When you finally decide to retire, it will bring a plethora of new issues to tackle, and one of the most irritating may be Medicare. Contemplating when and what to enroll in and what coverage will be best for you can be overwhelming. Here’s how Medicare beneficiaries can tread through the waters, and make the most of the program.
1. What’s covered and how much you pay
Hospital care is covered by Medicare Part A. Medicare Part B is medical insurance that pays for doctor’s visits and outpatient services. Medicare Advantage plans, or Medicare Part C, are an alternative to traditional Medicare offered by private insurance companies, typically with different premiums and restrictions. Prescription drug coverage is provided through Medicare Part D.
Workers and employers each pay 1.45 percent of employee earnings into the Medicare system. Self-employed workers contribute 2.9 percent of their income. People who earn more than $200,000 for individuals and $250,000 for couples pay an additional 0.9 percent tax on that income.
Most people don’t pay a premium for Medicare Part A. The standard Medicare Part B premium is $104.90 in 2015, but costs are higher for retirees with a modified adjusted gross income above $85,000 for individuals and $170,000 for couples. Medicare Part D premiums vary depending on your plan choice. There’s a $147 Medicare Part B deductible in 2015, after which you will be charged 20 percent of the Medicare-approved amount for most services. There’s no annual limit on out-of-pocket costs. Medicare Part A has a $1,260 deductible if you are hospitalized, and additional costs apply if your hospital stay exceeds 60 days.
2. Filling the gap
Recipients of traditional Medicare will probably want to sign up for a Medigap supplemental insurance plan offered by private insurance companies to help cover deductibles, co-payments and other gaps. You can change Medigap plans at any time, but you might be charged more or denied coverage based on your health if you choose or change plans more than six months after you first signed up for Medicare Part B. Medigap policies are identified by letters A through N. Each policy that goes by the same letter must offer the same basic benefits, and usually the only difference between same-letter policies is the cost. Plan F is the most popular policy because of its comprehensive coverage.
3. There’s an all-in-one option
You can choose to sign up for traditional Medicare, Parts A, B and D, and a supplemental Medigap policy. Or you can go an alternative route by signing up for Medicare Advantage, which offers comprehensive coverage through private insurance companies. Technically Medicare Part C, Medicare Advantage has a monthly cost, in addition to the Part B premium, that varies depending on which plan you choose.
With Medicare Advantage, you don’t need to sign up for Medicare Part D or buy a Medigap policy. Like traditional Medicare, you’ll also be subject to co-payments, deductibles and other out-of-pocket costs, although the total costs tend to be lower than for traditional Medicare. In many cases, Medicare Advantage policies charge lower premiums but have higher cost-sharing. Your choice of providers may be more limited with Medicare Advantage than with traditional Medicare.
4. Enrollment deadlines
You can first sign up for Medicare during a seven-month window around your 65th birthday. Coverage can start beginning the month you turn 65. If you fail to sign up during this initial enrollment period, you could be charged higher premiums for the rest of your life. If you delay Medicare enrollment due to group health insurance through your current job, sign up for Medicare within eight months of leaving the job or the coverage ending to avoid the penalty.
5. The “donut hole”
One cost for Medicare is decreasing — the dreaded Part D “donut hole.” That is the period during which you must pay out of pocket for your drugs. The coverage gap begins once you leave the initial coverage stage and ends when you spend a total of $3,700 out of pocket in 2017. If you reach the gap in 2017, you will pay no more than 40% on covered brand-name prescription drugs and receive a 49% discount on covered generic drugs. Under the Affordable Care Act provisions, there will be additional discounts in the coverage gap each year through 2020, when the coverage gap will be closed entirely, and you will have continuous Medicare Part D Prescription Drug coverage. Because of the health care law,the amount a beneficiary pays while in the doughnut hole is gradually shrinking, so that by 2020, beneficiaries will pay just 25% of the costs of their generic and brand-name drugs while in the coverage gap.
6. Free services
Medicare provides many preventive care services, such as flu shots and mammograms, without any cost-sharing requirements. Beneficiaries are also eligible for a free wellness doctor’s visit once each year. However, tests and services performed during the wellness visit could result in additional charges.
7. What’s not covered
Medicare doesn’t cover everything. It typically doesn’t cover vision, dental care or hearing aids. Medicare also won’t pay for more than 100 days of long-term care such as nursing home stays or assisted living.
8. You have the right to appeal
If you disagree with a coverage or payment decision made by Medicare or a Medicare health plan, you can file an appeal. The appeals process has five levels, and you can generally go up a level if your appeal is denied at a previous level. Gather any information that may help your case from your doctor, health care provider or supplier. If you think your health would be seriously harmed by waiting for a decision, you can ask for a fast decision to be made and if your doctor or Medicare plan agrees, the plan must make a decision within 72 hours.
The new Medicare Plus Card saves you up to 75% on things not covered by Medicare
Medicare doesn’t cover everything. Luckily, those on Medicare can now start saving on out of pocket expenses like prescription drugs, dental, vision, hearing, and more. Over 1 million people have already received their free Medicare Plus Card.