What is Medicare?
Medicare and Medicaid are both government programs established in 1965. Except for their names, there is very little overlap. Medicare is health insurance for people 65 and older and people receiving Social Security Disability Insurance. Medicaid is health insurance for the impoverished, including, in Texas, people receiving Supplemental Security Income and long-term care, whether at home or in a nursing home.
Every American citizen becomes eligible for Medicare at age 65 and should apply in the six months before their 65th birthday.
There are two types of Medicare: traditional Medicare (also called original Medicare) and Medicare Advantage. Traditional Medicare is run by the federal government, through contractors. Medicare Advantage is run by insurance companies. Both include Medicare Part A, or hospital Medicare, and Medicare Part B, or outpatient Medicare (though people who do not yet qualify for Social Security retirement benefits must apply for Medicare Part B.) Medicare Part D, prescription drugs, must also be applied for by people choosing traditional Medicare but is part of Medicare Advantage. A separate “Medigap” or Medicare supplement policy can be purchased with traditional Medicare to cover copays, deductibles and certain other costs. These plans also have letter names (F, L, K, etc.) They are not available with Medicare Advantage plans. But those plans do have add-on vision and dental insurance and often include care managers, gyms and health-related incentive programs and activities.
Which Medicare policy is right for you?
Traditional Medicare has higher premiums but lower copays and deductibles – particularly if you buy a Medigap policy. Some studies have found that, on average, this is better financially for people over 70. But if you do not apply for traditional Medicare when you are first eligible for Medicare at 65 and develop health problems, you may not be able to get it later on. Your application can be denied.
There are many Medicare Advantage programs offered by different insurance companies. They vary by state and type. Some are health maintenance organizations (HMOs). Others are preferred physician organizations (PPOs).
Whether you are interested in traditional Medicare or Medicare Advantage, you can get help choosing the right policy for you. Start at www.medicare.gov/plan-compare/. Call your local Area Agency on Aging for a free in person consultation.
If you choose a Medicare Advantage plan, it will change. From year to year there will be changes in the drugs and dosages which are covered and in the physicians who are “in network.” Your circumstances and needs will also change. Between October 15th and December 7th you can change plans. If you move to a new area, you can change plans at any time.
Estate Planning attorney, Terry Garrett, is a member of the National Academy of Elder Law Attorneys and is active in the Texas and Austin Bar Associations. She graduated with honors from Cornell University. She was on the Dean’s List at Wharton Business School. She earned her J.D. at Columbia Law School, receiving the Parker Award and a Mellon Fellowship.
She assists families of people with special needs, people planning for the retirement years and people administering estates.