The ABCs of Medicare: Know Your Options and How to Fill the Gaps
Medicare is the primary source of comprehensive healthcare insurance for seniors 65 and over. For most of America’s senior population, Medicare is a blessing they’re eligible for when they turn 65. However, you still have to begin with a good basic understanding of how the parts work together and a knowledge of where the coverage gaps are. If you make the wrong choice, you could end up having to spend a lot of your own money.
The full initial enrollment period for Medicare includes the three months prior to, the month of, and the three months after your 65th birthday. You’ll need to sign up during the first three months if you want coverage to begin the month you turn 65. You’ll be automatically enrolled in Medicare if you’re receiving Social Security; otherwise, you’ll need to enroll on your own through Social Security or the Medicare.gov website.
Medicare: What’s What?
Medicare is composed of four parts, Parts A, B, C, and D. The majority of enrollees begin with Part A, which covers hospital inpatient care and some kinds of home health care with no premiums, while Part B covers doctor services, hospital outpatient care, preventive care, and some types of home health care. With Part B there is a monthly premium that’s based on your income (higher-income enrollees pay more). And you can sign up for Part B at age 65 if you’re retired or will retire at 65; if you’re still working, you’ll need to study your options to determine the proper time to enroll given your situation. You can also sign up for Part D, which covers prescription medications, when you sign up for Plan B. If you delay and sign up late, you could end up incurring a permanent penalty that could cost you plenty.
Medicare Part C, also called Medicare Advantage and sold through companies like Aetna, offers plans that generally come with co-pays and deductibles. However, there’s a yearly out-of-pocket limit, so when your deductibles and co-pays are paid up, the plan pays 100 percent of your medical bills for the remainder of the year. These plans function like managed care plans, with care provided by doctors and hospitals within the plan’s network. Many Advantage plans come with dental, hearing, and vision coverage, which aren’t covered under Original Medicare.
There are out-of-pocket costs associated with original Medicare, and there’s no limit on what you could spend, which means your end of the deal could add up quickly, particularly if you require therapy or medical treatments. Medigap plans cover most of Medicare’s out-of-pocket expenses. If you’re covered under Original Medicare, choosing a Medigap plan is a way of filling one of those gaps, which can become a financial burden for older adults. Once Medicare has paid your claim, it’ll be forwarded directly to your Medigap plan, which then pays its portion of the bill.
Medigap won’t cover prescription drugs, so you’ll need to purchase a separate plan for drug coverage. If you’re enrolled in an Advantage plan, you’ll receive an annual notice of change, with important information about any changes to your plan in the coming year (plans are sometimes terminated, so read these carefully).
Go to Medicare.gov to find Advantage plans in your area.
Filling the Gaps
Medicare doesn’t cover deductibles/co-pays for hospital stays and doctor services, fees for doctors who charge more than Medicare pays, the cost of prescriptions, or dental care. You can fill these gaps by adding a supplemental Medigap policy and Part D policy, or by enrolling in a Medicare Advantage plan. If you go the Medigap/Part D route, you’ll have fewer out-of-pocket costs, though your premiums will be higher than with Medicare Advantage.
Knowing how to get started in Medicare can eliminate some of the anxiety and confusion enrollees sometimes experience. Remember, it’s important to determine if you’d rather have higher premiums or higher out-of-pocket costs. Also, research the best ways for you to fill gaps in your coverage and get the plan you need.
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