Medicare facts – what you should know
Medicare can be sort of overwhelming when you are new to it. It’s a national health insurance program with various moving parts. We generally recommend that people begin doing their research about six months before they age into Medicare at 65 so that they can learn all the parts and supplemental options.
The great news is that once you learn a few of the basics, it makes it easier to understand all the rest. Here are a few key points you should know about Medicare so that you can transition smoothly in retirement.
1. Medicare Has Monthly Premiums
Original Medicare has two parts. Part A is hospital coverage and most people don’t pay anything for it at age 65. This is because you’ve paid taxes during your working years to cover it.
Part B, however, has monthly premiums that you will pay the entire time that you are enrolled in Medicare. In 2019, most people will pay $135.50 a month as their standard Part B premium. Some individuals pay more though if they are in higher income brackets.
If you enroll in Medicare Part D, which is optional, you will also pay premiums for this drug coverage. Think of it as a sort of pharmacy card that helps you pay for your prescriptions.
2. Medicare Has Cost-Sharing
Besides just paying your monthly premiums, you’ll have costs as you go along. These will include copays and coinsurance for various medical services and deductibles for inpatient and outpatient care. These gaps in Medicare can be costly, so many people choose to enroll in either a Medicare supplement or a Medicare Advantage plan to help them cover these costs. These two kinds of coverage work differently but both will help to keep you from the risk of medical bankruptcy if you encounter a chronic illness or injury.
3. Enroll On-Time to Avoid Late Penalties
Medicare gives everyone a 7-month Initial Enrollment Period to sign up for Parts A, B and D. If you don’t enroll during this period and you have no other creditable coverage, you will likely be assessed expensive late penalties later on when you finally do decide to enroll. The penalties are calculated based on how long you waited to enroll.
For instance, you will be assessed a 10% late penalty, cumulative, for every month that you could have been enrolled in Part B but were not. The penalty only applies if you didn’t have other health coverage that was creditable.
Some people work well past age 65 these days and these individuals can delay enrollment into Medicare if they have creditable group health coverage from a large employer.
4. You Can Make Changes During an Annual Election Period
Medicare allows beneficiaries to change their drug plan or their Medicare Advantage plan during the fall annual election period each year. This period runs from October 15th until December 7th every year and the changes will take effect on the first of January.
This is important because you might be prescribed a new medication and find that your current plan doesn’t cover it. The election period gives you an opportunity to change over to a plan that does.
5. Everyone Gets an Open Enrollment Period for Medicare Supplements
We mentioned earlier that many people enroll in supplemental coverage to help cover their Medicare deductibles, copays and coinsurance. Some people new to Medicare might worry that they can’t get cover if there is a pre-existing condition. Fortunately, all beneficiaries are given a six-month open enrollment period to enroll in a Medicare supplement. This period begins with your Part B effective date. So even if you have a serious illness, you don’t need to worry that when you age into Medicare that you’ll be unable to get coverage.
You cannot be denied for coverage by the insurance company when you apply during this window.
6. Most Doctors Accept Medicare and Medicare Supplement Plans
The majority of medical providers in the United States do accept Medicare. If you enroll in a traditional Medicare supplement, the provider must also accept your Medicare supplement. The network is Medicare and it’s a big network.
Sometimes, however, you may find doctors whose practices are full. This doesn’t mean they don’t accept Medicare. It may just mean that they cannot accept any new patients who have Medicare.
If you run into this, Medicare has an online directory that you can use to find a new physician in your area.