As an American approaching age 65, you need to do your homework and get familiar with Medicare. This is because, for most of you, it will not only become your primary payer of health care costs, and for some of you, your only payer, but also because you’ll have to make a number of decisions, and make them wisely.
These decisions — while they can usually be changed — can only be changed at certain times, and, in some cases, with a permanent cost to you. Sometimes they can’t be changed.
You have got to start making these decisions at least four months before you hit 65 as you have research to do and appointments to set up, and it will take a good while to accomplish all this.
So my very first advice is to become familiar with the basics of the four parts of Medicare:
- Part A, which covers inpatient and hospice care, and which almost everyone gets “free;”
- Part B, which covers doctor visits and outpatient care, and for which most of you will have to pay about $115 a month;
- Part D, which covers prescription drugs, and which will cost most of you who opt for this anywhere from nothing to $133 a month, although the average is roughly $35 a month.
- And you will probably want to look at Part C, also called Medicare Advantage, which is Medicare managed care. Here you sign up with a managed care or insurance company, usually pay them a monthly premium (in addition to your Part B premium), and get your care delivered or paid through it. Your monthly premium will run from nothing to close to $200; premiums vary hugely.
Notice I wrote “most of you” in the first paragraph. This is because Medicare is all too complicated, and as my old Spanish teacher instructed us about that language: “There is the rule, the exception to the rule, and the exception to the exception.” So while it’s easy to make generalizations about Medicare, they rarely apply to every beneficiary or to every situation.
You can get a good overview of Medicare by going though Chapters 2 (Part A), 3 (Part B), 6 (Part D), and 8 (Part C) of Managing Your Medicare (there is a link to this book from the bottom of this page).
The first advice I give beneficiaries-to-be is to figure out exactly what your health insurance situation will be when you turn 65 and become entitled to Medicare. If you don’t have any and won’t be getting any, your situation is simpler, and you can skip the next two paragraphs.
But for those of you who will or may be carrying health insurance into your Medicare entitlement, you need to be very careful and find out exactly what you should do. For example, if you have TRICARE for Life (TFL), you must enroll in both Part A and Part B to keep it.
If you plan to keep working, and will be covered by your employer’s plan, you need to find out if it will be your primary or secondary payer; if it’s the latter, you will probably want to enroll in Part B, but if it’s the former, and has good coverage, you may want to hold off on Part B until you retire. This is because you will avoid paying the $115 a month premium and you will be given another chance to enroll, without any penalty, when you do retire.
And you need to find out if your insurance is “creditable coverage” for Part D or not. By “creditable coverage” we basically mean that it is at least as good as Part D; if it is, you probably do not want to sign up for Part D at this point, unless you have very high drug costs or you are eligible for the low income subsidy, as you can enroll in Part D without penalty if you later lose your drug coverage.
Be very careful, as in some cases if you do sign up for Medicare or one of its parts, you could lose your insurance.
For example, it’s been said that some beneficiaries who signed up for Part D not only had their employers cancel their drug insurance, but also cancel all of their health insurance benefits and refused to let them re-enroll. You need to be cautious and find out from your human relations people or your health insurance carrier exactly what the implications are when you become 65 and can enroll in the various parts of Medicare.
Whether or not you have health insurance, ask your employer or union if they will subsidize any of your Medicare. Although it’s rare, some will pay all or part of your Part B premiums. I have even met a beneficiary whose former employer subsidizes her Medigap policy’s premium.
For beneficiaries-to-be with low incomes and few resources, you need to inquire if you may possibly be eligible for any of the various programs which will help with your Part B premiums, and possibly your Part A and B deductibles and co-insurances, and your Part D premiums and drug costs. These are known, respectively, as Medicare Savings Programs and Part D “Extra Help.”
By “low income” we mean you should inquire if your monthly income is below $1,500 for a single or $2,000 for a couple and your resources (excluding your house, car, personal effects) are worth less than $13,000 for and individual or $26,000 for a couple. These aren’t the official limits, and the rules of what counts and what doesn’t are complicated, and there are many exceptions.
If you are anywhere near these limits, check this out. And if you are economically quite poor, you may now also qualify for Medicaid by virtue of being aged, that is, age 65. It, coupled with Medicare, will pay for virtually all your health care.
To find out more, or to see if you are eligible for any of these programs, call 1-800-MEDICARE, or your State Health Insurance Assistance Program (SHIP); you can get your state’s toll-free number for this counseling program from the back of your Medicare & You booklet or by going on www.shiptalk.org. Medicare counselors are constantly amazed by how many beneficiaries they run across who qualify for these programs but never knew to enroll.
Most beneficiaries take Part B and Part D. My advice to beneficiaries is, generally, if they are unsure about being in these two parts, go ahead and sign up, they can drop them later.
Remember that if you don’t sign up for Part B and you later do so, you will be subject to a penalty of 10 percent of the premium for every 12 months you could have been enrolled but were not. And for Part D the penalty is a $0.32 increase in your monthly premium for each month you could have been enrolled but were not. (These penalties for Part B won’t apply if you had insurance through your work, or though a working individual such as your spouse; the Part D penalty doesn’t apply if you had creditable coverage.)
You have a crucial choice to make. You must make the decision to stay in fee-for-service Medicare, usually called Original Medicare, and which Medicare will automatically put you into, or you can join Part C; that is, a Medicare Advantage managed health care plan, but only if you have enrolled in both Part A and Part B.
Those who opt for Original Medicare and have no other insurance usually buy a Medicare supplement policy. Let’s talk about his option first, and then the managed care one. You should know that each year you are allowed to change from Original Medicare to Medicare Advantage managed care, and vice-versa, so this decision is not irrevocable.
In Original Medicare you have control over which doctors, hospitals, and health-care providers you use, as long as they are enrolled in Medicare; the vast majority are, and are taking Medicare patients.
You will be generally be responsible for 20 percent of the cost of your outpatient services, and for a deductible of $1,132 when you are admitted to a hospital. (The good news is that Medicare decides what the overall charge can be, and these are usually much lower than what doctors and hospitals normally charge patients.) As these deductibles and coinsurances can add up to large amounts, many beneficiaries with no other insurance purchase a Medicare supplement or “Medigap” policy that will help pay for what Medicare does not; that is, they help cover the payment gaps.
You will have to decide about this pretty quickly. This is because under federal law you are guaranteed the right to buy a Medigap policy, but only at certain times. One of those times is when you are 65 or older and you first get Part B. For most of you, this will be the month you turn 65 as you will start your Part B then. You have six months of a guaranteed right to buy any policy being sold in your area, regardless of your health condition.
To find out what Medigap policy you should buy, you need to know three things:
- First, Medigap policies are structured in 11 (and only 11) different policy types. They are known by letters, A, B, C, D, F, F-Hi, G, K, L, M and N.
- Second, the benefits of any particular policy type are identical no matter how much the policy costs or what insurance company sells it.
- Third, the cost of any particular policy type can differ by up to 300 percent from the lowest- to the highest-cost policy.
So once you decide on which policy type to buy, think of buying from the cheapest company.
Fortunately, most people have at least some information about what policies are available and how much they cost; your state commissioner or department of insurance compiles this as they have to approve any policy sold in your state. And some of them also compile consumer–oriented information about how well the companies that sell these policies deal with their customers.
So if you are going to go the Medigap route, get all the information you can about what is available to you by contacting your commissioner or department. Many of them have excellent websites, and some of them publish handy booklets. You can reach your state’s department by going on the National Association of Insurance Commissioners’ website (www.naic.org), clicking on “States & Jurisdiction Map,” and then clicking on your state.
Once you have this information, you’ll note that there are four general types of Medigap policies:
First there are the “standard” policies A, B, C, D, F, and G, each of which, in turn, pays more benefits than the previous. This can best be seen in a chart that is updated for 2011 and which can be accessed from the CD that comes with Managing Your Medicare.
Then there is a policy, F-Hi, which has a very high deductible, $2,000, which you must pay in full before it covers anything.
The next are the two “catastrophic” policies, K and L, which more or less pay, respectively, only 50 percent and 75 percent of your gaps until they hit a catastrophic amount, after which they pay everything.
The three last policies (F-Hi, K, and L) have, of course, smaller premiums, and are meant for those who have the wherewithal to pay out several thousand dollars before they fully kick in.
Finally, there are two new types of policies — M and N — which cover your gaps with the exception of some deductibles or co-payments you have to pay. As these policies are very new, we don’t have a good feel for them yet.
You may wish to know that overall the most popular policies are C and F (not F-Hi) as they cover your gaps very well. And so you can begin somewhere. Where I live in North Georgia, a male, non-smoker, age 65 will be charged an average of $120 a month for A, the most basic policy, $185 for C, and $175 for F; ladies will pay about $15 a month less.
One final piece of advice. You may want to make sure your health-care providers will accept whatever Medigap policy you are thinking of getting. While this is usually the case (because typically your provider will bill Medicare, and Medicare will automatically send your claim to your Medigap provider), you should make sure before you sign up for a policy.
You do need now to make a decision about Part D. But we’ll discuss that after we go through the next topic. Up to this point we have pretty well taken care of those of you who are going to carry good insurance into age 65, and those of you who can afford Medigap, and those of you who are way down the poverty line and qualify for Medicaid or your state’s Qualified Medicare Beneficiary program (which is the Medicare Savings Program which pays coinsurances and deductibles) set in Original Medicare.
For those of you who are not in the last groups, you need to consider Medicare Advantage; that is, managed care. This is because over the last few years Medicare has been paying managed care outfits quite generously for caring for Medicare beneficiaries. In fact, some have claimed that Medicare has been too generous, and the health care reform legislation passed in 2010 is supposed to cut these payments back. But in the meantime, quite a few insurance companies and health-care organizations are in Medicare managed care.
Perhaps a few words on how this works would be helpful.
Medicare managed care plans range anywhere from those organizations that are highly restrictive about where you can get your care, have their own doctors and health care professionals on staff, and even their own hospitals; all the way to companies that let you go to any provider you want as long as they will accept their payment, which matches Original Medicare’s, for your services.
Generally speaking, the more restrictive organizations have higher monthly premiums but offer well-coordinated care, while other organizations have lower premiums and virtually no coordination. In fact, some of these don’t have any premiums at all.
But the reason you should always think of joining a Medicare Advantage plan is that plans tend to limit the amount you have to pay for a given service to a specific co-payment, which significantly reduces your potential liability. And, with some exceptions, plans must have an annual cap on the total that you pay out-of-pocket for services, which also limits your liability.
Be aware that Medicare Advantage plans generally cover only part of a state, although some cover whole states, but you have to reside in the area they cover to join. Each plan agrees on a year-to-year basis to cover Medicare beneficiaries and how they do so. What plans are available to you this year may change the next, and typically plans change their benefit structure each year.
For some of you, this decision will be easy. Perhaps you are currently a member of an HMO that also deals with Medicare; as you turn age 65 you will sign up with them as a Medicare beneficiary and “age into” them.
Or perhaps you have heard of a renowned managed care organization in your area and now, with Medicare paying most of your way, you can afford to join it.
Or perhaps you simply can’t afford a Medigap policy, and you choose to join a plan with little or no monthly premium, hoping that you won’t have to pay out a good deal in co-payments.
Others will have to balance the likelihood of paying a monthly premium to a plan (in addition to a Part B premium) in light of what their plans will cover and what they’ll be liable for.
You probably will want to start by getting some general information on the many different types of plans available; I call this information about HMOs, PPOs, SNPs, PFFS plans and so forth the “alphabet soup” of Medicare managed care! (All this is covered in the beginning of Chapter 8 of Managing Your Medicare.)
Then, you want to find out exactly which plans are available to you in your area. You can best find this information by going on Medicare’s website and doing a general search for your zip code in their Compare Drug and Health Plans feature, or you can call 1-800-MEDICARE or your SHIP. You can then begin looking up individual organization’s benefit structures and costs on the Medicare website, or by calling plans you are interested in and asking for their literature.
Be sure, before you do this, to read about Part D, below.
A few words of help and a warning. My book, on its CD, has a “Cost Comparison” worksheet where you can do some basic comparisons of what each plan will cost you and what basics it will pay for; this will help you sort out the information you’ll be deluged with.
In a few parts of the country there are over 60 Medicare Advantage plans, so be prepared to deal with information overload!
Also, when you begin considering a plan, it’s vital to find out if those who currently provide your health care will work with the plan you are thinking of joining. If you have long term relationship with a physician, hospital, therapist, etc., you will want to make sure they will accept your plan. Don’t hesitate to call your SHIP to discuss this, and talk to friends or family members who are on Medicare and ask about their experience with Medicare Advantage.
And finally, if you call plans for information some will want to send a sales agent to your home. You probably should not allow this unless you have a good idea that a particular two or three plans are the best for you. These folks can “charm birds out of a tree” and may not be selling you what is best for you.
You can see why you need to start all this decision process at least four months ahead of being 65! Most people will have a lot of homework to do.
As you are deciding between Original Medicare and Medicare Advantage, and picking a Medigap or a managed care plan, you also have to think about Part D. The way you enroll in Part D is different than Part B, which the government will enroll you in and either take your premiums out of your Social Security payment or bill you. You enroll in Part D by actually joining a Part D drug plan.
For those of you in Original Medicare, you can only join a “stand-alone” Part D drug plan. It’s helpful to know that a stand-alone drug plan has to cover a whole state. If you are looking at Medicare Advantage, most managed care plans have Part D as part of their overall benefits, but some don’t.
If your Medicare Advantage plan does not have Part D, you can also join a stand-alone plan.
The way you do this is going on Medicare’s website and completing your “drug list.” This is an itemization of each prescription medication you take, the dosage you normally take, and how often you take it. (The book’s CD has a “prescription list” which you can print out and list all this information, and some additional details.
You should always have this updated list with you in case of emergency or when you visit your doctor. In fact, you should also write down your non-prescription drugs and supplements, as your doctor will want to know this information too, even though Medicare won’t generally cover these.)
For those of you who are looking for a stand-alone drug plan, once you enter this information into the Compare Plans feature, the website will come back with a list of drug plans in your area arranged in order by the cheapest for you.
For those of you who are looking at the managed care option, it will calculate what the overall cost of your drugs will be with each managed care plan, and array all this for you. This is excellent information to have when deciding about what plan to join.
Just as with Medicare Advantage plans, you generally have to join a drug plan for the remainder of the year, but you can switch plans each calendar year, and you should be prepared to do so to get the best deal for you.
Beneficiaries-to-be who take no or very few or very inexpensive drugs wonder if they should opt for Part D. The downside if you don’t is that, if you don’t have creditable coverage, and later join Part D, you will pay a penalty — right now 32 cents per month — for each month you could have had Part D but did not.
You are usually allowed to join Part D only at the beginning of any calendar year. If you have to start taking an expensive drug in March, you may run up quite a drug bill by the end of December; you might want to think of joining the lowest cost plan available to you to avoid a future penalty and a possibly unexpected big drug bill.
At this point you have decided on Original Medicare and secured a Medigap policy if you want one, or enrolled in a Medicare Advantage plan, and you have lined up your Part D coverage if you opt for that. But you are not quite done.
Now, before you actually become a Medicare beneficiary, you need to make appointments to get preventive care. Not to mention any curative care you should be getting but may have put off. And it’s possible that you now will be able to afford prescriptions that you should have been taking but haven’t been filling.
Don’t wait until you get your Medicare to call and make your appointments. Make them now for the month you become 65; remember that Medicare always starts on the first of the month. There are several reasons for this.
For one, your health is your most valuable asset. The sooner you take the best care of it, the better. Second, it may take you a long time, even several months, to get an appointment, especially for preventive care. So call two or three months before you get your Medicare to set these up.
Third, you can get some preventive care services, such as the “Welcome to Medicare Exam,” only in the first 12 months you have Medicare, so you may as well get going now. This is particularly true because many preventive services have time restrictions on them. For example, you can’t get an Annual Wellness Exam until 12 months have passed since your “Welcome to Medicare” exam. The sooner you get started, the sooner you can get your subsequent preventive care services.
You can get a detailed list and schedule, completely updated for 2011, of all the preventive services available to a beneficiary age 65 (there are separate ones for females and males) from the “updates” page accessible from the CD that comes with Managing Your Medicare. These will help ensure that you know the ones you are covered for and when you should get them.
Now you’re ready. Good luck with your Medicare!