It is not an easy feat to understand all the aspects of Medicare, much less choosing the plan that is right for you. And unfortunately, we cannot sum up in one article - or even two - how to choose the right plan for you. This is a task that really needs to be coordinated with your entire life plan. But what we can do is help you understand the system so that the task is not so daunting.
#1 Thing to Know
Medicare is simply health insurance for individuals who have obtained the age of 65. Perhaps the most common misconception is that it will cover all of your medical expenses. There are a couple of ways to insure against the additional expenses Medicare does not cost and it is critical that you do so.
What are the Basics?
There are two parts of Medicare that are initiated through your enrollment in social security: Part A is the inpatient hospitalization coverage, which is provided at no monthly cost to you. Part B is coverage for medically necessary services such as doctors’ visits which involve a monthly premium that is “means tested,” which means that the amount you pay is based on your income from the prior two years. There are many things that Parts A and B do not cover that may very well surprise you and that you need to be aware of: certain treatments, medical equipment, surgeries, doctors visits, prescriptions and most long-term care needs. Additionally, there are co-pays and deductibles.
How Do I Start Part A and B?
If you are already taking social security when you turn 65, you will automatically be enrolled in Part A and B. If not, you will need to sign up during a 7 month period of time beginning 3 months before you turn 65 and ending three months after the month you turn 65. If you are still eligible under a group plan, you may wait and enroll within a short period of time after employment, or when coverage with the group plan ends and there are special enrollment times that will be available to you after the designated windows.
How Do I Insure Against What Medicare Doesn't Pay?
The good news is that you do have choices. For everything excepting of prescription drug plans and most long-term care expenses you have two choices: Part C commonly referred to as a Medicare Advantage Plan and a Medicare Supplement policy. Part C is much like a health maintenance organization (HMO) or PPO. It combines all of your Medicare needs and requires you to receive services through one of these provider organizations. They are very strict as to how and when they will pay, and may be very inconvenient for someone in a rural area. On the other hand, some plans may be more convenient for individuals because these organizations know the Medicare system so well. They can even sometimes include a prescription drug plan. A Medicare Supplement policy also referred to as a “Medigap policy” can simply pay for many of the costs Part A and B don't including copayments and deductibles. They are much less restrictive than Part C and can be purchased with your specific needs in mind. In other words, you have choices on what you want your policy to cover. Both Part C and Medicare Supplements may cause you to think about additional insurance for your prescriptions. There are multiple prescription drug plans available. This is called Part D. The best way to explore these is by talking to your pharmacist and using the Part D tool on the Medicare.gov website.
Last, but not least is the cost of most long-term care. Medicare will only pay for the first 30 days if you are moved into long- term care by your doctor. This means everything else will need to come from somewhere else. Unfortunately, this could be the largest medical expense you will face in retirement. Due to the extremity of these costs, there is much to plan for.
What do I do now?
- If you will be turning 65 in the next year or going off your group health plan, start planning today. The Medicare process can be a little time consuming and a little overwhelming if you wait until the last minute. Be aware of the time factor in enrollment.
- Let us help. For most retirees their medical expenses are the largest expenses they will have in retirement and to add pain to this misery health care costs are going up. Your plan needs to be paramount!