Medicare Planning: The Basics You Need to Know

If you or a loved one could soon be eligible for the U.S. national health insurance program commonly known as Medicare, it's important to understand how the program works. It's useful to know how to qualify and be familiar with the potential benefits you may receive, especially in connection with your financial and estate planning. While you should discuss the specifics of your circumstances with a knowledgeable Michigan Medicare attorney, some general information can provide you with the basics.

Medicare Eligibility and Enrollment

In general, eligibility for Medicare is determined by Social Security status, so individuals over age 65 or permanently disabled will qualify. In addition, Medicare benefits may extend to those who receive railroad retirement benefits or who are suffering from end stage renal disease. Unlike Medicaid, Medicare does not take into account your assets when determining eligibility or the amount of your benefit payment.

To enroll in Medicare, you must file an application three months before the first month that you'll be eligible for coverage; you also have until three months after your eligibility date to file. This time period is termed the "initial enrollment period." If you enroll properly during the initial enrollment period, your coverage will begin based on which of the relevant six months you filed your application. Applying for Social Security or railroad retirement benefits will automatically trigger enrollment in Medicare.

Medicare Part A versus Part B

Medicare coverage operates in similar fashion to private insurance companies: The program pays a portion, while other costs are paid by the beneficiary. There are two basic coverage components to the Medicare plan:

● Part A covers inpatient hospital treatment, hospice care, care at a nursing facility, and home health care. Financing for Part A is funded through the payroll taxes paid into Social Security by employers and employees.

● Part B benefits include medical care and the services of healthcare providers, medical equipment, and some outpatient care. Funds come from monthly premiums: Medicare beneficiaries share the costs through copayments and deductibles. Medicare Part B is voluntary, so you can decline coverage after automatic enrollment.

Failure to Properly Enroll

There are significant implications for failure to properly enroll in Medicare during the applicable enrollment period. You may be forced to pay a 10% annual surcharge on the Part B premium for each year you fail to enroll. Plus, failure to timely enroll can mean that you're ineligible for Medicare Part B coverage until the general enrollment period; the scenario results in a delay of coverage for Part B until July of the applicable year. Without coverage, you may be responsible for out-of-pocket medical expenses for up to several months.

As you can see, the regulations covering Medicare eligibility, enrollment, and coverage are quite complex. You risk losing coverage or paying hefty surcharges if you fail to enroll properly, so it's important to consult with an experienced Medicare lawyer if you're eligible now or soon will be. If you have questions about how Medicare works or want to know how the program impacts your financial or estate planning, please contact the Nawrocki Center for Elder Law, Special Needs & Disability Planning at our Brighton, MI office.

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