Tricia Neuman is a vice president of the Henry J. Kaiser Family Foundation and is the director of the Foundation's Medicare Policy Project.
Medicare is the national health insurance program covering Americans over 65 and those
who are totally and permanently disabled. Created in 1965 under President Lyndon B.
Johnson, today the program serves as many as 45 million Americans. Dr. Tricia Neuman,
an expert on Medicare policy issues, answered questions that can help you get a better
picture of the program.
How do people get Medicare?
People who work are taxed 1.45 percent. Once they have worked for ten years, they will qualify for Medicare once they turn 65. Their spouses will qualify too. In some ways, Medicare is automatic if you are receiving Social Security benefits.
What if I work past age 65?
People who are working who have coverage from their employer need to go to the Social Security office so that they don't pay their Part B premium when they don't need it. A couple months before they do retire, they need to go back to that office and say, "I'm retiring in the next couple of months; I do need Medicare; I should be paying the Medicare Part B premium."
What if I retire before 65?
It is a pretty risky business to retire in your late 50s or early 60s without health insurance, so be sure that you have health insurance before you retire that will carry you throughout the period until you turn 65. For people who want a second or third career, a real consideration is whether they are going to be giving up important benefits such as pension benefits or retiree health benefits. Often companies have vesting periods, so you have to be age 55 and have ten years of service in order to get retiree health benefits. Check with your employer about specific policies. Bottom line: You can't retire, even with a lot of income, unless you have secure health insurance because without health insurance, you risk everything that is in the bank.
What about the Medicare drug plan?
The Medicare drug benefit has this very unusual feature of a coverage gap, what some people call a donut hole, but what that means for a senior in a standard plan, is they go to the pharmacy and the plan pays 75 percent of the cost. They pay 25 percent and get accustomed to paying $25 or $30 to fill a prescription. But when they reach the benefit limit, they pay 100 percent of the cost, which could be four times what they were budgeting for until they qualify for catastrophic coverage.
What is Medicare Advantage?
Medicare Advantage comprises private plans like HMOs and PPOs that provide Medicare benefits. There are some advantages to signing up for the Advantage plans because many offer extra benefits, more prevention benefits, dental, vision, but they do vary widely in terms of cost sharing and benefits. Some may not work as well for people who have very high medical needs, so it's the consumers responsibility to check out the benefits before they sign up and think about what they will need and use.