Medicare is the federal health insurance entitlement program for individuals over 65 years of age and those with end-stage renal failure or Lou Gehrig's disease. Medicare consists of four parts: Part A, which covers basic hospital charges; Part B, which covers physician's charges and lab fees; Part C, or Medicare Advantage, which provides a managed care structure and some additional benefits and services; and Part D, the prescription drug plan.
Eligibility Rules
Generally, you qualify for Medicare if you are over 65. You can also qualify if you have end stage renal disease requiring a kidney transplant or dialysis, and if you have amyotrophic lateral sclerosis, or Lou Gehrig's disease. You must be a citizen or permanent resident of the United States to qualify. Part A is free for those with at least 40 quarters of qualifying work history. If you have no work history, you will have to pay a premium, which is $450 per month in 2011. If you have between 30 and 39 quarters of work history, you can "buy in" to Medicare Part A by paying a premium of $248. The government periodically adjusts these premiums, so check with Medicare for the most current information.
Part A Deductibles
If admitted to a hospital while a Medicare beneficiary, you are responsible for the first $1,132 out of pocket. Part A pays your costs for the first 60 days of inpatient hospital care in a benefit period. For days 61 through 90, you will pay up to $283 per day out of pocket, and $566 per day after that. For those in nursing facilities, you are liable for a daily co-pay of $141.50 for days 21 through 100.
Enrollment Rules
You receive automatic enrollment in Part A and Part B when you turn 65 if you are collecting Social Security benefits. If you decline enrollment, however, you must generally wait until the Medicare open enrollment period, which is January through March each year. If you don't enroll at your first opportunity, you will have to wait until July 1 of the year in which you enroll for benefits to commence. In most cases, you will want to enroll during the three months before you turn 65. If you wait until after the start of the month in which you turn 65, it will delay your start date for coverage.
Premium Penalties
If you do not sign up for Part A when eligible, you will have to pay a 10 percent penalty for twice the number of years you were eligible for Part A, but didn't enroll. If you decline Part B when first eligible, you will have to pay a penalty of 10 percent of the Part B premium for each year you were eligible for Part B, but did not enroll. This is how the government discourages people from waiting to enroll until they need treatment.
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