Medicare is big business. There are more than 57 million Americans enrolled in it, with more added to the program each month. Its net outlays are about $600 billion annually. If you're not covered by Medicare yet, you will probably be relying on it in the future, so it's worth learning more about it.
Here are three Medicare rules it's important to know -- whether you are already using Medicare, or are looking forward to doing so in the future.
Medicare rule No. 1: Don't be late enrolling
This rule is surprisingly important -- because if you're late enrolling in Medicare, you can be penalized -- rather significantly. Here's the scoop: You're eligible for Medicare at age 65, and you can sign up anytime within the three months leading up to your 65th birthday, during the month of your birthday, or within the three months that follow. Miss that seven-month-long "Initial Enrollment Period" and your part B premiums -- which cover medical services, but not hospital services -- can rise by 10% for each year that you were eligible for Medicare, but didn't enroll.
You may avoid the penalty, though, if you're among the many Americans who are already receiving Social Security benefits by the time they reach age 65. Those folks are typically enrolled in Medicare automatically. You might also avoid the penalty and be able to skip the deadline if you're still working, with employer-provided healthcare coverage, at age 65, or if you're serving as a volunteer abroad.
Medicare rule No. 2: Shop around
Once you're enrolled in Medicare, you'll need to choose between original Medicare, featuring parts A and B, and Medicare Advantage plans, which are sometimes referred to as Part C. With traditional (or "original") Medicare, Part A covers inpatient hospital stays, hospice, and skilled-nursing facility stays, while Part B covers outpatient services, such as preventative care, laboratory tests, ambulance services, medical equipment, and necessary doctor services.
Medicare Advantage plans, meanwhile, are administered by private insurers, but are regulated by the U.S. government. Each must offer at least as much coverage as original Medicare (i.e., the benefits you'll find in Part A and Part B). Many go beyond that, though, offering broader coverage, such as vision care, dental care, and/or prescription drug coverage. (Those in original Medicare typically buy Part D for prescription drug coverage, and they may buy Medigap coverage, too, for even greater coverage.)
So which Medicare plan is best for you? It depends on your needs and preferences. Original Medicare is accepted by most doctors, and you can see them without referrals. So you can find and see a doctor anywhere in the U.S., which is especially handy if you're a traveling retiree.
Medicare Advantage plans feature defined networks of doctors (though some of the networks are quite large) and steeper costs for seeing out-of-network physicians, and they're typically limited to your local region. (Some do, on a limited basis, cover healthcare outside the U.S., unlike original Medicare.)
Original Medicare will often have you footing 20% of many bills with no limit on how much you end up spending. A Medicare Advantage plan, meanwhile, might charge you a certain copay per doctor visit or service, and many services will simply be paid for through your premium.
Importantly, Medicare Advantage plans also feature out-of-pocket spending caps. (The average out-of-pocket cap was recently $5,223, but many plans feature caps below $3,000, and the limit for 2017 is $6,700.) Once you hit the limit, the plan will pay all further costs. Better still, many plans charge the enrollee nothing in premiums. (The Medicare program pays the insurance company offering it a set sum per enrollee, and if the insurer thinks it can make a profit without charging its customers anything, it can do so.) The average monthly premium for Medicare Advantage plans was recently $33.
There's no one-size-fits-all answer when it comes to deciding between original Medicare and Medicare Advantage. Think about which doctors you see, what services you need, and what drugs you take, and then compare coverage and costs for available plans. You can check out details for available plans by using the Medicare Plan Finder at the Medicare website, which also shows you star ratings for Medicare Advantage plans and Part D (prescription drug coverage) plans in your area. The top score is five stars, and you should favor four- or five-star plans.
Medicare rule No. 3: Once you have Medicare, use it!
Both original Medicare and Medicare Advantage plans offer lots of preventive screenings at no extra cost to you -- such as mammograms and colonoscopies. Get screened for cancer, diabetes, and anything else your doctor deems sensible. You're also entitled to an annual wellness visit at no extra cost to you. You may be able to access smoking cessation or weight-loss counseling at little to no cost, and some plans may offer discounts on gym memberships or other wellness benefits.
Find out whether your plan offers "telemedicine" benefits, which give you access to doctors and other providers via the telephone or Skype-like video calls. You may not want to haul yourself all the way to your doctor's office if you're not feeling well -- and a telemedicine consultation may be a good solution, or at least a starting point. Telemedicine is becoming more widespread, so look into it.
If you know the most important Medicare rules, you can avoid paying more than you need to for healthcare coverage. You also may be able to stay healthier and enjoy a longer life.
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