Mastering Medicare
Most older adults understand that we are entitled to Medicare insurance once we reach 65. Anything beyond that can be confusing. So here’s a quick overview of the program, and the decisions you will be making concerning your medical coverage.
It is a three-part program (sort of)
Part A – hospital coverage: All Medicare enrollees are automatically enrolled in Part A, which covers the first 60 days of all hospital services. After that, you start paying a portion of each day’s cost. Most of us to not pay a premium for Part A, because we’ve already paid in through Medicare tax deductions at work. However, each time you are hospitalized, Medicare charges a deductible. The amount changes each year, but currently is about $1400.
Part B – doctors/outpatient services: This covers doctor visits, diagnostic screenings, lab tests, medical equipment, etc. You must pay a monthly premium for this coverage. If your modified adjusted gross income is above a certain amount, you will pay the standard premium plus an Income Related Monthly Adjustment Amount (IRMAA). Many people who are still working and have insurance through their job put off signing up for Part B. But if you are not otherwise covered, and you do not enroll in Part B when you first sign up for Medicare, you will probably have to pay a higher monthly premium from then on. Part B monthly premiums are automatically deducted from your Social Security benefit. In addition to an annual deductible, you are responsible for paying 20% of the bills for all covered services.
Part D – prescription drugs: Coverage for medications must be bought through a private insurer. These plans most likely will have premiums, plus flat copays for each prescription, or a percentage of the medication’s costs. There may also be an annual deductible. If your out-of-pocket prescription bills are very high, you may be eligible for ‘doughnut hole’ coverage, where you’ll be required to pay no more than 25% of the cost of brand-name drugs, and 37% for generics. There is also catastrophic coverage for enrollees who pay over a set ceiling, which reduces your payment to just 5% of the cost of your drugs.
Filling your insurance ‘gap’
Here’s where things can get hazy. Parts A and B do not cover all the costs. And your out-of-pocket expenses can skyrocket easily into the tens of thousands, should a serious illness occur. Medicare supplementary insurance (Medigap) programs are designed to help you pay for the costs that Medicare does not cover, including copayments and deductibles. These policies are sold by private insurance companies, and you pay a monthly premium. You must already have Medicare Part A and B in order to get a Medigap policy. Medigap plans don’t cover long-term care, vision, dental, hearing aids, eyeglasses or private nurses. They are guaranteed renewable even if you have health issues.
The second way to fill that ‘gap’ in uncovered Medicare costs is with a Medicare Advantage plan. This option may cost less than traditional Medicare plus Medigap. Here’s how it works: you would sign up for an Advantage plan through a private insurance company that is approved by Medicare. It is a ‘bundled’ plan that includes Medicare Parts A and B, and usually Part D. Depending on the provider, it often includes extra services such as eyeglasses, dental care, wheelchair ramps, even gym memberships.
Medigap or Medicare Advantage?
A Medigap insurance plan typically covers any health providers who accept Medicare. With a Medicare Advantage Health Plan (Medicare Part C), your coverage is limited to doctors and facilities within your program’s network of providers. If you go to out-of-network those services may or may not be covered. Each Advantage Plan provider may offer a different health maintenance organization (HMO) or preferred provider organization (PPO), so it is wise to see if your doctors, specialists and hospitals are included in the various networks, should you opt to buy this type of coverage.
Other considerations
- Costs – A Medigap policy typically requires a higher monthly premium, but your out-of-pocket costs could be less. A Medicare Advantage plan, in addition to costing you less, may cover more services, which could help stretch your budget.
- Flexibility – A Medicare Advantage plan often operates within a certain geographic area. If you snowbird for part of the year, or travel a great deal, a Medigap plan, which covers all doctors and facilities in the US that accept Medicare, might be better suited to your lifestyle.
- Referrals – Medigap plans do not require your primary doctor to make referrals to specialists. This is not always the case with a Medicare Advantage plan. If you select an HMO, your primary care doctor will usually have to refer you to see a specialist. In PPOs, you can often see an in-network specialist without needing a referral.
When (and how) to decide
When you first enroll in Medicare, and at certain others times during the year, you can choose whether you want Original Medicare (Parts A and B), or a Medicare Advantage Plan (Part C). Depending on which you choose, you may also need to get a prescription drug plan (Part D). And if you go with Original Medicare, you will probably want supplement coverage too.
When you turn 65 and are first eligible for Medicare, you have a 7-month window in which to enroll. It begins 3 months before the month in which you turn 65, and ends 3 months after your birthday month.
If you do not sign up when you are first eligible, you can do it between January 1 and March 31 of each year, and your coverage will begin on July 1.
If you want to sign up for a Medicare Advantage Plan (Part C) and/or Part D prescription drug plan you may do so right from the get-go when you turn 65. If you are on Medicare and want to switch to an Advantage plan, the open enrollment period goes from October 15 – December 7 each year.
Be a Medicare maven
AARP recently interviewed a range of experts on making the most of your Medicare coverage. Here are some of their tips:
- Choose your doctors – ask if they accept Medicare. Participating providers accept original Medicare’s fee schedule as full payment. Nonparticipants accept Medicare payments but can also charge patients up to 15% additional. Opt-out providers can charge patients whatever fees they choose.
- Deal with ‘surprise’ bills – always ask in advance if Medicare covers the treatment and procedures you’re about to receive. If you get an unexpected bill, don’t pay it right away. Check to see if it was also sent to your supplemental (Medigap) insurer. If Medicare or Medigap rejects a claim, file an appeal.
- Understand your rights – ifyour Medicare claim is denied, you can appeal the decision. Call the Medicare Rights Center hotline at 800-333-41144.
Don’t decide on your own
MyMedicare.gov is just what the doctor ordered for guidance, online enrollment forms, cost and coverage breakdowns, resources and all the help you need.
Find additional advice, explanations and news at AARP.org.
You can also get personalized health insurance counseling at no cost to you from your local State Health Insurance Assistance Program (SHIP). Go here.