Most retirees receive health insurance through Medicare, the federal government’s health insurance program for people age 65 and older. To maximize the value of the health plan, take care to sign up at the correct time and take advantage of the free and low-cost services Medicare provides. Here’s when to enroll in Medicare and how much you can expect to pay for benefits and services.
[See: 10 Ways to Make the Most of Medicare.]
What is Medicare? Medicare is a government health insurance program for people age 65 and older. Medicare Part A covers hospital care and hospice. Medicare Part B is medical insurance that pays for doctor’s visits and preventive and outpatient care. Medicare Part C or Medicare Advantage Plans are an alternative to original Medicare in which private insurance companies pay for Medicare approved and sometimes other services, but with different prices and restrictions than original Medicare. Medicare Part D provides prescription drug coverage. Retirees can also purchase Medicare supplemental policies called Medigap to pay for original Medicare’s out-of-pocket costs and additional services Medicare doesn’t cover.
Medicare age. Retirees can first enroll in Medicare during a seven-month window that begins three months before the month you turn 65. Sign up at the beginning of this period if you want coverage to begin the month you turn 65. If you miss the initial enrollment period, you can sign up between Jan. 1 and March 31 for coverage that will begin July 1, but you will be charged late enrollment penalties for as long as you have Medicare. “Late enrollment penalties from Medicare can be long-term,” says Anna Maria Chávez, chief strategy officer and senior vice president for external affairs at the National Council on Aging. “You don’t want to have to worry about higher costs, just because you didn’t act when you became eligible at 65.” If you delay Medicare enrollment because you or your spouse is still working at a job with group health insurance, sign up within eight months of leaving the employer or health plan in order to avoid the penalty.
[Read: Medicare Enrollment Deadlines You Shouldn’t Miss.]
Medicare enrollment. Social Security beneficiaries are often automatically enrolled in Medicare Parts A and B, with coverage starting the month they turn 65. (If your birthday falls on the first of the month, coverage will start at the beginning of the prior month.) Medicare cards are mailed out to most Social Security beneficiaries three months before their 65th birthday, and Medicare Part B premiums are withheld from Social Security payments. However, you will need to actively sign up if you want prescription drug coverage, a Medicare supplemental policy or a Medicare Advantage plan. Workers who haven’t signed up for Social Security will need to enroll in Medicare and pay the premiums out of pocket in order to receive coverage. You can sign up online at socialsecurity.gov, by phone at 1-800-772-1213, or at your local Social Security office.
Once enrolled, you can review your coverage and make changes each year between Jan. 1 and March 31. “In general, people should shop every year and decide whether their prescription drug plan and Medicare Advantage plan is best for them,” says Leslie Fried, senior director of the Center for Benefits Access at the National Council on Aging. “Look at your drug costs and provider network and make sure the plan still works for you.”
Medicare premiums. Medicare beneficiaries have to pay premiums and a variety of other out-of-pocket costs. Most retirees don’t pay a premium for Medicare Part A, but there is a $1,340 deductible in 2018 and additional charges for long hospital stays. Most beneficiaries pay the standard Medicare Part B premium of $134 per month in 2018, but higher income retirees pay more. “If your income is at least $85,000 or more, then you pay the income related premium, which is indexed and rises with income,” says Tricia Neuman, director of the Program on Medicare Policy at the Kaiser Family Foundation. Medicare Part B has a $183 deductible in 2018, after which beneficiaries are generally responsible for 20 percent of the cost of most doctor’s services. The premium for Medicare Part D prescription drug coverage varies depending on the plan you select. The average Medicare Part D premium is $33.50 per month in 2018, and plans can charge deductibles of up to $405. Many retirees select Medicare supplemental insurance plans that cover some of these cost-sharing requirements in exchange for a monthly payment.
[Read: Medicare Out-of-Pocket Costs You Should Expect to Pay.]
Most workers also pay into Medicare throughout their lifetime. Employees contribute 1.45 percent of their earnings to the Medicare program, and companies match that amount. Self-employed workers pay 2.9 percent of their earnings into the system. There’s an additional 0.9 percent tax on income above $200,000 for individuals and $250,000 for couples.
Medicare coverage. Medicare helps to cover the costs of health emergencies and chronic conditions, but also can be used to help maintain good health. Once you sign up for Medicare, remember to take advantage of the free preventive services, such as an annual wellness doctor’s office visit, flu shot and screenings for certain conditions. It’s also important to know what Medicare doesn’t cover, such as dental care, eyeglasses and hearing aids, so you can budget for these items.
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Your Guide to Medicare Coverage originally appeared on usnews.com
