Since 1966, The Unites States government has guaranteed access to health insurance for Americans over 65 years old (who have worked and regularly paid into the system), as well as young people with disabilities and others with specific illnesses like Lou Gehrig’s disease. This social insurance program is called Medicare.
(Not to be confused with Medicaid, which is a social health care program meant for Americans of all ages who struggle with low income and few resources.)
On average, only 48% of healthcare costs are covered for an individual by Medicare Part A, so in many cases, elderly or disable citizens will choose to buy supplementary medical insurance to cover the costs that Medicare does not pay for, like long-term care in a nursing facility, vision care, hearing aids, and dental procedures.
That being said, the Social Security Administration knows that many people would rather NOT pay the extra money out-of-pocket for healthcare. That’s why you have the option to cancel your Medicare Part B coverage. Terminating your coverage is a serious decision; if you change your mind and wish to re-enroll later, you might end up paying a surcharge.
If you’ve made up your mind to cancel your Part B Medicare coverage, simply fill out this form: CMS 1763: Request for Termination of Premium Hospital and/or Supplementary Medical Insurance, then call your local Social Security office. If you can physically get down to the office, go ahead and set up an appointment to handle the cancelation face to face. If you can’t get there in person, the Social Security Administration folks will help you come up with a feasible alternate option.
Before your appointment, fill in the CMS 1763 form here, print it out, and bring the paper copy with you. Don’t forget, you can save all the forms you’ve worked on digitally in your PDFfiller account (unlimited cloud storage comes free with your subscription). If you don’t have a printer, but you’d like to fill out the CMS 1763 form ahead of time, you can fax it to the local Social Security Administration right from your desktop, tablet, or smartphone.
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If you are one of the millions of Americans signing up for Medicare because you are turning (or have turned) 65, it’s important that you have a basic understand of how Medicare works before you enroll.
First thing’s first: mark your calendar. You have a seven-month initial enrollment period beginning three months before the month you turn 65, ending three months after your birthday month. To ensure coverage starts by the time you turn 65, sign up in the first three months of this enrollment period.
In simpler terms, it’s a seven-month sandwich. If your birthday is May 26th, you would have from February 1st – August 31st to sign up.
If you are already receiving Social Security benefits, the US government will automatically enroll you in Parts A & B. You can choose to turn down Part B–it involves a monthly out-of-pocket cost–using the cancellation form CMS 1763. But, if you keep Part B, the cost will be deducted from the Social Security benefits you already receive every month.
Haven’t started receiving Social Security benefits? You’ll need to independently sign yourself up for Medicare Parts A & B, or Medicare Advantage. If you’re still working full time around your 65th birthday, you might be considering delaying signing up for Medicare. Just make sure that when the time does come for you to sign up, you follow all the rules really carefully to make sure you avoid significant penalties and/or problems.
Lastly, here’s the breakdown we promised. This short guide to Medicare should help clarify a few things, and help you decide whether terminating your Medicare Part B coverage is really the right choice for you. Please feel free to send us any of your questions or comments, either in the comment box below or drop us a line here.
Part A :
The government pays for hospital services. If you or your spouse paid Medicare payroll taxes for 10 years or more, then Part A is free. (If you didn’t pay Medicare payroll taxes, you can buy Part A coverage for several hundred dollars per month.)
Part B :
The government covers doctor visits and outpatient services, in addition to hospital visits covered in Part A. As of 2014, the average monthly cost for most people enrolled in Part B is $104.90. If you are already receiving Social Security benefits, you will be automatically enrolled in Part B. If you wish to terminate or cancel this supplemental coverage and NOT be charged, fill out form CMS 1763, print it, and bring it down to your local Social Security office to process the cancelation with an agent.
Part C (Medicare Advantage) :
This alternative route is available through a private company, and has a monthly cost that varies depending on which plan you choose, and does NOT qualify as traditional Medicare. Medicare Advantage aims to provide all the same benefits of Medicare Parts A & B: Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), Private Fee-for-Service Plans, Special Needs Plans, and Medicare Medical Savings Account Plans.
Most Medicare Advantage Plans offer prescription drug coverage, too. With Medicare Advantage, you don’t need to sign up for Part D or buy a Medigap policy. You’ll still be subject to co-payments, deductibles and other out-of-pocket costs, but the total cost tends to be lower than that of traditional Medicare coverage. In many cases, Advantage policies charge lower premiums but have higher cost-sharing, and your choice of medical providers may be more limited with this plan.
Part D :
When you pay a monthly premium (monthly payment) for this plan, you will be purchasing it from a private insurance company, but it will be tacked onto your government issued Medicare Part A & B plans. This plan will cover most prescription drug costs at an average monthly cost of $31 for an individual.
This supplemental coverage is sold by private insurance agencies and specifically designed to compliment traditional government issued Medicare Parts A, B & D. Medigap policies are identified by letters A through N, and usually the only difference between same-letter policies (from company to company) is the cost.
Medigap coverage can help pay for deductibles, co-payments, and other items that parts A, B, & D don’t cover. You have the option to switch Medigap plans at any time, but keep in mind that you might be charged extra, or denied coverage for preexisting conditions, if you switch plans more than six months after you first signed up for Medicare Part B. (Plan F of Medigap is the most popular because it’s said to involve the most comprehensive amount of coverage.)
As with any major insurance and/or financial decision, it’s best to consult a professional. But we hope this article could get you one step closer to confidently taking control of your retirement and healthcare options.
Thanks again for reading! If you have any questions, feedback, or suggestions for other readers, please feel free to leave a comment below.
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