By
Maurie Backman,
The Motley Fool
It's time to get schooled
Healthcare is one the greatest expenses seniors face, and millions get coverage for it through Medicare during retirement. But the more you know about Medicare, the better equipped you’ll be to plan for your golden years and keep tabs on your health as you age. Here are a number of key facts it pays to familiarize yourself with.
1. Medicare has several distinct parts
Medicare is comprised of a few different parts that, when taken together, can provide fairly comprehensive health coverage. Part A covers hospital care, as well as care at skilled nursing facilities. Part B covers routine outpatient care, including doctor visits, diagnostic services, and preventive care. And Part D covers prescription drugs. There's also Medicare Part C, or Medicare Advantage, which is an alternative to original Medicare and its three unique parts.
2. Part A is generally free
Medicare Part A is free for most enrollees. The only time it isn't free is if you or your spouse didn't work long enough, and pay Medicare taxes long enough, to be eligible for no-cost coverage. You'll avoid Part A premiums if you or a spouse paid those taxes for at least 10 years. If not, you have the option to pay for Part A yourself.
3. Parts B and D charge a premium
You'll pay a premium for Medicare Parts B and D, the cost of which can fluctuate from year to year. Currently, the standard Part B premium is $135.50 per month. In 2020, however, it's increasing to $144.60. The amount you pay for Part D, meanwhile, will depend on the specific plan you choose.
4. Higher earners pay more for Parts B and D
Seniors with high incomes (say, because of robust pension benefits or retirement savings) are subject to income-related monthly adjustment amounts that make Medicare premiums even pricier. These apply to both Parts B and D. In 2020, you'll face a premium surcharge if you're an individual tax filer with an income above $87,000, or a joint tax filer with an income above $174,000.
5. Medicare Advantage can take the place of original Medicare
If you'd rather not navigate original Medicare's various parts, you can opt for a Medicare Advantage plan. With an Advantage plan, you're buying coverage from a private insurer, only your plan must offer at least the same level of coverage as original Medicare, and you must be enrolled in both Medicare Parts A and B in order to be eligible for a Medicare Advantage plan. There are benefits and drawbacks to opting for Medicare Advantage, so it pays to do some digging to see if it's the right choice for you.
6. You're eligible for coverage at age 65
Medicare coverage begins at age 65, but you may qualify to enroll earlier under specific circumstances -- namely, if you have ALS (Lou Gehrig's disease) or end-stage renal disease. You may also qualify to enroll early if you're permanently disabled and have been receiving disability benefits for at least two years.
7. Your initial enrollment period lasts seven months
Your initial window to sign up for Medicare begins three months before the month of your 65th birthday, and ends three months after that month. If you miss that window, your next opportunity to enroll is during Medicare's general enrollment period of Jan. 1 through March 31 every year.
8. You can enroll in Medicare online
Enrolling in Medicare online can be much quicker than doing so in person or over the phone. All you need to do is
create an account on the Social Security Administration's website and enter some basic information (like your name, address, and Social Security number). All told, the process should take 20 minutes or less.
9. Enrolling late will cost you
If you don't sign up for Medicare on time, you'll risk paying more for Parts B and D for life. In the case of Part B, you'll face a 10% surcharge on your monthly premiums for each 12-month period you were eligible to enroll but instead went without coverage. Your Part D penalty, meanwhile, will equal 1% of the national base beneficiary premium (which can change from year to year) multiplied by the number of months you were eligible for coverage but didn't enroll.
10. You'll get a special enrollment period if you're still working at 65
If you’re still working at age 65, and have coverage through a group health plan at work (or you’re married to someone in this situation), then you don’t need to worry about signing up for Medicare right away. Rather, you’ll get a special enrollment period that lasts eight months, during which time you can sign up for Part B and avoid a penalty for being late. That special enrollment period begins the month after you stop working for your employer, or the month after your group health coverage ends -- whichever is sooner.
11. Original Medicare doesn't cover everything
Many seniors are shocked to learn that original Medicare does not cover a number of key health services. These include dental care, vision care, and hearing aids. Medicare Advantage, however, often includes these services in its scope of coverage, which is why it could pay to look into an Advantage plan.
12. And it won't cover long-term care
An estimated 70% of seniors who reach the age of 65 will need some amount of long-term care in their lifetime, and unfortunately, Medicare won't cover it. Medicare will only pay for care related to an illness or injury, but it won't pick up the tab for custodial care, or assistance with daily living tasks.
13. You're not stuck with the same Part D plan for life
The Part D drug plan you sign up for initially may not serve your needs indefinitely. Part D plan formulas change from year to year so that medications that don’t cost a lot one year can be prohibitively expensive the next year. Thankfully, you have the option to change your Part D plan every year during Medicare’s annual open enrollment, which runs from Oct. 15 through Dec. 7.
14. You can change your Advantage plan, too
Just as you can switch your Part D plan during open enrollment, so too can you move from one Advantage plan to another. And if you’d rather revert to original Medicare, you can do that during open enrollment as well.
15. You can enroll in Medicare before Social Security
Though you’re allowed to start collecting Social Security as early as age 62, you’re not entitled to your full monthly benefit until age 66, 67, or somewhere in between, depending on the year you were born. The good news is that you’re not required to be on Social Security to get Medicare benefits. When you enroll in Medicare, you’ll be asked if you wish to sign up for Social Security as well, at which point you can simply opt out.
16. You can pay your Medicare premiums directly from your Social Security benefits
One advantage of being on Social Security and Medicare at the same time is that your Part B premiums will be automatically deducted from your Social Security benefits. This helps you avoid the hassle of having to pay them yourself, and it also protects you from severe Part B premium hikes thanks to Medicare’s hold-harmless provision.
17. You'll face deductibles under Medicare
With Medicare Parts A and B, you'll have an annual deductible that you'll need to meet before your services are paid for. Under Part A, you'll face a $1,408 deductible next year for each benefit period during which you require inpatient hospital care. For Part B, you'll need to meet a $198 deductible in 2020.
18. You may need supplemental insurance
Because there are so many out-of-pocket costs associated with Medicare, many seniors opt to buy a Medigap plan. Medigap is supplemental insurance, and it can help pick up the tab for expenses like deductibles and copays.
19. You're entitled to a host of free preventive services
Once you're enrolled in Part B, you can benefit from a number of no-cost preventive services designed to help you take care of your health. These include annual wellness checkups, depression screenings, flu shots, and mammograms.
20. You can consult with physicians online or over the phone
Many seniors struggle with mobility issues that make seeing a doctor in person very difficult. Thankfully, you can receive healthcare advice under Medicare without having to leave your home. All you need to do is request a telehealth consultation, and you'll get access to a doctor over the phone or via a computer.
21. Original Medicare doesn't offer overseas coverage
Many seniors travel extensively during retirement. If you’re planning to globe-trot, you should know that original Medicare won’t provide coverage overseas. However, an Advantage plan might.
22. Medicare scams are all too common
Seniors tend to be easy targets for scammers, so if you get a call from a Medicare representative claiming you’re about to lose your benefits if you don’t make an immediate payment, don’t believe it. The only way a Medicare representative will reach out to you by phone is if you initiate contact, so never give out personal information to someone who calls threatening to make your health benefits disappear.
23. Medicare will help you narrow down your plan choices
Selecting a Part D or Advantage plan can be a time-consuming, mind-boggling process. Thankfully, Medicare’s Plan Finder makes it a lot easier to compare your options. You’ll even get access to plan ratings so you can see how satisfied enrollees tend to be with their coverage.
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