Medicare is a federal program that offers health insurance to American citizens and other eligible individuals. It is commonly called, “Original Medicare”.
Medicare Part A covers 80% of hospitalization and some other services that are not considered “doctor provided” (which isn’t very many).
You are entitled to Part A based solely on your age, and you do not have to sign up for it or pay premiums for it.
Medicare Part B
Medicare Part B covers doctors’ services and outpatient care. Part B pays for 80% of covered services, and you pay the other 20% up to a maximum out-of-pocket per year. You can also opt to add a Supplement plan to cover the remaining 20% that Parts A and B don’t cover.
You will pay premiums based on your income. If you apply for Social Security when you are eligible, your Part B premiums will be deducted from your Social Security checks.
You must sign up for Part B, and can do so either:
- When you turn 65
- At a later date if you plan to work past age 65 and have access to a group insurance plan
Even if you plan to work past age 65, it is a good idea to sit down with your insurance planner 3 months before your 65th birthday to talk about your options. Everyone’s situation is different, and there are a lot of options and financial tradeoffs to be considered carefully, because you may not be able to change your decision once you are out of your enrollment period.