The ABC's (and D's) of Medicare
The ABC’s (and D’s) of Medicare
Understanding Medicare in my mind would be like driving in India without Waze. I know where I need to end up – but don’t know the best way to get there. The normal street signs used to navigate may be hard to see. Depending on directions from Government Employees or Insurance Companies is dicey. Taking a wrong turn can be pricey.
Yes, I am receiving way too many unsolicited phone calls and stacks of mail from insurance companies trying to get my attention as I approach 65. Am I supposed to talk and/or read every piece of mail? Which ones are important? It is a whole new world. Most of us spend our lives working for an employer that selects our insurance. We have an annual benefits enrollment period and select from two or three plans they have chosen for us. So, its complicated.
Consequently, most of us are clueless about Medicare and the countless decisions we have to make about our coverage. We might be working past 65 and are not even sure if we need Medicare, but we don’t want to do something (or not do) wrong and get a late enrollment penalty.
This post contains some useful information that I have uncovered to help guide me through the maze of information and make the right decisions regarding Medicare.
You have choices and Must Make Timely Decisions
· The first time you can enroll in Medicare is called your Medicare Initial Enrollment Period (IEP). The initial enrollment period is 7 months long – starting the 3 months before the month you turn 65, the month you turn 65, and the 3 months after you turn 65. If you miss this window of time – you may incur permanent enrollment penalties or delay your coverage.
· Research your options. You need to determine if you are going to enroll in the traditional Medicare program or enroll in a Private Medicare Advantage Plan.
· If you chose traditional Medicare – you must decide whether you need to add Part D Prescription Coverage, and if so, chose the right plan for the prescription drugs you do or may take. You also need to decide if you are going to purchase Medigap supplemental Insurance.
· If you go the Medicare Advantage route – you should compare plans according to your needs and understand your options if you change your mind and want to go to traditional Medicare.
The A, B, C’s (and D’s)
Medicare breaks down into 4 main parts. Below are a few key points about each one, what they cover, and the cost for each Part.
· Room and Board at Hospitals
· Post-hospital care
· Almost Always Free
· The Care administered by Physicians
· Preventative Care
· Diagnostic Imaging, radiation, durable medical equipment
· As of 2022 - $170 Monthly Premium
· An Alternative to traditional Medicare
· Combines Part A, B, and usually D
· Has an out-of-pocket maximum
· Prices vary by State – 2022 Premiums from $40 - $100 per month
· Retail prescription drugs
· Multiple options with different specifics within each one
· Make sure the medications you take are covered within the specific drug plan
· 2022 Premiums are approximately $35 per month. However, if you make over $91,000 per year ($182,000) for a couple – your premiums may be higher
Part D Drug Coverage Cycle
Phase 1: Annual Deductible. If your Part D has a deductible, you pay 100% of your drug costs before coverage begins. The deductible limit by law in 2022 is $480.
Phase 2: Initial Coverage. You pay a co-pay for each prescription, and your plan pays the rest until these drug costs reach the limit. The limit by law in 2022 is $4,430.
Phase 3: Coverage Gap AKA Donut Hole. The plans pay no coverage during this Phase. You will receive discounts from the drug makers and the government until your out-of-pocket spending reaches the limit. The limit set by law in 2022 is $7,050. If you think you’ve reached the coverage gap and don’t get a discount when you pay for your brand-name prescription, review your next “Explanation of Benefits” EOB. If the discount doesn’t appear on the EOB, contact your drug plan to make sure your prescription records are correct and up-to-date.
Phase 4: Catastrophic Coverage. You pay about 5% and your plan pays 95% of your drug costs. So, although out-of-pocket costs drop to a much lower level once you hit the catastrophic threshold, they don’t drop to zero. If you are taking an expensive medication, even 5% of the cost can continue to add up to a significant amount of spending each month.
What is Medigap?
Medicare supplemental insurance – also known as Medigap – isn’t a government program. It is private supplemental insurance you can choose to buy separately to reduce your costs in the traditional Medicare program. If you don’t have supplemental coverage from elsewhere (such as retiree benefits) and can afford the extra premiums, Medigap is worth considering.
What is Medicare Advantage?
Medicare Advantage (MA) is the name used for Medicare’s private health plans. They deliver Medicare benefits in a different way from the traditional system and are run by Medicare-approved private insurance companies. Medicare pays each plan monthly for each enrollee’s medical care, regardless of how much health care a person uses. You receive your medical benefits through the plan of your choice and pay the charges required by the plan. Because plans vary greatly in their costs and benefits, you need to compare them carefully to pick the one that best suits your needs. The AARP Medicare for dummies by Patricia Barry is an excellent source of information on MA and all things Medicare.
What if I need Emergency Care Abroad?
Medicare medical coverage benefits outside the U.S. are extremely limited. It is recommended to purchase a travel insurance policy to get the best coverage and ultimately the best “Peace of Mind.” As a Scuba Diver, I obtain Travel Insurance from Divers Alert Network (DAN) every time I go on a Dive Trip. My airline of choice is United Airlines. I always push the easy button and purchase the trip insurance offered when I book a flight, and on a recent cycling trip in France – I really needed it. Once again AARP comes to the rescue with Travel Insurance Information.
How do I sign up for Medicare?
· Apply by phone. Call Social Security’s main number at 800-772-1214 and schedule an appointment for a phone interview at a time convenient for you.
· Apply at your local Social Security Office. Call Social Security’s main number – 800-772-1214 and schedule your appointment at your local Social Security office at a time convenient for you. If you make an appointment in advance, you don’t have to wait in line.
· Apply online. You can apply online on Social Security’s website – as long as you are at least 64 years and nine months old and you don’t want to apply for retirement benefits at this time. Go to www.ssa.gov/medicareonly.
Do I have to sign up for Medicare again every year?
In general, if you are enrolled in Medicare, you do not need to take action to renew every year. There are some exceptions:
· You make the decision to change plans.
· Your plan reduces its service area and now you live outside of the coverage area.
· Your plan doesn’t renew its Medicare contract for the upcoming year.
· Your plan leaves the Medicare program in the middle of the year.
· Medicare terminates its contract with your plan.
Do your own Homework
The costs you face under Medicare will need to be included in your retirement budget, so it pays to know as much as you can about the program before you make the leap and retire. That way you will be better equipped to assess your savings and make financial choices that fit your lifestyle. Remember that healthcare is one of the greatest expenses you will face in retirement and learning as much as you can about Medicare will help you avoid costly mistakes as you step into retirement.