Medicare provides insurance coverage to 56 million Americans, yet many people don't know everything they should know about this valuable program. Here are 12 important facts about Medicare that can help you make the most of your Medicare benefits.
No. 1: Know the different parts
Medicare consists of Part A, Part B, Part C, and Part D. Part A provides coverage for hospitalization. Part B offers coverage for routine care, such as doctor visits. Part C is the Medicare Advantage program, which bundles Part A, Part B, and sometimes Part D into one plan. And Part D is the prescription drug plan.
No. 2: Sign up at 65, or else!
Many people think seniors are automatically enrolled in Medicare, but that's only true if you're enrolled in Social Security prior to turning age 65. If you're not receiving Social Security by then and you don't sign up for Medicare at age 65, you could end up paying more for your Medicare benefits than everyone else. Part B premiums increase by 10% for each full 12-month period that you could have been enrolled but failed to sign up.
No. 3: Early is better than late
You can sign up for Medicare at any point between three months prior to turning age 65 to three months following the month you turn age 65. You can sign up anytime during that seven-month period, but signing up early can be best. Wait to sign up, and you risk experiencing a gap between when you're existing insurance ends and Medicare begins.
No. 4: Learn your limits
Medicare Part A covers 100% of hospitalization costs after your deductible is met, but it only does so for a limited period of time. After 60 days of hospitalization, you're required to start paying a share of expenses, and after 90 days you'll be on the hook for 100% of your bill if you've used up your 60 lifetime reserve days. In 2017, your per-day coinsurance is $329 from days 61 to 90 and $658 per day from days 91 until your lifetime reserve days are gone.
No. 5: Paying for Part B
Medicare Part B covers many common healthcare services, but it doesn't pay for everything, and you must pay a monthly premium for coverage. You'll pay a deductible ($183 in 2017) plus 20% of the cost for most healthcare services. You'll also pay a monthly premium that ranges between $109 and $134 this year, depending on when you first enrolled in Medicare. Also, if you're a high-income earner, you could pay even more per month in premiums because of Medicare income adjustments.
No. 6: Penny-wise prevention
Though you do have to pay Medicare Part B premiums, deductibles, and co-insurance, many preventive health services won't cost you a penny. Many preventive screenings, including for cancer and cardiovascular disease, are covered by Medicare free of charge. You can also get a free annual wellness visit and flu shots. The list of free preventive services is long, so examine it and be sure to take advantage of all that's included.
No. 7: Medicare Advantage premiums vary
Medicare makes payments to insurers that sell Medicare Advantage plans, so some plans have $0 premiums. Most private insurers, however, charge a monthly premium, especially if they offer more than bare-bones coverage. The amount you'll pay in monthly premiums for your Part C Medicare Advantage plan depends on many factors, including the amount of your deductible and co-pays. The plan's provider network, the extent of the plan's drug coverage, and your out-of-pocket limits affect premiums, too. Because premiums can vary widely, it's important to compare your options.
No. 8: Is my medicine covered? Read the fine print
Part D drug plans and Medicare Advantage plans must follow basic Medicare guidelines, but beyond those rules, there's significant wiggle room regarding what drugs plans cover and how much you'll pay for your medicine. Expensive drugs could cost you more or less depending on the plan you pick. Generic-drug prices can vary, too, especially if plans offer mail-order and 90-day prescription services. Don't assume your drug coverage will be the same if you change your plan. Oftentimes, it won't be.
No. 9: A shrinking donut hole
A quirk in how Part D plans are designed means you end up paying more for your prescription drugs when your total drug spending falls between set levels. In 2017, this coverage gap, or donut hole, occurs when your spending is between $3,700 and $4,950. In the past, you paid 100% of drug costs in the donut hole. However, cost-sharing in the donut hole is shrinking. In 2018, if you end up in the donut hole, you'll be responsible for 35% of the cost of covered Part D brand drugs and biologics and 44% of the costs for generic drugs. Cost-sharing will continue declining until 2020 when it levels off at 25% of covered Part D drugs.
No. 10: Closing the gaps
The Part A deductible is currently $1,316 per year, and the Part B deductible is $183 this year. On top of that, you risk unlimited costs in Part A after you've used up your lifetime reserve days, and you'll always be on the hook for 20% coinsurance for Part B services, regardless of your annual spending. To reduce the likelihood that injury or illness will deal a big blow to your budget, consider a Medigap plan. Medigap plans charge monthly premiums, but they help pay healthcare costs when Medicare falls short. Sometimes, Medigap even gives you coverage when you're traveling outside the United States. You'll need to be enrolled in original Medicare, though. Medigap isn't available if you have Medicare Advantage.
No. 11: Changing your mind
Unhappy with your Medicare choice? Don't worry: You get an annual do-over. Medicare offers open enrollment between Oct. 15 and Dec. 7, and during this period, you can switch between Part A plus Part B and Medicare Advantage. You can also swap Part D plans. If you plan to use the open enrollment to make changes, review your healthcare spending and carefully compare plans to make sure your needs are covered. If you make a mistake, you could have to wait until next year's open enrollment to fix it. There is one exception, though: You can drop Medicare Advantage and switch back to original Medicare every year between Jan. 1 and Feb. 14.
No. 12: Helping hands
If you're overwhelmed by your Medicare choices, you're not alone. Fortunately, there's help available. You can get answers to general questions by calling Medicare at (800)633-4227 (that's 1-800-MEDICARE), or you can get personalized counseling (my preference) by setting up an appointment with your State Health Insurance Assistance Program (SHIP). SHIPs can answer questions about benefits, coverage, premiums, cost-sharing, and changing plans --r and best of all, it's free.