In the firsttwo parts of this article, you learned about the types of coverage that Medicare provides and the costs associated with those benefits. As a current or prospective user of Medicare coverage, however, you also need to understand the process by which Medicare claims are received, processed, and paid. By being able to foresee potential problems, you can take steps to avoid surprises that can turn what you thought was a covered expense into a big medical bill that you have to pay yourself.
Getting medical care
If you're familiar with using the networks of medical professionals, your first experience with Medicare may be a pleasant surprise. Traditional Medicare coverage is less restrictive than are private health insurance plans that require the use of preferred health-care providers or HMOs. You can generally visit any doctor you wish, and you can usually go directly to a specialist without seeing a primary care physician first to get a referral. If you need medical care when you're away from home, traditional Medicare allows you to see a doctor anywhere in the United States, even if your condition doesn't involve a medical emergency.
However, there are also some things about traditional Medicare that raise concern among seniors in regard to their coverage. Although Medicare participants can use any doctor they wish, not all doctors are willing to accept patients who are covered by Medicare. Because Medicare closely monitors and limits the amounts it pays to doctors for medical services, some physicians have chosen to close their practices to new Medicare patients. Furthermore, the economics of accepting Medicare patients continue to deteriorate. According to the American Medical Association, nearly half of all doctors, citing reductions in payments from Medicare in conjunction with higher operating costs, plan to reduce or eliminate Medicare patients from their practices. As Medicare payments are expected to fall in future years, the problem may continue to worsen.
If you choose a Medicare Advantage Plan under Part C, you may have to follow very different rules to get the most benefit from your plan. Depending on your plan, you may face restrictions or limitations on which doctors you can see and what you have to do to get a referral. If you're concerned about a particular restriction, you may be able to get a different type of coverage from the same insurance company. Some companies, including Aetna and UnitedHealth Group, offer multiple types of Medicare Advantage Plans in some states.
Paying for care
When you see a doctor for medical care, the first question you should ask is whether the doctor has opted out of Medicare. If the answer is yes, then you will be responsible for the full cost of your care, and Medicare will not reimburse you or your doctor. To get Medicare to pay for your medical bills, you will have to find a doctor who accepts Medicare.
Once you find a doctor who accepts Medicare patients, the next question you need to ask is whether the doctor accepts assignment of Medicare claims. The benefit of using a doctor who accepts assignment is that the doctor agrees to accept whatever amount Medicare approves as payment in full of the 80% of costs that Medicare covers, and you will therefore have to pay only the remaining 20%. In contrast, a doctor who does not accept assignment may choose to charge an additional amount above what Medicare approves, which can leave you with a higher bill. Federal law allows doctors to charge as much as 15% above what Medicare approves for medical costs. Choosing doctors who accept assignment is your best option, even though they can be difficult to find.
If you still have private health insurance after you turn 65, either because you're covered under your own or your spouse's employee group health insurance plan or because you have retiree benefits through your old employer, Medicare and your private insurance will coordinate to determine which program will be primarily responsible for paying your medical expenses. In general, if you're retired and have retiree coverage from a former employer, Medicare will be the primary payer, and the retiree plan will be secondary.
If you're covered under group health insurance, on the other hand, the question is more complicated. For employers with 20 or more workers, the group plan acts as primary payer, and Medicare is secondary. However, if the employer has fewer than 20 workers, then the roles are reversed, and Medicare acts as primary payer. Before you incur medical expenses, talk with your group-plan benefits specialist to figure out how your plan benefits will coordinate with Medicare.
In general, Medicare provides a level of coverage that is fairly similar to what private health insurance plans offer. Although it won't cover all of your medical expenses, it does pay a substantial portion of them. For many people considering retirement, the availability of Medicare is what makes that retirement possible.
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Fool contributor Dan Caplinger isn't anywhere close to getting Medicare, but he's had plenty of experience with those who do. He doesn't own shares of the companies mentioned in this article. UnitedHealth is a Stock Advisor and Inside Value recommendation. The Fool's disclosure policy is there for you both before and after you turn 65.