Free health insurance? If that sounds crazy it is because it is simply not true; but, I hear this statement all of the time "Medicare is free."

There are 5 types of Medicare and NONE of them are FREE. If you are turning 65 soon or if you are switching from employer insurance to Medicare, don't be caught by surprise, keep reading...

Medicare A (for inpatient and skilled nursing care)

Everyone that is 65 and/or disabled is eligible for Medicare A. Many of us have paid into the Medicare program; take a look at your pay stub, that line that says "Medicare". If this is you and you have paid in for the required 40 calendar years, you will receive Medicare A for $0/month; this makes sense because you basically have been paying a premium your entire working career. I would not call that "free" though.

If you did not pay into the Medicare program during your working years and are not married to someone who did, you are still eligible for Medicare A, but you will have to pay a premium as you never paid into the program. The premium in 2024 is $505.00/monthly.

If you meet any of the following scenarios you may not be paying into Medicare, which could cost you in the future:

1.) Working under the table/no employment on file.

I will never forget the sweetest gentleman that I met a few years ago. He was in his mid 90s and his sister, who was 20-years younger, was caring for him. He was a farmer and for all of his life worked on the farm, but off the books. He was not eligible for $0 premium Medicare so his sister was paying for the Medicare A premium, which was cheaper than a hospital bill. (important to note that this scenario also produces no social security income...a financially vulnerable situation to find yourself in, hopefully you have saved).

2.) You exempt yourself from paying into Social Security/Medicare

Most people don't realize that you can exempt yourself from paying into Social Security/Medicare; honestly, this is not a bad thing, because without the right planning this is a HORRIBLE idea.

A few years ago I was working with a family that could not understand why their mom's health insurance through the county was not paying for a hospital or skilled nursing stay. Turns out she had exempt herself from paying into social security and Medicare. I would suspect she felt that she had a good back-up plan for retirement and health insurance....but she forgot to read the fine print..

She took an early retirement and had no issues with health insurance, BUT, when she turned 65 the county retirement plan became secondary and would only pay when Medicare paid primary...oops...too bad she did not pay into Medicare. Her only options were to pay for Medicare A premiums or to not have Medicare A coverage. The premiums are quite hefty.

3.) You work for an organization that does not pay into Social Security or Medicare

It is not common for private businesses to not pay into Social Security or Medicare; however, it is common with employment through the Federal government (VA, Corrections, Federal mail, etc.). The difference between this scenario and the above two, is that the government typically has substitutions: they offer pensions and alternatives to Medicare.

Be sure to read the fine print though and plan accordingly; there may be an option for you to pay in to Social Security and Medicare but you must inform your HR department of this. Also, keep in mind that if you have work history where you did pay into Social Security and Medicare, you may have credits that would make you eligible. Contact Social Security for more information on work credit: sss.gov

We can all agree: Medicare A is not free....now lets talk about Medicare B...

Medicare B (outpatient and ancillary)

You are eligible for Medicare B once you turn 65 and/or are disabled, REGARDLESS of work history. The only guideline to receiving Medicare B is that you must pay a monthly premium. The premium in 2024 is $174.70. If you happen to be required to pay for Medicare A and also have to pay for Medicare B; you could be paying close to $700/month It is a good thing that most people earn $0 premium Medicare A; however, this is where the confusion comes in, the $0 premium only applies to Medicare A, not part B. If you are married and both need Medicare B, you will both pay the $174.70 for a combined total of $349.40.

Going without Medicare B could lead to costly medical bills. If the monthly premium is not affordable there are tiers of assistance available. (any insurance agent can help with this)

Some folks decide to not sign up for Medicare B because they do not go to the doctors...thinking this will save them money. The problem with this is when you do need it and sign up you will receive a penalty that will be added on to the Medicare B premium; this will never go away.

I see folks with no Part B all of the time. The most common reason is because they receive ancillary services at the VA. Unfortunately, in the event that care or an emergency must be provided outside of the VA, the patient will almost always get stuck with the bill. One gentleman that stands out to me was a veteran who refused to pay for Part B but required services outside of the VA. The bills started adding up and he came to me to sign up for Medicare B (2-years after I advised him). He was assigned a ten-year premium penalty and was going to have to pay an EXTRA $130/month!

Clearly, Medicare B is not free...but what about Medicare Part D??

Medicare Part D (prescriptions)

Medicare Part D covers prescriptions and is provided by private insurance companies like AETNA, Humana, AARP, Wellcare, etc... You are eligible to sign up for a prescription plan once you turn 65 and/or disabled. You are not required to sign up for part D, BUT, just like Medicare B, if you do not sign up once your turn 65 or lose credible coverage, you will be penalized in the form of an extra premium being added to the current monthly premium. This penalty follows you for life.

In 2024, the average Medicare beneficiary has a choice of close to 60 Medicare plans with Part D coverage, including 21 Medicare stand-alone drug plans and 36 Medicare Advantage drug plans. The average premium of a Part D plan in 2024 is $55.50, but can reach over $100/month. There are also deductibles and copays to consider, which differ with each plan.

It is clear to see that Medicare Part D is also not FREE....but what about those Medicare Advantage plans, also known as Medicare Part C?

Medicare Part C or Medicare Advantage (bundled part A+B+D)

Medicare Part C plans are provided by private insurance companies like Humana, AETNA, United Health Care, AARP, etc. Medicare has approved these plans and pays them to cover your Medicare benefits. Many people think these plans are FREE...thanks to late night commercials. The truth is, that many of these plans have $0 premiums, but you are still required to pay your Medicare A and B premiums (return to top for these costs). You can possibly save some money (the Part D premium) if you find a Medicare Advantage plan that meets your needs and has a $0 premium.

There are Part C plans that have premiums and can range up to $150/month in 2024. These plans tend to have low to no copays and other reduced out-of-pocket costs.

Don't be fooled by commercials that claim these plans are FREE, at minimum you will need to pay the Medicare Part B premium each month. Important to note, that there is no penalty for not signing up for a Part C plan, that only applies to Medicare Part B and D.

BUT wait...there is another Medicare option....Supplemental Plans...are these free?

Medicare Supplement Plans

Medicare Supplement plans or Medigap, is extra insurance that you can purchase from a private insurance company to help pay your share of costs associated with Medicare Part A and B. These plans have also been approved by Medicare and require that you be enrolled in Medicare A and B first. These plans have a wide range of premiums depending on the coverage and the company providing. These plans range from $53-$535/month. At first glance this seems incredibly expensive; however, consider the below scenario:

You are admitted to a skilled nursing home and will be receiving rehabilitation services. Medicare A pays up to a 100-day stay; HOWEVER, 80 of these days have a copay of $204/day in 2024...this totals $16,320! A supplemental plan could cover the total balance, saving you thousands.

Supplement plans are far from FREE but could possibly reduce your out-of-pocket costs significantly in certain situations.

To conclude, I am sad to report, that Medicare is not free; however, there are programs to help pay for premiums and prescriptions for those who meet income guidelines.

More importantly, meeting with an expert to compare and combine all the options above will provide you with the best plan that meets your needs with the least impact on your bank account. So don't be surprised with the cost of Medicare and reach out today to compare and save.

As always I am here to answer your questions and help you navigate the Medicare maze...reach out via email at [email protected], call at 607-661-6911, visit me on Facebook at https://www.facebook.com/profile.php?id=61551075748151 or simply fill out the consult request below.

Thanks for stopping by and supporting me in my venture to provide "Mindful Coverage"

Agent Nancy Smallwood