Did you know that about 51 million Americans are covered under Medicare today? That number is set to explode, however, as the baby boomers turn 65. By 2020, another 13 million will have signed up. If you’re one of them (or even if you already have Medicare), here’s what you need to know about this form of insurance.
- There are four parts to Medicare.
- Part A covers inpatient hospitalization, hospice care, blood products, short-term care in a skilled nursing facility and some home health services.
- Part B covers all outpatient services, such as doctor visits, ambulatory surgery, durable medical equipment and home health services.
- Part C, or Medicare Advantage, is the managed care form of Medicare run by private insurance companies. It covers the same services as Parts A and B, except for hospice care and participation in certain clinical research studies.
- Part D covers prescription drugs.
- One type of Medicare is called “original” Medicare.
Under original Medicare, you can see any provider who accepts Medicare. You pay premiums, deductibles and coinsurance, or copayments for most services. If you want drug coverage, you have to purchase a plan separately. There is no limit on your annual out-of-pocket costs.
- The other type of Medicare is called Medicare Advantage.
Medicare Advantage is run by private insurance companies and includes all benefits covered under Parts A and B. These plans may have limited provider networks and may require specialist referrals. They may also have premiums, deductibles, and copayments or coinsurance, although annual out-of-pocket costs are capped. Most plans cover prescription drugs and benefits not covered by Medicare, such as vision, dental, and hearing services.
- You have deadlines to meet.
You’re automatically enrolled in Medicare Parts A and B when you turn 65 if you’re getting Social Security and paid Medicare payroll taxes while employed. If you’re not getting Social Security, you have to sign up for Medicare. To avoid paying a penalty, sign up during the seven-month period that begins three months before you turn 65. You can enroll between January 1 and March 31 each year, with coverage beginning July 1.
- Your monthly premiums depend on your income.
If your individual adjusted gross income in 2013 was above $85,000, you’ll pay a higher premium for Parts B and D than those with lower incomes. The premium for Part B in 2014 is $104.90; premiums for Part D differ based on the plan.
- Some Medicare Advantage plans are better than others.
Medicare Advantage plans are evaluated based on criteria such as customer satisfaction and quality of care. Plans receive between one and five stars, depending on their scores. Five-star plans have the highest scores, and you can switch into a five-star plan most of the year—not just during open enrollment.
- You will probably need Medigap insurance.
You can rack up some hefty out-of-pocket costs with the deductibles and copayments required under original Medicare. For instance, a 10-day hospital stay could cost you more than $12,000. A supplemental insurance policy, called Medigap, helps pay for certain services Medicare doesn’t cover, including deductibles, copayments and coinsurance. However, you can’t use a Medigap plan to pay for Medicare Advantage plan costs.
- You should check to see whether your drugs are covered.
All prescription drug plans and Medicare Advantage plans have drug formularies, which list the medications they cover. The drugs are sorted into tiers based on their cost and effectiveness. The higher the tier, the higher your copayment. To learn whether your medication is covered—and how much it will cost—contact your prescription drug plan or Medicare Advantage company. Many plans post their formularies online.
- You have protections and rights under Medicare.
These include the right to be treated with dignity and respect at all times, to be protected from discrimination, and to have your personal and health information kept private. You can also get emergency care when and where you need it, appeal payment or coverage decisions, and file complaints if you’re unhappy with the care you receive.
- Medicare doesn’t cover long-term care.
70% of us will need long-term care at some point. This includes help with daily activities, like bathing and cooking, as well as some medical care. Neither Medicare nor most health insurance plans, including Medigap, cover this type of care. If you’re worried about costs, check into long-term care insurance. Most people who can’t afford long-term care eventually qualify for Medicaid, government health insurance for the poor.
For more information about the Affordable Care Act, visit www.healthcare.gov. There, you can also find information about Medicare, or visit www.medicare.gov.