Original Medicare Eligibility And Insurance Programs
The original Medicare is also referred to as Medicare Fee For Service.
Eligibility
Medicare is available to U.S. citizens and lawful residents:
- Age 65 or older
- Disabled
- With End-Stage Renal Disease (ESRD)
The Original Medicare covered services, administered by the federal government through the Center for Medicare and Medicaid Services (CMS), includes two related health insurance programs, Medicare Part A and Medicare Part B.
Medicare Part A
(Hospital Insurance) Helps Cover
- Inpatient care
- Skilled nursing facilities (not custodial or long-term care)
- Hospice care
- Home health care
Medicare Part B
(Medical Insurance) Helps Cover
- Doctor services
- Outpatient care
- Other medical services such as physical therapy, occupational therapy
- Home health care
- Medical supplies
"To qualify for home health care benefits under either Part A or Part B, a beneficiary must be confined to his/her home, under the care of a physician, and in need of skilled nursing services on an intermittent basis, physical therapy, or speech-language pathology services"
Original Medicare Premium And Cost Sharing
Part A Premium
Most people don’t pay a premium for Part A because they or a spouse, typically, already qualified for premium-free coverage through their payroll tax contribution over at least 40 quarters of coverage, while working.
Typically, you have free Part A if you are age 65 or more, and eligible for monthly Social Security or Railroad Retirement Board (RRB) retirement benefits.
If you don’t qualify for premium free Part A coverage, you can get Part A coverage by paying a monthly premium, provided you are a U.S. citizen or lawful permanent resident with 5 years of continuous residency in the U.S. prior to the month of filing an application for Medicare.
For 2024:
- If you paid Medicare taxes for less than 30 quarters of coverage, the projected standard Part A monthly premium is $509 ($506 in 2023).
- If you paid Medicare taxes for 30-39 quarters of coverage, the projected standard Part A monthly premium is $280 ($278 in 2023).
In addition to paying the Part A premium, in most cases you must also enroll in Part B and pay the Part B premium. You can buy Part B only, without Part A.
Part A Deductible and Coinsurance
For the calendar year 2024, for each benefit period, you have a projected deductible amount of $1,632 ($1,600 in 2023)and coinsurance as follows:
- Days 1-60: $0
- Days 61-90: $408 per day, or 25% of the inpatient deductible amount ($400 in 2023).
- Days 91 and beyond: $816 for each of the 60 lifetime reserve days after day 90 ($800 in 2023). This corresponds to 50% of the inpatient deductible.
- Beyond lifetime reserve days: all costs
For Skill Nursing Facility (SNF) stay you pay for each benefit period:
- Days 1–20: $0 for each.
- Days 21–100: $204 coinsurance per day ($200 in 2023)
- Days 101 and beyond: All costs.
A benefit period begins the first day an enrollee is admitted to a hospital or received extended care services, and it ends when the enrollee has not been an inpatient of a hospital or other facilities for 60 consecutive days
- There is no limit to the number of benefit periods you can have.
- For each new benefit period , you must pay the hospital insurance deductible and you are also subject to the coinsurance scheme.
Part B Premium
For CY 2024, the projected standard Part B monthly premium amount is $174.70 ($164.90 in 2023) or higher, depending on your Modified Adjusted Gross Income (MAGI) filed with IRS in 2022. This corresponds to about 25% of the full premium, and the remaining is paid by the federal government.
The premium then increases by income bracket to 35%, 50%, 65%, 80%, and 85% of the full premium. According to CMS, about 8% of the beneficiaries with Part B are affected by the premium adjustment known as Income Related Monthly Adjustment Amount (IRMAA).
Part B Deductible
The calendar year 2024 Part B deductible is $240 ($226 in 2023). After your deductible is met, you typically pay 20% of the Medicare-approved amount for most doctor services (including most doctor services while you’re a hospital inpatient), outpatient therapy, and durable medical equipment (DME)
Private Insurance Options
The following coverages are provided through private health insurance companies
- Medicare supplemental insurance also known as Medigap
- Medicare Advantage known as Part C, which combines Part A and Part B services in a single plan that can offer variety of extra benefits and premium options
- Medicare Prescription Drug Plans (PDP), also known as Part D.
Enrollment Options
You have the option to enroll in the Original Medicare or in a Medicare Advantage Plan. If you decide to enroll in the Original Medicare, you need to know:
- You are subject to the Original Medicare cost sharing described above
- There is no annual out of pocket limit
- You do not need a referral and you can see any provider who accepts Medicare patients, anywhere in the U.S. You do not need to have a PCP either, but most people would recommend having one.
- You are not covered for most dental care, eye exams, hearing aids, non-emergency services from opt-out providers, etc.. (see section 2 of Medicare and You)
- Original Medicare does not cover prescription drugs. Private insurers offer standalone Prescriptions Drugs Plans (PDP) as well as Medicare Advantage Plans with Prescription Drugs coverage (MAPD).
- You can buy a Medigap coverage to pick-up the Original Medicare cost sharing and make your annual out-of-pocket cost more predictable.
- You can enroll in other insurance plans, if eligible, such as Medicaid, employer plan, or union plan to reduce your payments.
Enrollment Periods
You Can Enroll In Medicare During The Following Periods:
- Your Initial Coverage Enrollment Period (ICEP). ICEP starts 3 months before you turn 65 and ends 3 months after. During this period, you can enroll in Original Medicare, known also as Medicare Fee For Service (FFS), or Medicare Advantage.
- The Annual Enrollment Period (AEP), from October 15th to December 7th, each year. During this period, you can switch from Medicare Advantage to Medicare FFS, switch MA Plans, or keep the plan you have.
- The Open Enrollment Period (OEP), from January 1st to March 31st, each year, if:
- You deferred your Part B or Premium-Part A enrollment, you could enroll in Medicare FFS or Medicare Advantage during this time and your coverage will start the following month.
- You enrolled in a MA plan during the AEP, you could change your plan once during the OEP.
The OEP is sometimes referred to by CMS as General Enrollment Period (GEP).
- Special Enrollment Periods (SEP). These are life-driven circumstances such as moving out of the service area, losing employer coverage, becoming eligible for Medicaid, being diagnosed with qualifying chronic conditions for enrollment in available specific Special Needs Plans (SNP), etc.
Late Enrollment Penalty
Part A Late Enrollment Penalty
If you are not eligible for premium-free Part A, and you do not buy it when you are first eligible, your monthly premium may go up 10%. You will have to pay the higher premium for twice the number of years you could have had Part A but did not sign up.
Part B Late Enrollment Penalty
If you do not sign up for Part B when you are first eligible, you may have to pay a late enrollment penalty for as long as you have Part B. Your monthly Part B premium may go up 10% for each 12 month-period that you could have had Part B but didn’t sign up. If you are allowed to sign up for Part B during a Special Enrollment Period, you usually don’t pay a late enrollment penalty.