Medicare is an often confusing program that most seniors don’t fully understand. It’s hardly their fault—the government couldn’t have engineered a more convoluted program.
However, here are seven things every senior should know before they sign up for Medicare.
1. You Only Pay into Medicare Part A
Many people think since they pay into Medicare during their working years that Medicare will be free. However, you only pay into Medicare Part A. Other parts, such as Part B, Part C, and Part D have monthly premiums.
Part A is your inpatient hospital coverage, and Part B is your outpatient coverage. While most people earn premium-free Part A, they have to pay at least $135.50 per month for Part B. And, that’s not all. There are other optional parts that also come with a monthly premium.
Part D is for prescription drug coverage and on average costs about $32 per month. However, the monthly premium for Part D all depends on the plan you choose. Most Medicare beneficiaries have at least one plan option that has a $20 premium.
Two other types of plans that come with premiums are Medigap and Medicare Advantage. These plans are 100 percent optional. However, they are something you should consider. These plan types help to lower your out-of-pocket spending with Medicare.
Medigap is usually more expensive than Medicare Advantage averaging about $100 to $150 per plan. Medicare Advantage plans have much lower premiums. Some even have a $0 premium.
2. Medicare Doesn’t Cover Everything
Although Medicare covers many things, it doesn’t cover routine services such as dental, vision, and hearing exams. Medicare also doesn’t cover cosmetic services such as Botox. In the end, Medicare will cover medically necessary services and items..
Medicare Advantage plans usually cover non-Medicare covered benefits such as dental, vision, and hearing. You can review a Medicare Advantage plan’s Summary of Benefits to see which benefits the plan includes.
3. Medicare has Cost-Sharing Expenses
In addition to monthly premiums, Medicare also has cost-sharing expenses such as copays, deductibles, and coinsurance. The cost-sharing expenses are different for each part. Part A has a deductible of $1,364 per benefit period, whereas Part B has a deductible of $185 per year in 2019.
Also, Part B has a coinsurance amount; you are responsible for 20 percent of allowable charges. Medicare Part B will pay 80 percent of Medicare-approved outpatient services. Part A has daily copays for stays in hospitals and skilled nursing facilities past 60 days and 20 days, respectively. You have cost-sharing expenses for Part D plans as well.
4. There are Designated Enrollment Periods for Each Part
One of the things that makes Medicare so confusing for most people is the numerous enrollment periods they have. Many people confuse what each period is for. For instance, the Initial Enrollment Period (IEP) is a designated time to enroll in Parts A, B, D, and C (Medicare Advantage).
There are also enrollment periods called the Annual Election Period (AEP) and Open Enrollment (OE). The AEP is strictly for Medicare Advantage and Part D plans, whereas the OE is a one-time period that is for enrolling in Medigap plans without health questions.
Most of these periods are different for each person. However, the AEP is the same for everyone. The AEP, also known as the Fall Open Enrollment, starts on October 15th every year and ends on December 7th every year.
5. There are Penalties for Not Enrolling on Time
If you don’t enroll in Part B and Part D, during your IEP, then you can be penalized. You can also have a penalty for enrolling in Part A late if you have to pay a premium for it. Penalties are based on how many months you postponed enrollment.
For example, if you don’t enroll in Part B until you are 70 years old, your late penalty will be about $70 ($135.50 X 10% X 5 years). You will pay this penalty every month on top of your regular monthly premium for Part B.
However, if you have creditable coverage for Part B and Part D, then you can delay enrollment until you lose creditable coverage.
6. Medigap Plans Have the Same Coverage from Carrier to Carrier
There are 10 standardized Medigap plans in 2019. Each plan has the same coverage no matter the carrier you get it from. For example, a Medigap Plan G from Aetna has the same coverage as a Plan G from United Healthcare.
This means that the factor you should focus on is the quotes premium from each carrier. Find a carrier with the lowest premium to find the best deal. You can also review the carriers’ average rate increases to make sure the carrier has a good history of rate hikes.
7. Depending on Your Plan, You May be Limited to a Network
Depending on how you’re covered by Medicare, whether Original Medicare, Medigap, or Medicare Advantage, you may have a network of providers. A network is a list of providers who accept your plan.
If you have Original Medicare or Original Medicare with a Medigap plan, you can trust that you will never be subject to a network. However, if you have a Medicare Advantage plan, you will most likely have a strict network of providers. If you go outside your plan’s network, then you could pay most or all of your bill.
Do as much research during the months leading up to your enrollment so you can make sure you have a tight grasp on Medicare.