Understanding Medicare

What do I need to know about Medicare?

Medicare is a health insurance plan for people who are age 65 or older. People who are disabled, or have certain permanent health conditions, may be eligible for Medicare at earlier ages. If you are not already getting benefits, you should contact Social Security about three months before your 65th birthday to sign up for Medicare. You should sign up for Medicare even if you don’t plan to retire at age 65. Medicare has four parts:

  • Medicare Part A, hospital insurance, and helps pay for inpatient hospital care and certain follow-up services. Under certain conditions, you are eligible for Part A at no cost if you are 65 and older.
  • Medicare Part B, medical coverage, and helps pay for doctors’ services, outpatient hospital care, home health care, durable medical equipment, and other medical services.
  • Medicare Part C, Medicare Advantage plans, is available in many areas. People with Medicare Parts A and B can choose to receive all their health care services through a private insurance company approved by Medicare to provide this coverage.
  • Medicare Part D, prescription drug coverage, helps cover the cost of prescription drugs.

While Part A is free for most people, you will have to pay a premium for Part B. If you have higher income, you may have to pay an additional premium for Part B and Part D. If you have other health insurance when you become eligible for Medicare, you will want to evaluate whether it is worth it to sign up for Part B. The decision to sign up for additional parts of Medicare should be based on your personal needs, lifestyle and budget. Your private insurance plan can help you understand how it fits with Medicare Part B. This is especially important if you have family coverage. It is important that you not cancel any health insurance until your Medicare coverage begins. If you have TRICARE (military health insurance) your health benefits may change or end when you become eligible for Medicare. You may want to contact a military health benefits adviser to better understand your specific options. Visit www.Medicare.gov to learn more about Medicare and each of the Parts described.

What do I need to know about Representative Payees?

More than 8 million people, who get monthly Social Security or Supplemental Security Income (SSI) benefits, need help managing their money. In these cases, you can appoint a relative, friend, or other interested party to serve as the “representative payee”. Social Security investigates those who apply to be representative payees to protect the interests of beneficiaries because a representative payee receives the beneficiary’s payments and is given the authority to use them on the beneficiary’s behalf.

Typically, representative payees do not collect a fee for services provided; however, the representative payee can make a positive difference in the beneficiary’s life. In this role, you must take care of the beneficiary’s day-to-day needs to ensure well-being, including food, shelter, medical and dental needs (not covered by insurance), and personal needs, such as clothing and recreation. Remaining funds must be saved. Under certain conditions, Social Security allows for payment of expenses that improve daily living conditions or for better medical care but it is important that you confirm that the expenses are allowed. As a representative payee, you are required to use the benefits properly. Consequences of misuse range from repayment and fines to imprisonment.

In addition to ensuring daily needs are met, you are also responsible for keeping records and reporting how benefits were spent. On an annual basis you will need to complete a Representative Payee Report. To be best prepared, keep track of the following:

  • Expense type (what was purchased?)
  • Date of expense: month and year (when did you purchase?)
  • Amount of Social Security or SSI benefits received
  • Actual expenses (how much did you spend?)
  • Expenses for food and housing
  • Expenses for clothing, medical/dental, and personal items
  • Expenses for recreation and other miscellaneous items

If you stop being a payee, you must notify Social Security immediately. Once you are no longer responsible for the beneficiary, you must return any benefits, including interest and cash you may have, to Social Security. This is important as a new payee will need to be named immediately.

If the beneficiary dies, any saved benefits should be given to the legal representative of the estate or must be handled according to state law. When a person who receives Social Security benefits dies, no check is payable for the month of death even if they die on the last day of the month. In fact, you must return any check received. SSI benefits are payable the month of death but any subsequent benefits received must be returned.

Understanding Medicare can help you be prepared when you retire.