Medicare Eligibility Age - What You Need to Know - Retirement Planning

Health care can be one of the biggest causes of depleting savings in retirement. As you age, your health starts to deteriorate and ultimately requires periodic medical attention. Whether you are undergoing a long-term treatment, require surgery, or take life-long medication for lifestyle diseases, the costs of medical-related expenses can be astronomical and a burden on the pocket. The reports published by the U.S Bureau of Labor Statistics every year offer a great insight into the rising medical inflation in the country. The U.S spends approximately $3.6 trillion on healthcare every year. This can amount to $11,000 per person. Moreover, the health care costs have also increased from 5% of the gross domestic product (GDP) in 1960 to a whopping 18% of the GDP in 2018.

It is clear that a health insurance plan or a health savings plan is a much-needed tool to combat the rising health care costs. Covering health expenses out of your pocket can be next to impossible, especially in retirement when your sources of income are numbered and restricted. This is why the U.S government offers plans like Medicare to help retirees cover the costs of their health-related expenses. However, in order to use Medicare effectively, you must know what it entails, when you can use it, and what the age to qualify for Medicare is. To help you understand the intricacies involved while planning for retirement healthcare expenses, you may also consult with a financial advisor. The advisor can answer your queries and clear up any doubts that you may have and help set up a custom retirement plan for you.

What is Medicare?

Medicare is a health insurance program offered by the U.S. federal government. The plan subsidizes healthcare services. It is administered by the Centers for Medicare and Medicaid Services (CMS). Medicare is funded by the Federal Insurance Contributions Act (FICA), which takes contributions from U.S taxpayers. In 2021, employees contribute 6.2% of their paycheck to Social Security benefits and 1.45% of their pay check to Medicare. Employers also match these contributions and contribute the same on behalf of every employee.

Medicare consists of four plans, namely, A, B, C, and D. Here is what each of these entail:

- Medicare Part A: Medicare A covers expenses like inpatient hospitalization, skilled nursing care facility, inpatient care at a nursing facility, healthcare at home, as well as hospice care. It also covers the costs of supplies and drugs incurred upon hospitalization and physical and occupational therapy at home. Other inclusions under this plan are medication costs, doctor’s fees, counseling for terminally ill patients. Medicare Part A is free for people who have paid Medicare payroll tax during their working years.

- Medicare Part B: Medicare Part B covers additional health care expenses like ambulance expenses, doctor’s consultation and visit charges, mental health coverage, lab tests, medical equipment costs, etc., as well as preventive services. Medicare Part B is a paid service for which you need to sign up and pay premiums every month like any other insurance plan. As of 2021, the monthly premium for the Part B plan is $148.50. This is an optional plan.

- Medicare Part C: Medicare Part C, also known as Medicare Advantage is designed for older people and individuals who suffer from a disability. These plans are offered by private insurance companies and not the federal government. As far as the coverage is concerned, Part C offers the same coverage as Part A and Part B. It may also include some drug coverage of Part D. However, it does not cover hospice care.

- Medicare Part D: Medicare Part D covers only the expenses of prescription drugs. Part D is also offered by private insurance companies like Medicare Advantage.

There were some changes made to Medicare coverage to combat the repercussions of the Covid-19 pandemic. After the CARES (Coronavirus Aid, Relief, and Economic Security) Act was passed in 2020, Medicare now also covers treatments and medical services related to COVID-19.

What age is Medicare available?

Medicare health plans can be used by the following people:

You should be a citizen of the United States or a permanent legal resident of the country for at least five years.
The minimum age for Medicare is 65. So, you should be at least 65 years or older to use Medicare.
You can use Medicare if you are younger than 65 if you are suffering from certain disabilities.
The enrollment for Part A and Part B is automatic as long as you receive Social Security benefits.

You can start receiving full Medicare coverage at the age of 65 if you or your spouse has earned enough credits and are eligible to receive Social Security benefits. Ideally, you need 40 credits and 10 years of work to qualify for full Medicare coverage. One credit is equal to $1,470. So, you would need to earn at least $58,800 to earn 40 credits. Another important thing to note is that you can only earn up to four credits in a year. So, you must earn at least $5,880 every year.

The Congressional Budget Office (CBO) had suggested increasing the eligibility age by two months each year with an aim to ultimately increase it to 67 for those who were born in the year 1966 or later. However, there have been no official changes implemented in this regard.

How can you use Medicare if you do not meet the requirements of the Medicare eligibility age chart?

You qualify for full Medicare benefits even if you are under the age of 65 and do not meet the requirements of the Medicare age chart. Here’s how:

If you have been using Social Security disability benefits, also known as Social Security Disability Insurance (SSDI), for at least 24 months, you can qualify for Medicare too. These 24 months do not have to be consecutive. In this case, as soon as the 25th month starts, you will automatically be enrolled for Medicare, or you can enroll on the Social Security Administration (SSA) website yourself. You can use Medicare Part A and Part B in this case.
If you have amyotrophic lateral sclerosis (ALS), commonly known as Lou Gehrig’s disease, you can start using Medicare immediately. You can use both Medicare Part A and Part B in this case.
If you have received a disability pension from the Railroad Retirement Board, you can also use Medicare.
You can use Medicare if you have been diagnosed with an end-stage renal disease, such as permanent kidney failure that requires dialysis or a kidney transplant.
You can use Medicare if you or your spouse is eligible for Social Security benefits.
You can use Medicare if you or your spouse is a government employee.
You can use Medicare if you or your spouse has paid the Medicare payroll taxes.

Can you use Medicare if you are working after the age of 65?

You can use Medicare if you are working at or after the age of 65. However, you may have to take certain factors into consideration. Firstly, you may have your company’s health insurance plan if you are still working. In this case, your company-provided health insurance plan could be your primary health policy, or your employer plan provider may ask you to make your Medicare your primary insurer. This can impact you financially. Here’s how:

The primary insurance plan is the one that pays you first in case of a medical expense. This plan will pay you up to the total coverage offered by the plan. If you still have medical expenses after claiming the insurance payout from the first insurance plan, you can use your secondary insurance plan to cover the remaining costs. You may have to enroll in additional optional Medicare plans like Part B if Medicare is your primary insurance plan. Likewise, if Medicare is your secondary insurance plan, it may not cover all the remaining costs, and you might again have to opt for optional Medicare plans. It is important to take into consideration all of these factors, including the coverage offered by your company’s health insurance plan and Medicare and then choose one of them as your primary insurance plan. You can speak to a financial advisor or your company’s human resource development department if you have any doubts and do not know how to proceed.

How can I check the Medicare eligibility age chart and see if I qualify for Medicare coverage?

To check if you qualify for Medicare, you can visit the official Medicare Government website and use the eligibility and premium calculator. You can estimate your eligibility as well as the premium for your Medicare with this tool. If you get railroad benefits, you can also contact the Railroad Retirement Board, or the Social Security department to know more about your eligibility and premium.

To summarize

While Medicare is a great health program of the federal government, you must know its eligibility criteria, the minimum age for Medicare, and other rules and regulations to use it effectively. Medicare can help you cover various costs related to health care. However, it can be used only after the age of 65 in most cases. So, if you qualify for it only after you reach the age of 65, you must consider purchasing a private health plan for the years before. This is especially crucial if you retire sooner than 65 and do not have a company insurance plan to fall back on.

The various rules and coverage inclusions of each Medicare plan can be hard and confusing to understand. Consulting a professional financial advisor to ensure that you have sufficient coverage can help you make the most of these plans.