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How Medicare Works

When you become eligible for and enroll in Medicare, Medicare coverage is provided as follows:  

Medicare Part A provides hospital insurance.  

It helps pay for Medicare approved hospital stays, care in skilled nursing facilities, hospice care, and hospital care from qualified Medicare providers.  

You typically do not pay a premium for Part A coverage if you paid Medicare taxes while you were working. If you did not pay into Medicare, don’t worry–you can still enroll in Medicare Part A, but there will be a cost for participation.

If you are already receiving Social Security benefits, enrollment in Medicare Part A is automatic.  

Medicare Part B provides medical insurance.  

It helps pay for Medicare approved doctor services, outpatient care, certain preventive care services, diagnostic tests, and some other services and supplies that Medicare Part A does not cover.  

You pay a monthly premium for Part B coverage. For example, for most Medicare-eligible individuals, the lowest monthly premium in 2010 was $96.40, although some will pay more, depending on their income and date of enrollment into Medicare.  

Enrolling in Medicare Part B at the right time is critical.  

When you turn age 65, you have an initial 7 month period to enroll in Part B:  

  • You may enroll in Part B up to 3 months before the month of your 65th birthday.  
  • You may enroll in your birthday month.  
  • You may enroll up to 3 months after your birthday month.

If you miss this initial 7 month period you may still enroll in Part B during the general enrollment period from January through March of each year.  

  • Coverage becomes effective July 1 of that year.  
  • You will be assessed a lifetime penalty of 10% for each year you were eligible for Part B but did not enroll.  
  • Exception: If you or your spouse are still working, you may delay enrollment in Part B until retirement, without incurring the 10% penalty.  

Medicare Part B Reimbursement Plan (MBRP)  

Members who qualify and enroll can get reimbursed for some of the cost of Medicare Part B through the Medicare Part B Reimbursement Plan.

Medicare Part C  

Medicare Part C is a federal program that allows you to receive your Part A and B Medicare benefits through a Medicare Advantage or other Medicare-approved insurance plans.  

These are health plans (such as HMOs) approved by Medicare and run by private insurance companies. Currently, ACERA sponsors two Medicare Advantage plans and a Medicare Supplement Insurance Plan.  

Medicare Part D helps to cover your prescription drug costs.  

When you become eligible for Medicare Part A, you also have the opportunity to enroll in a Medicare Part D prescription drug plan. Medicare prescription drug plans are run by insurance companies and other private companies approved by Medicare.  

If you enroll in an ACERA-sponsored medical plan, your Medicare Part D prescription drug benefits are covered through that plan; you do not need to enroll in a stand-alone Medicare Part D plan! If you do enroll in a separate Medicare Part D plan, ACERA will be forced to cancel your entire medical coverage, because you cannot be enrolled in two plans at once.

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