If you're getting close to age 65, or have even reached or surpassed it, you may be assuming that you know all you need to know about Medicare. If you mainly just know that it will provide health insurance for you in your golden years, you need to learn a little more. For example, there are different kinds of Medicare coverage to sign up for, some services and products are surprisingly not covered, and there is a bit of means-testing involved.
Selena Maranjian: One things that many Americans don't realize about Medicare is that if they want Medicare coverage, they don't have to sign up for the U.S. government-provided original Medicare coverage. Private insurance companies such as Blue Cross Blue Shield and UnitedHealth Group (NYSE: UNH) now offer Medicare Advantage plans.
Medicare Advantage plans, which debuted in 1995, are administered by private insurers but are regulated by the U.S. government. Each must offer at least as much coverage as what is now called "original Medicare" (i.e., the benefits you'll find in Part A and Part B that respectively cover hospital and medical services). In order to attract customers, many offer broader coverage, such as vision and/or dental care. Most include prescription drug coverage, too. While original Medicare doesn't cover healthcare provided outside the U.S., some Medicare Advantage plans do. While original Medicare will often have you footing 20% of many bills, a Medicare Advantage plan might charge you a low copay per doctor visit or service. Medicare Advantage plans also have out-of-pocket limits , beyond which the plan will pick up all your healthcare costs for the year.
Original Medicare lets you see any healthcare provider who accepts Medicare, but Medicare Advantage plans will typically limit you to a network of doctors -- though these networks can be very big sometimes.
If you think you might be interested in a Medicare Advantage plan, see which ones are offered in your area. Know, too, that choosing between original Medicare and a Medicare Advantage plan isn't a permanent decision. At least once a year, you will be able to switch between them.
Brian Feroldi: One surprising fact about Medicare is that it doesn't cover a lot of services that millions of elderly patients typically need. For example, Medicare generally won't cover trips to the dentist, ophthalmologist, or audiologist, leaving recipients who want basic care for their mouth, eyes, or ears to foot the entire bill.
Let's look at each in a bit more detail so you can know what to expect.
Medicare won't pay for trips to the dentist for basic services such as cleanings, fillings, tooth extractions, or dentures. However, if have an extreme dental emergency and you wind up in the hospital, then Medicare will pay for certain dental services as part of your Part A benefit.
Just as with dental care, Medicare doesn't pay for many eye care services, either. Need a routine eye exam, eyeglasses, or contact lenses? You will likely be on your own. There are a few exceptions to this rule, though, as Medicare will pay for an annual eye exam to check for diabetic retinopathy (if you have diabetes) and for a yearly glaucoma test (if you are deemed to be a high-risk candidate). It will also cover some tests and treatments if you have been diagnosed with age-related macular degeneration by an eye doctor. But that's about it.
As for the ears, Medicare will cover some diagnostic tests to check your hearing and balance if your healthcare provider deems them necessary, but it won't pay for routine hearing exams or even a hearing aid. That's surprising, as the National Institute of Health estimates that almost half of people age 75 years or older have a hearing impairment.
If you're worried about any of these routine coverage gaps, then you might want to look at buying a Medicare Advantage Plan that covers these services. Not all of them do so, make sure you ask about each of these before you sign up.
Dan Caplinger: Many people see the means-testing of benefits to be the solution to the financial woes faced by major government programs such as Social Security. But what a lot of Americans don't realize is that Medicare already has a form of means-testing that charges higher premiums to high-income participants.
Specifically, for premium payments in 2016, individuals with incomes of less than $85,000 or joint filers with earnings of less than $170,000 pay the standard Part B premium of $121.80. However, those with higher incomes also have to pay an additional surcharge. For singles making up to $107,000, the add-on surcharge is $48.70 per month. From $107,000 to $160,000, singles pay double what low- and middle-income retirees pay. For incomes between $160,000 and $214,000, the extra payment is $194.90 per month, and those above that income level top out at $268 extra per month. The income ranges for joint filers are all exactly double the single-filer ranges.
Similar surcharges add costs for Part D prescription drug coverage. Supplemental costs follow the same ranges as Part B premium surcharges, and add $12.70, $32.80, $52.80, or $72.90 to your monthly costs depending on where you fall. These extra payments go part of the way toward helping to finance Medicare for the bulk of its lower-income participants.
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