement,  Medicare Advantage Plan, or Part D prescription drug plan to round out your coverage.  Fun fact:  You need both Parts A and B to have a Medicare Advantage or Supplement Plan, but you only need Part A to sign up for a Part D drug Plan.  To learn more about the differences between a Medicare Supplement and a Medicare Advantage Plan, please visit our Medicare Advantage vs. Medigap page or click here.

One thing to note...

With all of the attention that Medicare Supplements and Advantage Plans get, it is easy to forget sometimes that there really is a 3rd and 4th option when it comes to your Medicare coverage choices: Getting by with only Original Medicare (Part A & B only), or going with Original Medicare + a Part D prescription drug plan. 

Just be aware that if you do go this route, there are three things to keep in mind: 

  1. There is no upper limit to the out-of-pocket costs you could incur under Original Medicare as it does not come with any kind of annual out-of-pocket maximum, 
  2. Delayed enrollment in a Part D drug plan could subject you to the late enrollment penalty later on and, 
  3. If you do forgo enrolling in a Part D plan when you are first eligible, you may have to wait until the next annual enrollment period (Oct. 15-Dec.7) to sign up for a drug plan.  This means that your drug coverage would not go into effect until January 1 of the new calendar year. If you are diagnosed with a serious or chronic condition, having to wait for annual enrollment and the new calendar year effective date could leave you without prescription drug coverage when you need it most.

IRMAA: The Income Related-Monthly Adjustment Amount

If you have higher income, the law requires an adjustment to your monthly Medicare Part B (medical insurance) and Medicare Part D prescription drug coverage premiums, and you will likely receive a letter from the Social Security Administration notifying you of such. To determine your income-related monthly adjustment amounts, Social Security uses your most recent federal tax return the IRS provides to them. As an example, for 2019, this information is usually from a tax return filed in 2018 for tax year 2017. Who is affected? If you file your taxes as “married, filing jointly” and your modified adjusted gross income (MAGI) is greater than $170,000, you’ll pay higher premiums for your Part B and Medicare prescription drug coverage. If you file your taxes using a different status, and your MAGI is greater than $85,000, you will also pay higher premiums. It is possible to appeal this determination, however. If your income has gone down due to any of the following situations, and the change makes a difference in the income level SSA considers, you should contact them to explain that you have new information and may need a new decision about your income-related monthly adjustment amount if:

• You married, divorced, or became widowed;

• You or your spouse stopped working or reduced your work hours;

• You or your spouse lost income-producing property because of a disaster or other event beyond your control;

• You or your spouse experienced a scheduled cessation, termination, or reorganization of an employer’s pension plan; or

• You or your spouse received a settlement from an employer or former employer because of the employer’s closure, bankruptcy, or reorganization.

If any of the above applies to you, you will need to provide the documentation verifying the event and the reduction in your income, as well as file Form SSA-44 with Social Security. Typically the most efficient way to handle this is to call Social Security (800-772-1213) to set up a face-to-face meeting at a local office. The documentation you provide should relate to the event and may include a death certificate, a letter from your employer about your retirement, or something similar. If you filed a federal income tax return for the year in question, you will also need to show them your signed copy of the return. Finally, if you end up paying the surcharge for a month or two before your appeal is approved, Social Security should reimburse you for the overpayment.

To download the Life Changing Event Form SSA-44 from the Social Security Administration, click here. To get more detailed information about the Income Related Monthly Adjustment Amount, please visit the official SSA publication by clicking here

* Source:  Medicare Premiums:  Rules For Higher-Income Beneficiaries; Social Security Administration 2017;