Everything You Ever Wanted to Know About Medicare

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Everything You Ever Wanted to Know About Medicare

By Kathleen Downes

This is a very comprehensive post about Medicare: the parts of Medicare, what it covers, what the parts of Medicare mean, who is eligible, how to get Medicare if you are disabled, how to purchase plans in Medicare, and much more. This might be easier to read as a download. You can download this by clicking here:

What is Medicare?

Medicare is a U.S. government-run health insurance program for qualified workers age 65+ and some people with disabilities. It is run by the federal government or the government for our whole country. 

The money that pays for Medicare comes from 2 trust funds held by the U.S. government (Medicare 2021). 

The first fund, the Hospital Insurance fund, pays for Part A costs such as inpatient hospital stays, limited home health services, and limited stays in skilled nursing facilities. I will talk more about the parts of Medicaid later (Medicare 2021). 

Where Does the Money for Medicare Come From?

The money from the hospital insurance fund comes from:

• Payroll taxes
• Income taxes on Social Security retirement benefits
• Interest on trust fund investments
• Premiums, or monthly payments, from people who don’t get Part A for free (2021).

The second trust fund is called the Supplementary Medical Insurance fund. It pays for Part B costs such as outpatient care (services that are not overnight hospital care). It also pays for Part D care (prescription medicine). 

The money for this fund comes from:

• monthly premiums 
• interest earned on trust fund investments. 

Typically, everyone enrolled in Part B and/or D pays a premium (Medicare 2021).

What are the Parts of Medicare?

Medicare has 4 parts, each represented by letters.

Part A: Inpatient hospital care and some limited home health care, limited nursing home care

Part B: Outpatient care such as doctor’s visits and some limited home health care

Part C: Is also called an advantage plan (MA plan), which allows the government to contract with a private company to deliver Medicare benefits. 

Part D: Prescription drug coverage (Bunis 2021).

You can receive Part D benefits in two ways:

• A separate drug plan
• An MA “Part C” plan that includes drug coverage 

You have to have Parts A & B to join an MA plan or a separate drug plan. Not all MA plans cover prescription medications (Medicare 2021b). 

What is Meant by Part C Medicare Advantage vs. Original Medicare?

Original Medicare is the traditional way to receive benefits. The government pays a provider directly for services in Parts A and B (Center for Medicare Rights 2021). Most Americans use Original Medicare and most providers accept it. 

The other choice is to package benefits together with a Medicare Advantage Plan (MA) which is also called Part C. 

You can think of an MA plan (Part C) as a way to combine the parts of Medicare into one plan (Bunis 2020).

Those in an advantage plan still receive the services in Part A & Part B, but may be offered additional services not covered by regular Medicare such as dental benefits (Center for Medicare Rights 2021).

You can also get Part D, drug coverage, through an MA plan, or as a separate benefit (Center for Medicare Rights 2021). Not all Medicare Advantage plans cover drugs. 

Most Medicare Advantage plans do have drug coverage, but you might be allowed to join a standalone drug plan if your MA plan does not cover drugs. You cannot join a standalone drug plan if your MA plan already offers prescription coverage (EHealth 2021).

If you have an MA plan, you still pay a premium for Part B (and Part A if you don’t get it for free). 

 The MA plans have to place a limit on out-of-pocket costs for A & B (Center for Medicare Rights 2021).

What To Look For in Medicare Advantage Plans

Every Medicare Advantage Plan is Different

If you are going to buy an Medicare Advantage plan, check out:

• What providers participate
• What coverage rules apply
• Cost-sharing rules
• Any additional premiums (Center for Medicare Rights 2021).

You can learn more about Original Medicare vs. Part C here: The Choice Between Original Medicare and Part C

Here is a chart that compares Original Medicare and Part C Original vs. Part C Chart

Find out when you can sign up for an MA plan or go back to Original Medicare here: Part C Enrollment

Who Can Get Medicare?

• People age 65+ (and in some cases, their spouses)
• Some workers with disabilities who are receiving Social Security Disability Insurance (SSDI) because they can’t work in a way the government calls substantial 
• Some adult disabled “dependents” of a qualified worker who is 65+, on SSDI, or deceased (Bunis 2020)

Eligibility for Medicare for People 65+ (Non-Disabled)

• Must be a U.S. citizen or legal resident for 5+ years (Bunis 2020)
• You can get Medicare at age 65 regardless of income (how much money you make)

How to Get Medicare Part A Without Paying Monthly Fees

You can get Medicare Part A without paying a monthly fee (premium) if you:

• Worked at least 40 quarters or 10 years in a U.S. job where you paid Social Security taxes
• Are eligible for railroad retirement benefits
• Have a spouse who gets premium free Part A
• Worked at a government job where you paid Medicare payroll taxes (Center for Medicare Rights 2021b).

If you do not meet any of these criteria, you can get Part A but will have to pay for it. 

• If you or your spouse worked 30-39 quarters (7.5-about 10 years), Part A costs $259 a month in 2021 (Medicare 2021b).
• If you or your spouse worked fewer than 30 quarters, Part A costs $471 a month in 2021. (Bunis 2021).

You can read more about qualifying for premium free Part A or buying it here: Part A Premium Free or Monthly Premium

If you can’t afford your premium, you may qualify for Medicare Savings programs to help you. You can read about those here: 4 Kinds of Medicare Savings Programs

What About Part B premiums for those 65+?

All non-disabled Medicare enrollees regardless of how long they have worked will pay a premium for Part B.

The premium varies based on how much money you make for the year and can change each year.

The most common premium is $148.50 per month in 2021 (Centers for Medicare and Medicaid Services 2020).

How do people 65+ enroll in Medicare and when?

Eligible for Premium Free Part A & Receiving Retirement Benefits Too- Automatic Sign Up

If you are turning 65 and receiving Social Security retirement or railroad benefits at that time, you will be automatically enrolled in Medicare Part A and Part B (Center for Medicare Rights 2021b). 

Three months before the month of your 65^th birthday, when coverage begins, you will get a red, white, and blue Medicare card in the mail from either Social Security or the Railroad Retirement Board (Center for Medicare Rights 2021b).

If you are receiving Part A without a premium, you don’t have to say yes to Part B. Some people don’t want Part B right away because it has a premium.

What to Do If You Don’t Want Medicare Part B

If you decide you don’t want Part B, there are directions about what to do. 

You can read about those directions here: What If I Don’t Want Part B?

 You should only delay signing up for Part B if you are still covered by job-based insurance through your job or your spouse’s job (2021b).

Further, you should only delay signing up for Part B if your job-based insurance pays bills before Medicare. This means your job- based insurance is the primary payer (2021b). 

Otherwise, you could get a lot of medical bills.

Job-based insurance is typically the primary payer for people 65+ if your workplace has 20+ workers (Center for Medicare Rights 2021d). 

How Does Medicare Work with Job Based Insurance?

You can read more about how Medicare works with job -based insurance here: Medicare & Other Insurance

If you have job-based insurance and delay signing up for Part B, you will likely get a special enrollment period (SEP) if you want to sign up for Part B when the insurance through the job ends (2021e).

There is no penalty if you sign up for Part B during the SEP: within 8 months of the job- based insurance ending (2021e).

The coverage starts the month after you enroll.

*If you anticipate losing your job-based coverage, sign up for Medicare the month before that coverage ends* (2021e)

If you do not have job-based insurance and delay enrolling in Part B, it will cost more if you want to sign up later because of a penalty payment (2021c).

Further, if you do not sign up for Part B automatically in the months near your birthday or during an SEP following the loss of job- based insurance, you have to wait until the general enrollment period between January 31 and March 1 with coverage starting July 1. You will have both a coverage gap and a penalty payment for joining Part B late (Center for Medicare Rights 2021e).

**If you are younger than your spouse and will be getting Medicare based on their record, you will not receive Medicare until you yourself are 65**

For example: Jen is 62 and will qualify for Medicare based on her husband Bill’s record. Bill is 65 and will get Medicare now, but Jen won’t until she turns 65. 

Age 65, Eligible for Premium Free Part A and Not Receiving Retirement Benefits- You Have to Actively Sign Up for Medicare

• Call Social Security at 800-772-1213
• Write a letter to Social Security
• Visit a Social Security office
• Go to www.ssa.gov 

If you are going to get benefits through the railroad board, call the Railroad Retirement Board office (2021c)

What Are the 3 Enrollment Periods for Medicare?

There are three enrollment periods in which you can sign up for Medicare Parts A & B if you have to actively enroll.

1. Your first chance to enroll in Medicare Parts A & B is the Initial Enrollment period or IEP. It is the 3 months before you turn 65, the three months after you turn 65, and the month of your birthday (Center for Medicare Rights 2021c). 

You can read more about your IEP and when your coverage would start if you enroll during the IEP here: Medicare IEP

**You can sign up for Part A at any time after your IEP without a financial penalty. The rules are different with Part B (Medicare 2018)**

Like the last group, some don’t sign up for Part B right away because it has a premium. 

Again, if you decide you don’t want Part B, there are directions about what to do. 

You can read about those directions here: What If I Don’t Want Part B?

**Get ready for me to repeat myself, because the information for this group is the same**

You should only delay signing up for Part B if you are still covered by job-based insurance through your job or your spouse’s job (2021c).

Further, you should only delay signing up for Part if your job-based insurance pays bills before Medicare. This means your job- based insurance is the primary payer (2021c). 

Otherwise, you could get a lot of medical bills.

Job-based insurance is typically the primary payer for people 65+ if your workplace has 20+ workers (Center for Medicare Rights 2021d). 

You can read more about how Medicare works with job -based insurance here: Medicare & Other Insurance

1. If your job is lost or your job-based insurance ends, you may be eligible for a special enrollment period (SEP). You can enroll without a penalty for signing up outside of the “regular time period” if you do so within 8 months of your coverage ending, your spouse’s coverage ending, or your retirement from the job (2021e). 

The coverage starts the month after you enroll.

*If you anticipate losing your job-based coverage, sign up for Medicare the month before that coverage ends* (2021e)

1. Finally, if you did not enroll during the IEP and do not qualify for an SEP you have to sign up during the General Enrollment Period (GEP) (2021e).

The GEP is January 1 through March 31, with coverage beginning in July. This could cause a gap in coverage (2021e). You can read more here: GEP

**If you are younger than your spouse and will be getting Medicare based on their record, you will not receive Medicare until you yourself are 65**

For example: Jen is 62 and will qualify for Medicare based on her husband Bill’s record. Bill is 65 and will get Medicare now, but Jen won’t until she turns 65.

65 and Not Eligible for Premium Free Part A- Buying Part A & Enrolling in Part B

Even if you or your spouse have not worked long enough to get Part A premium-free, if you are a citizen or legal resident for 5+ years, you can buy Part A (Bunis 2021).

The cost depends on how long you worked. One work quarter or credit in 2021 is $1470. The most you can earn each year is 4 credits (2021).

Costs are lower for those who have worked 30-39 quarters ($256 monthly). They are higher for those who have worked fewer than 30 quarters ($471 monthly)

 (Bunis 2021).

You can enroll in Part B without buying Part A. But if you buy Part A, you have to enroll in Part B (Bunis 2021).

Like all others, you will pay a premium each month for Part B.

If you have to buy Part A, you need to file an application with Social Security. 

• Call Social Security at 800-772-1213
• Write a letter to Social Security
• Visit a Social Security office
• Go to www.ssa.gov 

You can either sign up during your initial Enrollment period, a special enrollment period, or the general enrollment period.

Like those in premium-free categories, the initial enrollment period is the 3 months before your 65^th birthday, the month of the birthday, and the 3 months after. The month you enroll will affect when your coverage starts (Medicare 2018). 

Similarly, you may also be eligible for a special enrollment period if you or a spouse have job-based coverage (Medicare 2018). When you sign up during an SEP, your coverage begins the next month (2018).

If you anticipate job- based insurance ending, sign up the month before it ends (The Center for Medicare Rights 2021e).

Your other choice is to buy Part A and enroll in Part B during the general enrollment between January 1 and March 31. Your coverage will start in July. There could be a coverage gap if you don’t have job-based insurance during this time. (2021e)

If you buy Part A and enroll in Part B, during general enrollment, you will likely pay a penalty fee for both Part A and B.

 It will cost more than signing up during an IEP or SEP. You can read more about this here: Part A Penalty for Those Who Buy Part A Late

Remember, people who buy Part A have to sign up for Part B.

If you can’t afford your premiums, a state program may help you. 

You can read about those here: 4 Kinds of Medicare Savings Programs

If you do not have enough work history for premium- free Part A and are buying it, you can work more and earn the credits to eventually get Part A with no premium (Healthline 2021)

Getting Medicare If You Are Disabled

Medicare with Social Security Disability Insurance (SSDI) Under Age 65

How do people with disabilities get (SSDI)?

In this context, we mean people who are “disabled” by the Social Security definition for Social Security Disability Insurance benefits or SSDI. You can be medically disabled, but not meet the government criteria of disability. 

To get SSDI, your disability has to prevent you from working in what the government counts as a substantial way. In 2021, that means you didn’t earn more than an average of $1310 monthly for the year (Social Security Administration 2021).

It has to be severe by government standards and expected to last 12 months or result in death (2021).

Typically, people who have been receiving SSDI for 24 months (2 years) will be automatically enrolled in Parts A and B at the start of the 25th month (Center for Medicare Rights 2021f). 

These 2 years before Medicare starts are called the Medicare waiting period.

People with Lou Gehrig’s Disease/ALS or End Stage Renal Disease do not have the same waiting period (Center for Medicare Rights 2021f). 

You can read about the special rules for people with these conditions here: ALS or Kidney Disease and SSDI

The waiting period makes life difficult for folks not yet on Medicare. They might not have other insurance while they wait. 

Those in the waiting period may be able to apply for other coverage through the Affordable Care Act (Obamacare) Marketplace or pay for COBRA, a program that lets them keep their job-based insurance for a time after they can no longer work. You can read about those choices here: Waiting Period Coverage

But the costs of these options may be unaffordable for someone on SSDI.

Some people who have little or no income (earnings) or assets (savings, property etc.) may be able to get Medicaid during this time (put link back to my article about Medicaid).

 However, for people with very complex medical needs, Medicaid alone may not cover all the things they need sufficiently (Example: a wheelchair with the right type of supports, a certain doctor for a rare condition, or the right type and number of catheters)

 In the future, I’d like to see the waiting period eliminated. In my view, someone disabled enough to get SSDI shouldn’t have to wait two years for Medicare!

In addition to meeting the definition of disabled under the law, you need to have the right number of work “quarters” to get SSDI checks. Your number of quarters depends on the age that you became disabled. You can read more about how to get SSDI and how the law defines disability here: SSDI 

Like those who qualify by age, those who get Medicare through SSDI will receive a package in the mail 3 months before Medicare starts (Center for Medicare Rights 2021f). 

SSDI recipients, as I said before, are automatically signed up for Part A and Part B. You don’t have to keep Part B but you should in most cases—we’ll talk more about that later.

Also like the age-related recipients, your Part A will be premium free if you or your spouse worked 40 quarters (about 10 years).

If you or your spouse worked fewer than 30 quarters, you will pay $471 per month. If you or your spouse worked 30-39 quarters, you will pay $256 a month in 2021 (Disability Secrets 2021).

To keep SSDI, you need to have Part A once you are eligible. However, you can choose to opt out of Part B when you are first eligible.

The Part B premium will be taken out of your benefit check automatically unless you decide you don’t want Part B (2021f). 

Once again…

If you decide you don’t want Part B, there are directions about what to do. 

You can read about those directions here: What If I Don’t Want Part B?

You should only decline Part B if you have other job-based insurance from you or a spouse and it is the primary payer…meaning it pays bills before Medicare.

For folks who are disabled, job insurance pays first if the job has 100+ employees. 

 Medicare pays first If your job has fewer than 100 employees.

 If you opt out of Part B in a situation where Medicare is the first payer, you will have a lot of costs out of pocket (Center for Medicare Rights 2021g).

If your job- based insurance is the second payer, you do not get an SEP and should accept Part B as soon as you are eligible to avoid high costs. You can read more: SSDI Recipients and Part B

If that job- based insurance is going to end and it is the primary payer, you have a special enrollment period to sign up for Part B without financial penalty. That SEP lasts 8 months after coverage ends (2021g).

If you declined Part B when you were enrolled automatically, you have an initial enrollment period or IEP in which you can join Part B if you change your mind. Like an IEP for age-related recipients, the time period is 7 months long—the 3 months before your 25^th month on SSDI, the 25^th month on SSDI, and the 3 months after (United Healthcare 2021). 

The month you enroll within your IEP (For example: The 1^st month vs. the 3^rd month of IEP) will affect your Part B start date, just like those who qualify based on age.

The chart would look something like this:

If you enroll in Part B during the….

25^th month you receive SSDI- it starts 1 month after

1 month after the 25^th month you receive SSDI- it starts 2 months after

2 months after the 25^th month you receive SSDI- it starts 3 months after

2 months after the 25^th month you receive SSDI- it starts 3 months after

If you opt out of Part B during the IEP and decide you want it later… but don’t have a special enrollment period, you will have to wait until general enrollment (GEP) to sign up. The GEP is the time between January 1 and March 31 (Center for Medicare Rights 2021e)

You will pay a financial penalty if you wait until the GEP and your coverage won’t start until July.

**If you are eligible for Medicaid as well as Medicare, you should take Part B** 

This is the case for some low-income Medicare recipients.

Why should you take Part B in this situation? 

Because Medicaid is always the “payer of last resort.” If you opt out of Part B and also have Medicaid, you will get a lot of bills (2021g). Medicaid may be able to help you pay Medicare premiums.

 4 Kinds of Medicare Savings Programs

So, Kathleen…

What happens when an SSDI recipient Turns 65?

When an SSDI recipient under 65 turns 65, they now become entitled to Medicare based on age not disability (AARP Medicare Plans 2021).

If you chose not to take Part B when you were under 65 on SSDI, you will be automatically enrolled in Part B 3 months before your 65^th birthday (AARP Medicare Plans 2021).

The package with the card will arrive in the mail. 

You will essentially have a second IEP in which to decide (again) if you want to keep Part B. The month of your 65^th birthday, the 3 months before, and the 3 after. 

During that time, if you said “no thanks” and change your mind, you can sign up without extra costs.

After that, there’s that general enrollment again!

The GEP is the time between January 1 and March 31 (Center for Medicare Rights 2021e)

You will pay a financial penalty if you wait until the GEP and your coverage won’t start until July.

Plot twist! What if a disabled worker receiving Medicare through SSDI wants to try going back to work? Can they keep Medicare?

Yes. The cash benefit of the SSDI check will eventually end if you are working substantially after a 9 -month trial work period (TWP). You can read about that here: Trial Work Period

But…

As long as the person remains medically disabled, they can keep Medicare Part A premium- free for 93 months (7 years, 9 months) after their trial work period. Added together, that is about 8 and a half years (Social Security Administration 2021b).

If they have chosen to enroll in Part B, they will continue to pay premiums as usual should they want to keep it (2021b).

Of course, Medicare Part A is only premium-free for those who worked at least 40 quarters (or has a spouse that has).

After premium-free Part A coverage ends, a working person who remains medically disabled can purchase Part A if they want.

You will get a letter about how to purchase Medicare Part A if you want it at the end of the premium- free period. You can also choose to buy Part B at this time if you want.

In this situation, you cannot buy Part B unless you buy Part A (Social Security Administration 2021b).

You can read more here: Working Disabled Extended Medicare Coverage

                                              Medicare for Working Disabled

Medicaid or a Medicare Savings Program might be able to help you with the premiums for Medicare.

4 Kinds of Medicare Savings Programs

Disabled Adult “Dependents”- Getting Medicare Through Disabled Adult Child Benefits (DAC)

If any of you are still awake, there’s another way to access Medicare as a person with a disability. 

If you are eligible for Disabled Adult Child (DAC) benefits, you can get Medicare after 24 months of receiving these checks.  

They are also sometimes called Childhood Disability Benefits (CDB). 

Medicare should begin on the 25^th month you receive a DAC benefit (Special Needs Alliance 2021).

If the parent whose work record the DAC-er uses receives premium-free Medicare Part A, the DAC-er will too.

They will be enrolled in Part B automatically like others on SSDI, unless they opt out. Part B costs a monthly premium.

If you decide you don’t want Part B, there are directions about what to do. 

You can read about those directions here: What If I Don’t Want Part B?

If you are not covered by a parent/guardian’s job-based insurance as a primary payer, you should take Part B.

For folks who are disabled, job insurance pays first if the job has 100+ employees. 

 Medicare pays first If your job has fewer than 100 employees.

 If you opt out of Part B in a situation where Medicare is the first payer, you will have a lot of costs out of pocket (Center for Medicare Rights 2021g).

**If you are eligible for Medicaid as well as Medicare, you should take Part B** This is the case for some low- income Medicare recipients.

Why should you take Part B in this situation? 

Because Medicaid is always the “payer of last resort.” If you opt out of Part B and also have Medicaid, you will get a lot of bills (2021g). Medicaid may be able to help you pay Medicare premiums.

So, what exactly is a DAC benefit?

A DAC benefit is an SSDI cash payment to a disabled beneficiary based on another’s work record.

To qualify a person must be the “dependent” of a worker considered insured by Social Security rules.

A “dependent” may be eligible for DAC if their parent or other legal guardian is/was insured by Social Security and the parent/guardian is:

• Deceased
• Receiving retirement benefits through Social Security 
• Receiving SSDI

The “dependent” must be:

• Age 18 or older
• Have a disability that started before age 22
• Unmarried 

Exception: DAC recipients can marry another person receiving DAC benefits and their full check will be protected* See: Marriage & Benefits

• Disabled by the same definition used by Social Security—you can read more about that here: Definition of Disability 

                    (Special Needs Alliance 2021).

Just like with SSDI, the person has to be considered unable to work gainfully (over about $1310 a month in 2021). The amount is slightly higher if you are blind. (Social Security Administration 2021sga).

 If you worked any length of time over substantial gainful activity (SGA) before applying for DAC, it is unlikely that you will qualify as DAC eligible on a parent/guardian’s work record. 

You can read more about this here: SGA DAC

When a parent/guardian with a disabled “dependent” goes online to apply for retirement/ disability benefits through Social Security, there should be a question asking about if there are any adult disabled children on the work record. If you click yes, they will follow up.

If a disabled adult child has already been found to be “disabled” for Supplemental Security Income (SSI), the process should be smoother to be found disabled for DAC because of rules called collateral estoppel. You can read about them here: CE Rules

A DAC recipient is entitled to cash benefits as soon as they are found eligible for SSDI via the DAC benefit. Other SSDI recipients have to wait 5 months after their approval date (Laurence 2021).

The amount of the DAC cash benefit will depend on the parent or guardian’s earnings history. You can read more about the money calculation here: DAC calculation

Although a non-disabled retiree parent cannot receive Medicare until they turn 65, they can elect to receive their cash retirement check as early as 62. 

Some folks may consider this to get their adult disabled child on Medicare sooner (the sooner parent receives retirement checks, the sooner the “child” can get DAC and start the 2- year countdown to Medicare. 

However, taking a retirement check early reduces its value and this is not doable for many families. You can read more about the impact of drawing retirement early here: Benefits at Age 62

Families used to “file and suspend,” meaning the parent could formally file for retirement early, then request the cash benefit be suspended while they continued to earn more work quarters. Yet, the dependent child would begin to receive DAC checks as soon as the parent filed despite that parent still actively working (Varnet 2015).

Hence, the strategy started the “clock” earlier for the child’s benefit and eventual Medicare eligibility while allowing the parent to earn more work quarters and increase the value of his or her eventual retirement check (Varnet 2015).

File and suspend was very helpful for families with parents who needed to keep earning work quarters but wanted to get their adult children on Medicare sooner (2015).

Unfortunately, “file and suspend” is no longer allowed. You can read about this here: No More File & Suspend

Thus, many folks who are entitled to DAC-related Medicare can now face a unique dilemma. 

If their parent retires, employer-based insurance may no longer be available to the dependent through a parent’s job.  Yet Medicare won’t be available until 2 years after DAC checks begin. 

Like others in the waiting period, the DAC recipient may well be entitled to Medicaid during this period. 

However, Medicaid alone may not be sufficient to cover the needs of people who are medically complex.

 Once again, the waiting period is problematic. I plan to one day write to my representatives and suggest eliminating it. 

If a worker has filed for retirement benefits “early” but is still earning money, the retirement check amount received for that month will be affected by the earnings test until the retiree reaches “full retirement age (FRA).” 

A person’s FRA depends on year of birth. You can see how the FRA is determined here: FRA and the Earnings Test

In 2021, any non-disabled worker who filed early for retiree benefits, is below FRA, and is earning money will have the retirement check reduced $1 for every $2 above the threshold of $18,960 in earnings per year (Congressional Research Service 2021). FRA and the Earnings Test

In the year of FRA, it is reduced $1 for every $3 over $50,520 in annual earnings until the month FRA is attained (2021). If enough money is earned during a period in which a person has filed for retiree benefits, that check could be reduced to $0. 

After the month of FRA is reached the earnings test no longer applies (Social Security Administration 2013)

**It is important to note that currently, if a dependent receives DAC benefits on a parent’s work record, the parent must be actively receiving retirement/disability checks for a DAC recipient to receive the DAC check**

Thus, if a retired person has a dependent associated with their record and is subject to the earnings test, any earnings over the threshold could affect the dependent’s benefits too (American Association of Retired People 2020). 

Hence, those who file early but continue to earn money must be aware of the impact of those earnings on the benefits of adult disabled children or spouses!

Without file and suspend, there is little strategic advantage for a retiree below FRA to file for benefits early if they have a DAC dependent and must continue to earn significant money.

 If the retiree’s retirement check is suspended due to earnings (before FRA), the DAC recipient’s check will be too. 

Months in which the DAC does not receive the check do not count towards the 24 needed for Medicare. 

What if I am already receiving SSI when I become eligible for DAC through my parent?

If your parent is a higher earner and the DAC check you receive through them is higher than the maximum SSI benefit, your SSI benefit will be replaced by the DAC check alone and you no longer have to follow SSI rules (How to Get On blog 2021), just SSDI rules. Plus, after 2 years on DAC, you will get Medicare. This is nice because SSDI rules are more flexible than those for SSI.

If your parent is a lower earner, you will have some combination of SSI & DAC benefits (2021) cash-wise, plus eventual access to Medicare.

If another dependent of the retiree is also eligible for benefits on the retiree’s work record, the DAC recipient’s check may be lower because of the family maximum payment amount. 

If you also rely on Medicaid (and became eligible via SSI), the money from a disabled adult child benefit does not count toward Medicaid income limits and you will remain eligible for Medicaid even if the DAC check puts you over regular Medicaid limits (How to Get On Blog 2021).

**However, income from work or other sources will affect Medicaid** 

If you require both Medicaid & Medicare, keep this in mind (2021). 

If you are eligible for Medicaid through another route besides SSI such as Medicaid Buy In, your income rules may be more flexible.

You can read an excellent article about this here: How to Get On

What if a DAC recipient wants to try working? Can they keep Medicare?

 The rules that apply to other SSDI recipients apply. 

Yes. The cash benefit of the SSDI check will eventually end if you are working substantially after a 9 -month trial work period (TWP). You can read about that here: Trial Work Period

As long as the person remains medically disabled, they can keep Medicare Part A premium- free for 93 months (7 years, 9 months) after their trial work period. Added together, that is about 8 and a half years (Social Security Administration 2021b).

If they have chosen to enroll in Part B, they will continue to pay premiums as usual should they want to keep it (2021b).

Of course, Medicare Part A is only premium-free for those who worked at least 40 quarters (or in this case, the parent has).

After premium-free Part A coverage ends, a working person who remains medically disabled can purchase Part A if they want.

You will get a letter about how to purchase Medicare Part A if you want it at the end of the premium- free period. You can also choose to buy Part B at this time if you want.

In this situation, you cannot buy Part B unless you buy Part A (Social Security Administration 2021b).

You can read more here: Working Disabled Extended Medicare Coverage

                                              Medicare for Working Disabled

Medicaid or a Medicare Savings Program might be able to help you with the premiums for Medicare.

4 Kinds of Medicare Savings Programs

What’s the scoop on Medicare and long-term care?

Oh, poop. 

Most people don’t realize Medicare doesn’t cover much long-term care. Medicare covers VERY limited nursing home services—and only if the stay is related to a recent hospitalization (Elder Law 2020).

Limited home care tasks are covered if you are homebound (ex: bandage changes)

But ongoing personal care/ assistance with activities of daily living is not covered by Medicare.

Only Medicaid covers ongoing home care and nursing care.

*balloon deflates*

You can read more here: Limited Nursing Home Stays

Medicare Limited Home Care

This makes it really hard for people who need personal care because money limits are really strict.

What other costs are part of Medicare?

Even if your Part A is “premium free,” there are other costs to consider. Medicare as a whole is not a free program.

The Terms to Know in Medicare

Here are some terms to know. 

A deductible is the amount you pay yourself before insurance starts to pay for your care (Healthcare.gov 2021)

A premium is the amount you pay each month for your health insurance (2021).

A copay is a fixed dollar amount you pay for covered care after you have reached your deductible. For example, a person may pay $50 per medical visit after the deductible (2021)

Coinsurance is the percentage of costs you have to pay out of pocket after reaching the deductible. For example, if you owe $100 and have a 20% copay, you have to pay $20 (2021).

Part A

For most folks (those who have worked 40 quarters or 10 years), Part A has no monthly premium (Medicare 2021d).

Part A refers to inpatient hospital care and limited home health/nursing facility care.

For those who pay for Part A, the premium is $471/month if you (or your spouse) worked less than 30 quarters. For people with more than 30 quarters, it is $259 monthly (2021d).

Part A also has a deductible, an out of pocket amount that you owe for inpatient hospital care before Medicare kicks in.

After you reach the deductible, there may or may not be a coinsurance payment depending on how long your stay is (2021d).

You can check out detailed Part A costs here: Part A costs

Part B

Part B refers to outpatient costs such as doctor’s visits. You may remember that everyone pays a Part B premium if they want that coverage. 

A “standard” premium is around $148.50 monthly this year for those on Original Medicare. It may be more if you have higher income. 

Before Part B will pay for your care, you will have to spend $203 out of pocket (deductible). 

After you reach the deductible, you typically pay 20% coinsurance in covered costs (Medicare 2021d).

You can read more detailed information here: Part B costs

Part C (Medicare Advantage)

Part C is not so much a “part” of Medicare, but instead a way of coordinating services. It is optional and serves those who don’t want to use Original Medicare (Center for Medicare Rights 2021).

From earlier in our discussion: 

Original Medicare is the traditional way to receive benefits. The government pays a provider directly for services in Parts A and B (Center for Medicare Rights 2021). Most Americans use Original Medicare and most providers accept it. 

The other choice is to package benefits together with a Medicare Advantage Plan (MA) which is also called Part C. 

You can think of an MA plan (Part C) as a way to combine the parts of Medicare into one plan (Bunis 2020).

Those in an advantage plan still receive the services in Part A & Part B, but may be offered additional services not covered by regular Medicare such as dental benefits (Center for Medicare Rights 2021).

Some Part C plans have drug coverage included. 

If not, you can buy a separate prescription drug plan, also called Part D.

If your Part C covers prescriptions, you cannot also buy a Part D plan (EHealth 2021).

Every Part C plan is different and if you want one, look at:

• Participating providers
• Coverage rules
• Cost sharing rules
• Additional premiums 

(Center for Medicare Rights 2021).

Even if you are enrolled in a Part C plan, you will still also pay a premium for Part B. 

You will pay a premium for Part A only if you have not worked enough to get Part A premium- free.

You have to have Parts A & B to join an MA plan (Medicare 2021b). 

You can find detailed info about Part C costs here: Part C costs

It is a personal decision to join an MA plan. Some people would rather use Original Medicare. 

Here is an article discussing pros and cons: Original Medicare or Part C?

You can join a Part C or MA plan during your initial enrollment period. Otherwise, you can join, switch, or drop a plan between October 15-December 7 each year. 

If the request is received by December 7, the plan will start January 1 (Medicare 2021c).

If you have a Medicare Advantage plan (Part C) and you want a different one, you can change it from January 1- March 31 each year (2021c)

If you want to switch from an MA plan to Original Medicare with a Part D plan, you can do that too from January 1-March 31 (2021c).

Part D

Part D represents coverage for prescription drugs. To buy a Part D plan, you have to be enrolled in Parts A and B. Remember, if you have a Part C plan that includes drug coverage, you can’t buy Part D (Medicare 2021d).

Part D plans vary in cost and the monthly premium depends on how much money you earn. The deductible, coinsurance, and copays depend on the plan. 

You can read more about Part D here: Part D costs

If you decide you want a Part D plan later (63+ days after initial eligibility period) and you didn’t have other prescription coverage through an MA plan or employer, you will likely pay a late enrollment penalty (Medicare 2021d).

So, it’s important to plan ahead of time regarding these costs. 

But wait… there’s one more player in the game. Meet Medigap!

As you may imagine, Medicare costs can get expensive! Medigap plans are supplementary (extra) insurance plans sold privately to help you cover costs not covered by Original Medicare (Example: deductible, coinsurance).

In 2021, there are about 10 Medigap plans, labeled by letters. What is available may vary based on where you live (Center for Medicare Rights 2021h).

**You cannot buy a Medigap plan if you have Part C (Medicare Advantage)**

You can read more about Medigap and how to choose a plan here: Medigap

It is a personal choice between Medigap and Medicare Advantage.

When comparing the two, here are things to think about:

Medigap (Supplement) and Medicare Advantage Plans

Medigap or Supplement

• Medigap plans are available, labeled A-N, federally standardized across companies
• Medigap is used in conjunction with “original Medicaid” to help pay for things Medicare does not such as deductibles/copays “fill the gap”
• If you want to buy Medigap plan, you should get it when you are younger/healthier to avoid rising costs or denial of coverage.
• People like predictability of Medigap

Advantage Plans

• Low or sometimes zero premiums
• Often cover A, B, and have drug plans.
• Sometimes called Part C
• However, limited network of providers
• Providers can drop out midyear (Siegel Bernard 2014)

Differences Between Medigap (Supplement) and Medicare Advantage

• Medigap supplements Original Medicare costs, while advantage plans are ways to get Medicare benefits
• People who travel are better off with a supplement- greater provider choice (2014).

There is no “correct” answer in the Part C vs. Medigap debate. It depends on your situation. You can read more information about this here: Is Medigap or Part C for me?

If you are “dual eligible” (you have Medicare & Medicaid), Medicaid may help you with Medicare premiums and you should pay little or nothing at providers who take both. 

As I mentioned before, other low-income Medicare beneficiaries may also be able to get help via Medicare Savings Programs. 

You can read about them here: 4 Kinds of Medicare Savings Programs

All right. That was a sh*tload of information and a lot of alphabet soup! I hope it was helpful. If you have any questions, drop a comment!

References

AARP Medicare Plans (2021). Medicare eligibility for those with a disability. Retrieved from https://www.aarpmedicareplans.com/medicare-articles/help-i-have-a-disability-and-i-want-to-enroll-in-medicare.html 

American Association of Retired People (2020). If I file for Social Security at 62 and continue to work, will my earnings affect family benefits for my spouse and children? Retrieved from https://www.aarp.org/retirement/social-security/questions-answers/social-security-family-benefits.html  

Bunis, D. (2020). Medicare eligibility, age, qualifications, and requirements. Retrieved from American Association of Retired People at https://www.aarp.org/health/medicare-insurance/info-04-2011/medicare-eligibility.html 

Bunis, D. (2021). Understanding Medicare’s options: Parts A, B, C, and D. Retrieved from American Association of Retired People at https://www.aarp.org/health/medicare-insurance/info-01-2011/understanding_medicare_the_plans.html 

Centers for Medicare & Medicaid Services (2020). 2021 Medicare Parts A & B premiums & deductibles. Retrieved from https://www.cms.gov/newsroom/fact-sheets/2021-medicare-parts-b-premiums-and-deductibles  

Center for Medicare Rights (2021). Differences between Original Medicare and Medicare Advantage. Retrieved from https://www.medicarerights.org/fliers/Medicare-Advantage/Differences-Between-OM-and-MA.pdf?nrd=1 

Center for Medicare Rights (2021e). Enrolling in Medicare with job-based insurance. Retrieved from https://www.medicareinteractive.org/get-answers/coordinating-medicare-with-other-types-of-insurance/job-based-insurance-and-medicare/enrolling-in-medicare-with-job-based-insurance 

Center for Medicare Rights (2021c). How to enroll in Medicare if you are turning 65 without Social Security or Railroad Retirement benefits. Retrieved from https://www.medicareinteractive.org/get-answers/medicare-health-coverage-options/original-medicare-enrollment/how-to-enroll-in-medicare-if-you-are-turning-65-without-social-security-or-railroad-retirement-benefits

Center for Medicare Rights (2021f). How to enroll in Medicare if you’re under 65 and have a disability. Retrieved from https://www.medicareinteractive.org/get-answers/medicare-health-coverage-options/original-medicare-enrollment/how-to-enroll-in-medicare-if-you-are-under-65-and-have-a-disability 

Center for Medicare Rights (2021d). Job based insurance when you turn 65. Retrieved from https://www.medicareinteractive.org/get-answers/coordinating-medicare-with-other-types-of-insurance/job-based-insurance-and-medicare/job-based-insurance-when-you-turn-65 

Center for Medicare Rights (2021b). Medicare eligibility for those 65+ Retrieved from https://www.medicareinteractive.org/get-answers/medicare-basics/medicare-eligibility-overview/medicare-eligibility-for-those-65

Center for Medicare Rights (2021g). Primary and secondary payers. Retrieved from https://www.medicareinteractive.org/get-answers/coordinating-medicare-with-other-types-of-insurance/coordination-of-benefits-basics/primary-and-secondary-payers

Center for Medicare Rights (2021h). Medigap overview. Retrieved from https://www.medicareinteractive.org/get-answers/medicare-health-coverage-options/supplemental-insurance-for-original-medicare-medigaps/medigap-overview

Congressional Research Service (2021). Social Security retirement earnings test: How earnings affect benefits. Retrieved from https://fas.org/sgp/crs/misc/R41242.pdf 

Disability Secrets (2021). Does someone on Social Security Disability get free Medicare? Retrieved from https://www.disabilitysecrets.com/resources/does-someone-social-security-disability-get-free-medicare 

EHealth (2021). Can I get a Medicare Advantage plan and a Medicare prescription plan at the same time? Retrieved from https://www.ehealthmedicare.com/faq/can-i-get-medicare-advantage-plan-medicare-prescription-drug-plan-at-same-time/

Healthcare.gov (2021). Glossary. Retrieved from https://www.healthcare.gov/glossary/ 

Healthline (2021). Can I get Medicare if I’ve never worked? Retrieved from https://www.healthline.com/health/medicare/can-you-get-medicare-if-you-have-never-worked

How to Get On (2021). How to navigate adult disabled child benefits. Retrieved from https://howtogeton.wordpress.com/how-to-get-adult-disabled-child-benefits/ 

Laurence, B.K. (2021). What is the five month waiting period for Social Security Disability? Retrieved from https://www.disabilitysecrets.com/five-month-waiting-period.html 

Medicare (2018). Enrolling in Medicare Part A & B. Retrieved from https://www.medicare.gov/Pubs/pdf/11036-Enrolling-Medicare-Part-A-Part-B.pdf

Medicare (2021). How is Medicare funded? Retrieved from https://www.medicare.gov/about-us/how-is-medicare-funded 

Medicare (2023). How to drop Part A & Part B. Retrieved from https://www.medicare.gov/basics/get-started-with-medicare/sign-up/ready-to-sign-up-for-part-a-part-b/how-to-drop-part-a-part-b 

Medicare (2021b). How to get prescription drug coverage. Retrieved from https://www.medicare.gov/drug-coverage-part-d/how-to-get-prescription-drug-coverage 

Medicare (2021c). Joining a health or drug plan. Retrieved from https://www.medicare.gov/sign-up-change-plans/joining-a-health-or-drug-plan 

Medicare (2021d). Medicare costs at a glance. Retrieved from https://www.medicare.gov/your-medicare-costs/medicare-costs-at-a-glance 

Siegel-Bernard, T. (2014). Beware of shifting options within Medicare plans. Retrieved from The New York Times at https://www.nytimes.com/2014/10/04/your-money/beware-of-shifting-options-within-medicare-plans.html?_r=1 

Social Security Administration (2021). Disability benefits: How you qualify. Retrieved from https://www.ssa.gov/benefits/disability/qualify.html 

Social Security Administration (2021b). Questions and answers on extended Medicare coverage for working people with disabilities. Retrieved from https://www.ssa.gov/disabilityresearch/wi/extended.htm 

Social Security Administration (2021sga). Substantial gainful activity. Retrieved from https://www.ssa.gov/oact/COLA/sga.html 

Social Security Administration (2013). RS 02501.021 The earnings test (ET). Retrieved from https://secure.ssa.gov/apps10/poms.nsf/lnx/0302501021#b5a 

Special Needs Alliance (2021). Planning for adult children with disabilities. Retrieved from https://www.specialneedsalliance.org/the-voice/planning-for-adult-children-with-disabilities-2/ 

United Healthcare (2021). Enrolling in Medicare if you’re on disability. Retrieved from https://www.medicaremadeclear.com/enroll/medicare-disability 

Varnet, V.M. (2015). Congress ends file and suspend strategy to maximize SSA benefits. Retrieved from https://www.fletchertilton.com/1C2194/assets/files/Documents/Congress%20Ends%20Apply%20&%20Suspend%20Strategy.pdf 

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