Statistics reveal that by 2030, those in the 65 and older bracket will be about 12% of the world’s population. As people age, they need more medical care so having good insurance is more important for older people.
In the United States, reaching the age of 65 means eligibility for Medicare. Signing up for Medicare on time is important so you don’t end up paying a hefty fine. If you’re new to Medicare, it can be confusing.
Are you wondering how Medicare works? In this article, we’ll give you 10 simple tips for understanding how Medicare works.
What Is Medicare?
Medicare is an insurance program that’s administered by the federal government. It comes in parts:
- Part A (hospital insurance)
- Part B (medical insurance)
- Part D (prescription drug insurance)
- Medicare Advantage (Part C – all-in-one alternative coverage)
Using a licensed agent from a company like MedicareWire.com helps clarify the process for picking a plan.
1. Part A, B, and D
Part A is hospital coverage and it’s free if you’ve paid Medicare payroll taxes for 10 years. If you stayed at home and your spouse paid, you’re also eligible. Those not eligible pay a premium per month.
Doctor’s visits and any outpatient services are part of Part B. This costs everyone per month. The average cost is about $135 per month.
Prescription drugs are Part D and that also comes with a cost per month. Most plans are about $35 per month.
2. An All-in-One Plan
You can sign up for an all-in-one plan that includes traditional Medicare as well as a supplemental policy. The supplemental policy is a Medigap policy. Medigap covers costs not included in Medicare.
Another option is a Medicare Advantage policy. These policies cover prescription drug and medical costs through a private insurer. These are the Part-C policies.
If choosing a Medicare Advantage policy, you’ll pay an added premium but you won’t need a Medigap or a Part-D policy.
3. Mind the Gap
Are you signing up for traditional Medicare? A supplemental Medigap insurance policy is a good idea. Medigap plans help with deductibles and co-pays along with other gaps in the traditional policy.
Changing Medigap policies is easy but watch out for denials or extra charges. These occur when changing plans after six months from initial signup on Part B.
It’s alphabet soup when it comes to Medigap policies with plans from A to N. Policies with the same letter offer similar coverage though the price differs.
4. The Best Time to Sign Up
Are you already getting your Social Security benefits? If so, enrollment is automatic. Premiums come straight out of your monthly benefit.
If you’re not taking Social Security yet, you’ll sign yourself up for Part A and B coverage. There’s a seven-month initial enrollment window. The window starts three months before your birthday month when you’re turning 65.
The window ends three months after your 65th birthday. Sign up as early as possible.
Are you working and covered under an employer plan? Delaying Medicare might be possible but make sure you follow the rules! If you don’t sign up within eight months of employer-provided coverage loss, you’ll pay heavy penalties upon enrollment.
5. High Income? You’ll Pay More
Depending upon your adjusted gross income, Parts B and D premiums carry a surcharge. Is your adjusted gross income more than $85,000 and you’re single? You’ll pay a higher premium.
Married couples making over $170,000 also pay higher premiums.
6. Enrollment Periods
The best time for signing up is the initial seven-month enrollment period. Did you miss the initial enrollment for Part B and you’re not working and not covered under your spouse? Then sign up during general enrollment between January 1st and March 31st.
Be aware, if you missed the initial enrollment, you’ll pay a penalty, and it’s big. For each 12-month period you delayed signing up for Part B, you’ll pay a 10% lifetime penalty. Don’t miss initial enrollment!
You can sign up late without a penalty if you’re covered by a current employer plan. Make sure you sign up within eight months after losing employer coverage. If you delay past the eight months, you’ll pay the penalty.
7. Lots of Free Services
There are a lot of free preventative services with Medicare. You’re eligible for a free cardiovascular screening every five years. Develop a personal health plan at your free annual wellness visit.
There’s no excuse for missing mammograms, flu shots, and cancer screenings since they’re all free on an annual basis.
8. What’s the Donut Hole?
The “donut hole” is the coverage gap in Part-D prescription medicine costs. The gap means higher out-of-pocket costs for drug coverage.
The donut hole is shrinking so the out-of-pocket costs aren’t as high as they were. If your costs reach $5,000 out of pocket, the government picks up the rest of the tab.
9. Be Aware
Your routine dental and eye care isn’t something that Medicare covers. Need dentures or hearing aids? Those aren’t covered.
Medicare doesn’t cover long-term care either. If you need custodial care and help with dressing and bathing, that comes out of your pocket. Consider long-term health insurance for covering these costs.
10. Appealing a Medicare Decision
Are you unhappy with a payment decision in your Medicare or Medicare health plan? File an appeal.
There are five levels within the appeals process. Denial at the first level doesn’t mean you didn’t win your appeal. Push the appeal to the next level.
Will your health suffer while waiting for a decision? If your doctor agrees, Medicare must give you their answer within 72 hours. Make sure you’ve got any supporting information that helps your case.
Learning How Medicare Works
Learning how Medicare works isn’t easy but it’s important! Understand the different parts, what each part costs, and the best ways of filling the gaps. Be aware that eye care and routine dental care are not covered with Medicare.
Enroll on time! Enrolling outside of your enrollment window means a 10% lifetime penalty. Make sure you have a separate long-term coverage policy.
Ask for help if you need it. Understanding Medicare is too important to let it go!
Looking for other articles with helpful advice? Keep reading the blog!