For most Americans, reaching age 65 is a health insurance milestone. At that point, you’ve obtained Medicare eligibility and no longer need to purchase individual health insurance or obtain coverage from an employer.
Medicare Parts A and B
Original Medicare (as opposed to Medicare Advantage) includes Medicare Part A and Part B. Medicare Part A is generally called “hospital insurance” as it pays for inpatient care. Medicare Part B is generally called “medical insurance” as it covers outpatient care and other services that beneficiaries need outside of the hospital. Prescription drugs are not covered by Original Medicare, as they’re covered under the separate Medicare Part D prescription drug program. Although Medicare A and B provide very comprehensive coverage when used together, they generally pay 80% of beneficiaries’ costs, and there’s no cap on how high the 20% out-of-pocket exposure can be. For most people with Original Medicare, a Medigap supplement plan is a good idea, as it covers all or most of the 20% coinsurance that the beneficiary would otherwise have to pay out-of-pocket.
Medicare Eligibility and Premiums
As long as you or your spouse worked for at least 10 years and paid Medicare taxes during that time, you’ll get Medicare Part A with no premium (if you or your spouse didn’t work at least 10 years, you’ll have to pay for Medicare A; the cost is $407/month if the work history was less than 7.5 years, and $224/month if the work history was between 7.5 and 10 years). Medicare Part B has a premium for everyone – in 2015, it’s $104.90 for most enrollees (more if your income exceeds $85,000 or $170,000 for a married couple).
In order for Original Medicare eligibility, you must have been legally-present in the US for at least five years. For senior citizens who relocate to the US, that used to pose a significant obstacle, as prior to 2014, individual health insurance plans were unavailable for people who were 65 or older. But the ACA changed all of that. Private individual health plans are available regardless of age, and exchange subsidies are available to legally-present seniors who aren’t eligible for Medicare. If you’re at least 65 years old, once you’ve been legally-present in the US for at least five years, you’ll be eligible to buy into Medicare (premium-free Medicare A is only available if you’ve also got at least ten years of work history with Medicare payroll taxes paid).
Enrolling in Medicare
If you’re already receiving Social Security retirement benefits or Railroad Retirement benefits when you turn 65, you’ll be automatically enrolled in Medicare. You’ll receive your Medicare enrollment information in the mail about three months before your birthday, and coverage will begin on the first of the month that you turn 65. If you’re not already receiving retirement benefits when you turn 65, you’ll have a seven month window during which you can enroll in Medicare: the three months prior to the month you turn 65, the month you turn 65, and the three following months. As long as you enroll during the three months of Medicare eligibility prior to turning 65, your coverage will begin on the first of the month you turn 65. But if you enroll during the final four months of your open enrollment window, your start date will be delayed.
