The new year is officially here, and if you turn 65-years-old this year and are a U.S citizen or have had permanent residency for at least five years, you will become eligible for Medicare. Medicare is health insurance provided by the U.S. government to those 65 years and older and others who qualify earlier due to receiving Social Security Disability benefits. Medicare can be a confusing maze to navigate through, and many beneficiaries aren’t aware of the different Medicare plan options, such as a Medicare Supplement. If you are nearing Medicare eligibility and are wondering, “How does Medicare work in 2022,” keep reading to find out!
When to apply for Medicare in 2022
There is a specific time to apply for Medicare to avoid a late enrollment penalty. If you turn 65 years old in 2022, you will need to apply for Medicare during your Initial Enrollment Period (IEP). Your IEP begins three months before your 65th birthday month and ends three months after. Therefore, you have seven months to apply for Medicare Part A (inpatient care) and Part B (outpatient care).
If you were to miss your IEP and you are not covered by creditable coverage, you would be charged with a lifelong late enrollment penalty. However, if you plan on working past age 65, you may be able to delay your Medicare enrollment.
Working past age 65 in 2022
Many seniors decide to delay their retirement and work past age 65. If you actively work for a large employer with 20 or more employees and are covered by their health insurance, you can delay enrolling in Medicare Part A and Part B. Many seniors still decide to apply for Medicare while being covered by large employer insurance. In this case, the employer insurance would be primary, and Medicare would work as secondary coverage.
Now, if you work for an employer that has less than 20 employees, you will need to enroll in Medicare during your IEP to avoid a late enrollment penalty. You can still keep your small employer insurance. However, Medicare would be primary, and your group plan would pay as secondary insurance.
What are the 2022 Medicare costs?
Medicare has costs, and they have increased in 2022. However, if you have paid payroll taxes for 40 quarters (ten years) in the U.S., then Part A is $0 for you. Those who have between 30-39 quarters will pay a pro-rated monthly premium of $274. If you have less than 30 quarters, you will pay the total Part A premium of $499/month. With that said, you can qualify for a premium-free Part A through your spouse if they have a qualifying work history.
You will pay the monthly Part B premium regardless of your work history. In 2022, the standard Part B premium is $170.10. However, suppose your taxes from two years ago (2020) show that you individually made more than $91K or more than $182K jointly. In that case, you will pay an additional charge on top of your Part B premium, which is called an Income-Related Adjustment Amount (IRMAA). If you no longer make the same income as you did two years ago, you can file an IRMAA appeal to lower your premium.
Different Medicare plan options
There are specific preventive services that Medicare will cover at 100%. However, Medicare does not cover all healthcare services in full. You will have out-of-pocket costs throughout the year, such as deductibles, copays, and coinsurance. These medical expenses can be detrimental for many, which is why most Medicare beneficiaries purchase an additional plan to help cover these Medicare gaps.
A Medicare Supplement, also known as a Medigap plan, works as secondary coverage to Medicare. A Supplement does not have network restrictions, which means you can visit any doctor or hospital in the U.S. that accepts Medicare and use your Medigap plan. When doctors accept Medicare, they must also take your Supplement plan no matter the plan type or carrier you purchased the plan through.
There are ten Medicare Supplements on the market, and each of them gives you predictable healthcare costs for the year. Each plan covers a particular set of benefits, and these plans are standardized, which means the plans are the same no matter the insurance carrier you purchase the plan through.
Medicare Advantage plans are entirely separate from Medicare. Whenever you enroll in a Medicare Advantage plan, you will get your Medicare Parts A and B benefits from the carrier you purchase your plan through.
Your Advantage plan carrier will create a network of doctors and pharmacies where you can receive your healthcare services. Typically, you will pay more for your healthcare services outside the network. On top of this, your carrier will also set the coinsurance and copay amounts that you will pay for your healthcare services.
What attracts many seniors to an Advantage plan are their low premiums and additional benefits. You can find some Medicare Advantage plans as low as $0. Some plans can also include extra benefits that Original Medicare does not cover, such as vision, dental, and hearing benefits.
Enrolling in Medicare in 2022 can be overwhelming whenever you aren’t familiar with your Initial Enrollment Period, the Medicare costs, and additional plans you can purchase. You can always visit Medicare.gov or reach out to a reputable Medicare broker for more information on Medicare in 2022.