Answers
to
Key
Medicare
Questions
Get
answers
to
questions
about
eligibility,
choices,
costs,
and
when
and
how
to
sign
up.
FIDELITY VIEWPOINTS – 7/9/15
As the first among her group of close‐knit friends
to reach age 65, Diane became their de facto
expert on Medicare. When each one got closer
to his or her Medicare eligibility date, she got a
frantic call for help.
Even though they were smart business people
and professionals, they “were flummoxed by the
new language and process for managing their
health care coverage," she remembers. "Since I
had already made my way through the decision
maze, they figured I'd have some of the answers
for them."
Unfortunately, as Diane and her friends soon
discovered, you “really do need to do your own
homework on this, because every situation is
unique." While she could direct them to some of
the places where she found information, she
couldn't give them the individual answers they
needed.
Diane and her friends are not alone in their
plight, says Kurt Czarnowski, a former executive
at the Social Security Administration and now
principal at Czarnowski Consulting, a retirement
education firm in Norfolk, Mass. To help people
get the free education and assistance they need,
Czarnowski recommends visiting the Social
Security site or the Medicare site, or getting in
touch with the local State Health Insurance
Assistance Program (SHIP) office for free one‐on‐
one assistance. Available in every state and U.S.
territory, SHIP program counselors are uniquely
trained to help people navigate the maze of
Medicare options.
Most of the questions he gets from the people in
his seminars have to do with Medicare eligibility,
coverage, and cost, Czarnowski says. Here's a
quick rundown of the questions most frequently
asked—with answers you'll find at the Social
Security and Medicare sites.
1. When am I eligible?
Normally, your health insurance coverage under
Medicare begins when you reach age 65.
However, you also may be eligible for Medicare
at any age if you are diagnosed with end‐stage
renal disease or another qualifying disability.
When you do become eligible, you'll want to
remember to sign up within the seven‐month
time frame that begins three months before the
month you turn 65 and ends three months after
deadline, your coverage will be delayed because
you'll have to wait until the next January to
March general enrollment period and your
coverage won't be effective until the following
July," Czarnowski cautions. You also may have to
pay more for some of your coverage. You can
enroll on the phone or at your local Social
Security office.
If you're still working when you're 65 and get
health insurance through your employer or your
spouse's employer, you don't have to enroll right
away, as long as you can prove that you had this
coverage when you sign up later on.
2. What are my choices?
While the decisions you need to make are similar
to what you may be used to with employer‐
provided health insurance, the structure of the
Medicare health insurance program is very
different. Not only are there different categories
of insurance to sort out, but there are many
options within each category. Here's a quick
rundown:
Part A: Hospital Insurance
Medicare Part A coverage was first introduced in
1965 to help seniors manage the high cost of
hospital care. After you pay an annual
deductible, this insurance kicks in to pay for
hospital stays, certain treatments and
procedures performed in the hospital, care at a
skilled nursing facility, and hospice care.
Part B: Medical Insurance
Medicare Part B was designed to pay for many of
the health care costs not covered by Part A,
including doctor visits and services, outpatient
hospital care, physical and speech therapy, lab
tests, blood transfusions, medical equipment
and supplies, and ambulance services. This
portion of basic Medicare is voluntary, and,
because it is subsidized by Medicare funds, you’ll
pay a low annual premium for the coverage.
Alternative insurance with a Medicare
Advantage Plan
With Medicare, you can purchase an all‐in‐one
managed care Medicare Advantage plan that
provides your Part A and Part B coverage. Some
Medicare Advantage plans also cover other
services that are not covered under Parts A and
B, and many include Part D prescription drug
coverage. Some Medicare Advantage plans
provide coverage only for network providers for
non‐emergency services. The type of plan you
choose depends on what types of services you
want to include (such as eye glasses or dental
care) and whether you prefer to choose your
own doctor or health care facility.
Medigap (supplemental) policies
You may have other health care costs that won’t
be covered by either Part A or Part B of
Medicare, such as deductibles and co‐pay
amounts, and certain other services. Unless you
have other health insurance—for example, if you
are a veteran, a union member, or a retiree with
an employer health benefit—you may want to
consider purchasing a policy that gives you the
extra coverage you may need. To supplement
Medicare Parts A and B, you can purchase a
"Medigap" policy. Medigap policies are offered
by private insurance companies, and there are a
variety of plans to choose from, based on the
services you would want to have covered.
You can find out which insurance companies sell
Medigap policies in your area at: Compare
Medigap Policies.
Compare Medicare Advantage or managed care
plans, with the Medicare Plan Finder.
Part D: Prescription Drug Coverage
Prescription drug coverage is not included in the
original Medicare (Parts A and B) or Medigap
supplemental policies. So unless you have this
coverage elsewhere—or it's already included in
your Medicare Advantage plan—you may want
to think about buying a Medicare Part D policy to
help pay for your prescription medications.
The plan you select for Part D coverage may
depend on whether the plan includes the types
and doses of medications you need (and how
these fit with their formulary), how frequently
you need them, and what pharmacy you use.
3. How do I choose my Medicare supplement
options?
The decision‐making process you've used to buy
your health insurance in the past still applies
when evaluating your Medicare supplement
options. Begin by looking at the coverage you
have now with your current health care provider
and deciding what you want to duplicate or
change. Then consider these questions to help
narrow your choices:
How much can I afford to spend on monthly
premiums?
What benefits do I really need? (You can
save money if you don't buy coverage for
benefits that you don't mind paying for out
of pocket, such as Part B deductibles.)
Do I want to choose my own doctors or
health care providers?
Does the plan include coverage for my
unique situation? (Paying for emergencies
outside the U.S. may be important if you
travel frequently.)
How does the plan's cost compare with that
of other plans with the same benefits?
You can go to www.medicare.gov or call your
local SHIP office to find out which insurance
companies sell supplemental Medigap or
Medicare Advantage policies in your state. Ask if
they have any guides or rate cards so you can
begin to compare plan features and costs.
4. What do the plans cost?
Part A
As long as you or your spouse paid Medicare
taxes for at least 10 working years (40 quarters),
your basic Part A coverage is free. But you are
still responsible for paying an annual deductible
(which is $1,260 in 2015), and a portion of the
expenses for hospital stays that last longer than
60 days or nursing home stays beyond 100 days.
Individuals who don't qualify for free Part A
because they did not pay Medicare taxes long
enough can generally purchase this coverage for
an additional cost.
Part B
The cost (premium) for Part B is set by Medicare
each year at a fixed rate for most participants
($104.90 a month for 2015), but it increases for
individuals with annual income over $85,000 and
married couples with annual income above
$170,000. The cost for these higher‐earning
a month in 2015. Part B premiums also can be
higher if you don't enroll when you're first
eligible.
As with Part A, you will pay an annual deductible
for Part B ($147 in 2015). And some covered
services require that you pay a percentage of the
charges or a co‐payment amount approved by
Medicare. If you are already receiving Social
Security benefits, payment for your Part B
coverage is deducted directly from your Social
Security checks. If you're not yet collecting
benefits, Social Security will send you a quarterly
bill.
Medicare Advantage Plans
With a Medicare Advantage plan, you typically
have a set premium, which includes your Part B
cost, no (or low) deductibles, and co‐pays for
doctors, doctor's office visits, and other services.
Everyone who enrolls in the same Medicare
Advantage plan pays the same premium,
regardless of age, gender, or health status.
To compare the cost of Medicare Advantage or
Managed Care plans in your area, use the online Medicare Plan Finder.
Part D
The amount that insurance companies charge for
prescription drug coverage will vary widely,
based on how they structure their deductibles
and their co‐pays, and the brand name and
generic drugs that are covered.
There is also a span of time for every Part D
coverage plan (aptly called the "doughnut
hole")—after you hit a certain expense level and
before your coverage kicks in again—when Part
D insurers reduce what they pay for your
prescriptions and require you to pay more. But
this often exasperating arrangement will be
phased out by 2020, as insurers gradually fill in
the amount they cover during the doughnut‐hole
period.
You can get help comparing costs among Part D
insurance providers at www.medicare.org or by
contacting your local SHIP office. As with all
prescription drug plans, you'll need to present
your Part D card at the pharmacy you use and
pay the co‐payment amount when you pick up
your prescription.
Medigap (supplemental) Policies
Although the benefits offered under a Medigap
or supplemental insurance policy are
standardized across the U.S., the premiums,
deductibles, and co‐payments for these policies
can vary widely. So be sure to compare costs
before you buy one.
The cost of a Medigap policy may also depend on
whether the insurance company offers discounts
(e.g., for nonsmokers or if you pay your
premiums online), or a lower‐cost option for
using certain hospitals or doctors within its
network.
The Medigap Policy Search on the Medicare Web
site can help you compare the costs and benefits
of the Medigap and Supplemental insurance
policies available in your state.
5. When and how do I sign up?
Parts A and B
Every eligible Medicare participant is entitled to
receive Part A and Part B coverage upon
reaching age 65, but you still need to sign up for
your benefits. If you're already receiving Social
Security payments, you'll be notified
automatically. If not, you'll need to contact your
local Social Security office or go to
www.socialsecurity.gov to request your ID card
and benefits.
Medicare Advantage Plans
You may enroll in a Medicare Advantage policy
during the same enrollment opportunities that
apply to Parts A and B. The annual open
enrollment period for Medicare Advantage
policies takes place every year from October 15
to December 7.
Outside of this period, the government has a 5‐
Star Special Enrollment Period for Medicare
Advantage plans and Medicare prescription drug
plans. With this option, you can switch from your
existing plan to a five‐star‐rated Medicare
Advantage Plan or a five‐star Medicare
prescription drug plan once a year between the
dates of Dec. 8 to Nov. 30 as long as a five‐star
plan is available in your area.
Medigap (supplemental) policy
You can purchase a Medigap policy when you are
first eligible for Medicare, or during the
Medicare open enrollment period. Some
insurance companies may allow the purchase of
a Medigap policy at other times.
Part D
If you're new to Medicare, consider enrolling in a
prescription drug plan during the initial seven‐
month enrollment period that begins three
months before you turn 65. If you sign up after
that, your premium can increase for each month
you delay. After you enroll, you can always
change to a different prescription drug plan
during the annual open enrollment period in
October.
6. Where can I go for more help?
In addition to the resources offered by your
State Health Insurance Assistance Program, or
SHIP, check out the services, seminars, and
publications available through your local Office
of Elder Affairs or Council on Aging. The official Medicare site also has many helpful guides and
interactive tools to help you compare your
Medicare options.
Understanding your options and comparing
plans can at first be a bit overwhelming. But if
you take a few minutes now to get your
questions answered and start sorting through
the alphabet soup of Medicare choices, you'll be
well positioned to select the best coverage for
your situation and get more from your health
care dollars.
Plan
Medicare Part A
Medicare Part B
Medicare Advantage Plan
"Medigap"
Supplemental Policy
Medicare Part D
Whatitdoes Covers cost of your hospital stay for up to 60 days
Partially covers costs beyond 60 days
Also covers skilled nursing and hospice care
Covers up to 100 days of outpatient care and nursing home care after a hospital stay
Provides HMO/PPO‐ like coverage Combines Part A and B
May offer coverage for other services May require using network doctors May include Part D
Pays for deductibles and co‐pays for Parts A and B, plus services not covered
Allows you to select your own provider May cover non‐U.S. care
Helps with cost of prescription drugs
Who
provides
U.S. government— (CMS)
U.S. government— (CMS)
Private health insurance companies
Private health insurance companies
Private health insurance companies
Monthly
costs
None for most participants
$104.90 (up to $335.70 for higher income) in 2015
Varies by plan; all participants in same plan pay same amount
Varies by plan Varies by plan
Annual deductible in2015
$1,260 $147 Usually none Varies by plan and
service
Varies by plan
Other
costs
You pay some or all of the costs for care after 60 days in a hospital
20% co‐insurance for some services
Co‐pays for most services
You may pay more if you enroll late
Costs increase during donut hole
