"As an athlete, I understood the value of my health insurance. I knew that in my profession, injuries were common and could happen at any time."
-- Magic Johnson
Athletes tend to need a lot of healthcare, and so do older Americans. Most older Americans don't have the funds to cover all their healthcare needs, though, because it's so expensive. According to Fidelity Investments, a 65-year-old couple retiring this year will spend, on average, about $260,000 out of pocket on healthcare in retirement. Clearly, affordable health insurance is critical for older Americans, and that's why Medicare is so important.
Don't just ignore Medicare, though, assuming that you can think about it later, when you're in your mid-60s. There are some important things to know about it so that you can make informed decisions when the time comes. Here are three of them.
Don't be late signing up
You might think that it doesn't matter exactly when you sign up for Medicare, but it matters a lot. If you're late enrolling, it can really cost you -- for the rest of your life.
The regular eligibility age for Medicare is 65. 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. That's your seven-month-long "Initial Enrollment Period" (IEP). Miss it 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.
If you are late, you can still enroll during the "general enrollment period," which is from January 1 through March 31 of each year -- though that coverage won't begin until July and the late penalty might apply.
There are a few loopholes, though. If you're already receiving Social Security benefits as you approach 65, you'll likely be enrolled in Medicare automatically. (You'll know this has happened because you'll receive your Medicare card in the mail three months before your 65th birthday.) Most people start collecting Social Security before age 65 (the earliest one can start is 62), so the penalty won't affect as many people as you might think.
You can 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. Such people will get a special enrollment period based on when they return, when they stop working, or when their employer-provided coverage ends.
Choose the best Medicare plan for you
It's easy to assume that there's just a single form of Medicare -- and for a long time there was -- but Medicare enrollees now have two main choices: "original" Medicare or a Medicare Advantage plan.
Original Medicare includes Part A (hospital coverage) and Part B (physician/medical insurance). Part D is optional, and provides prescription drug coverage. In addition, many enrollees opt to add on a private Medigap plan to pay for more of what Medicare doesn't pay.
Medicare Advantage plans, sometimes referred to as Part C, are offered by private insurers but are regulated by the U.S. government. They must offer at least as much coverage as original Medicare, but many go well beyond that, typically including prescription drug coverage and sometimes vision, dental, and/or hearing coverage, too. Medicare Advantage plans can sometimes be your best bet, as they may cost less and provide more coverage.
As your decision time approaches, read up on all the options available to you where you live. (Different Medicare Advantage plans are offered in different regions by different insurance companies.) Don't just compare premiums, either, because Medicare Advantage plans may offer different co-payments, deductibles, and so on. Compare total expected out-of-pocket costs, and consider other pros and cons, too. For example, Medicare Advantage plans are typically rooted in your local area, limiting you to a certain network of providers (though some networks can be rather large). If you plan to travel a lot, original Medicare may be preferable as it's honored by providers nationwide. On the other hand, some Medicare Advantage plans offer limited coverage abroad, which original Medicare does not do. The Medicare website's Plan Finder can help you compare plans and choose. Note the star ratings of plans you're considering and favor ones with four or five stars.
Rest assured that your decision won't be permanent. You can change your mind and choose a different plan next year. In fact, it's smart to review all your options and their costs each year.
Use your Medicare coverage
To get the most bang for your Medicare bucks -- and perhaps to live longer, too -- proactively use your coverage instead of just waiting to get sick.
Screenings and preventive care are often available at no extra cost to you, and they can help identify problems early, before they grow worse and more costly. These include mammograms, colonoscopies, diabetes screenings, flu shots, and even smoking and tobacco-use cessation counseling. Here's how powerful regular care can be: According to a 2014 study from the Insured Retirement Institute, "A 65-year-old male in excellent health can expect to live to age 87, while the same male in poor health (e.g. high blood pressure, high cholesterol, and tobacco use) has a life expectancy at age 65 of approximately 81 years." For women, excellent health offers a life expectancy of 89 and poor health only 84 years. That's five or six extra years of life!
Don't ignore wellness benefits, either. For starters, you're entitled to one wellness visit with your doctor annually, at no extra charge, in order to review your health. Don't skip this, as it gives your doctor a chance to discuss ways to get you healthier instead of just addressing the illness or injury you walked in with. You may have access to other benefits, too, such as discounts on gym memberships. Find out what your plan offers. When you're shopping for a Medicare plan, review available wellness perks, too, to see which would serve you best.
If you're informed and make smart decisions regarding Medicare and your healthcare, you can end up not only saving money but also living longer and better.