Take Charge of Your Health - Medicare Basics

Will you still need me, will you still feed me? When I’m 64?

-Paul McCartney

Many of us approach Medicare with a degree of confusion and amazement at just how much paperwork is sent out in advance of the signup deadlines. The Boston Globe recently summarized some of the basics that provide some clarification:

When to enroll: You can sign up for Medicare as early as three months before the month you turn 65, or as late as three months after. The exception: If you’re still covered by your employer, or your spouse’s, you can delay enrolling without penalty. But you should enroll in Medicare Part A even if you’re still on an employer’s plan because it sets you up in the Medicare system. And because you’ve contributed throughout your work life, there’s no premium for hospital coverage.

Here’s a sign-up link: www.medicare.gov/sign-up-change-plans/getting-started-with-medicare.

Beware late sign-up penalties: Since there’s no premium for Part A, there’s no penalty for missing the Medicare enrollment deadline. But if you’re late to enroll in Part B, which covers doctors’ visits and tests, you’re subject to a late penalty premium for the rest of your life of 10 percent for each year you delay. That’s right: for the rest of your life.

Similarly, missing the deadline for Medicare Part D, prescription drug coverage, invites a late penalty premium of 1 percent a month, amounting to 12 percent for the first year. Again, if you’re still getting your insurance through work, you can delay enrollment without incurring a fine.

More than 750,000 beneficiaries were paying late sign-up penalties in 2014 and were saddled with premiums 29 percent higher on average than those who enrolled on time, according to a Congressional Research Service report published last year. Medicare assesses these penalties because it relies on premiums to help fund 25 percent of the program, and it needs relatively young and healthy people to support older and sicker participants.

To avoid the Medicare charges, it is important to deal with the enrollment issue at 65.

The basics: Medicare has four parts. Part A pays for in-patient hospital care, skilled nursing, and home health care; there’s no monthly premium for those who paid in for at least 10 years through paycheck deductions. Part B covers outpatient medical services, such as visits to doctors and emergency rooms, tests, and procedures. You’ll be billed quarterly for Medicare premiums until you start receiving Social Security; after that, premiums are deducted from your Social Security check.

The monthly premium for Part B is set annually; for most people, it’s  $135.50 for 2019. 

Parts A and B, which date back to 1965, are sometimes called basic or original Medicare, covering 80% of medical costs.

Many enrollees supplement original Medicare with private Medigap plans that cover the other 20% of costs but also carry premiums, which vary depending on the plan, or opt for private managed care plans that provide insurance through physician and hospital networks.

Managed care option: Enrollees have the option of buying a wide range of Medicare Advantage plans from Medicare-approved private insurers under Medicare Part C, which took effect in 1997 and was intended to provide more efficiencies and cost savings to retirees. 

Folks opting for Advantage get their hospital and medical insurance — and often other benefits such as medicines, eyeglasses, or dental coverage — through plans typically administered by health maintenance or preferred provider organizations. The plans vary widely by state, benefits, and cost. Many are seen as cheaper alternatives but restrict members to a network that may or may not cover some medical specialists or out-of-state doctors. Members must still pay their Part B premiums, even though doctors’ visits are covered through their Advantage plans.

Drug coverage: Medicare Part D, which started in 2006, allows beneficiaries to purchase prescription drug plans, also from private insurers. These plans also carry premiums.

Medigap or Medicare Advantage? Both types of plans are options for plugging the holes, or gaps, of what isn’t covered by basic Medicare. Medicare Advantage plans roll together hospital, health insurance, and, usually, drug coverge. They typically have lower monthly premiums than Medigap plans but limit members to a network of doctors and hospitals. They can be a good option for people who don’t use a lot of medical services. Depending on the plan, they could also pay for services, such as gym memberships and hearing aids, not covered by basic Medicare.

Those with chronic health conditions who need a lot of health services may want to buy a Medigap plan. While such plans carry higher monthly premiums, they have fewer restrictions, and members don’t have to pay co-pays to see doctors or specialists. 

Unlike most Medicare Advantage members, Medigap buyers have to purchase a separate drug plan. Because most Medigap plans work across state lines, they are also a good option for “snowbird” retirees who spend part of the year down south, or people who live in one state but see doctors in a neighboring state.

When to shop around: Medicare has an open enrollment period that started Oct. 15 and ends Dec. 7, for beneficiaries wanting to switch from basic Medicare to Medicare Advantage, or vice versa, or buy or change prescription drug plans. 

In 2019, for the first time, there will be a separate open enrollment period running from January through March just for Medicare Advantage. This will be geared to beneficiaries who’ve already purchased a Medicare Advantage plan but want to change it, drop it, or switch to a Medigap plan along with a separate prescription drug plan.

Where to get personalized help: For new enrollees, and those seeking to change coverage during annual open enrollment periods, there’s a valuable source of independent advice on finding a Medicare Advantage or Medigap plan that suits your specific needs: federally funded programs offered free of charge at regional offices, senior centers, and other sites. Thank you to the Boston Globe Help Desk writer Robert Weisman (12/3/18) for this summary; hope it helps explain away some of the confusion.

As always, join us on the Health-E³ website blog page. We look forward to hearing your thoughts and experiences. Check out our newest page on Personalized Care. Feel free to ask a question about anything on the website or suggest ideas for additional helpful information. And remember, it's up to you to Take Charge of Your Health.