En español | Welcome to Medicare. More than 60 million Americans get their health care coverage through this federal insurance program for older Americans.
At 65, you become eligible for the program — which means you will need to set aside time around that milestone birthday to sift through many options so you can sign up for the coverage that meets your health needs and budget.
It’s up to you to get ready. No letter will arrive in the mail announcing it’s time to start making these decisions. What’s more, the timetable is specific — and important. You can start signing up three months before you turn 65, and you’ll have until three months after your birthday month to enroll. If you miss that deadline, you may end up paying higher premiums. If you are still working and have employer-sponsored health coverage, you can probably wait to sign up — but more about that later.
You’ll need to do some homework before you start assessing options and picking plans. Make a list of your doctors and decide how important it is to you that you can continue seeing them once you are on Medicare. Also make a list of any medications you take so you can make sure any prescription drug plan you select will meet your needs.
Think about your lifestyle. Are you a homebody and never travel outside the U.S.? Or are you an adventurer who goes abroad frequently? Do you split your time between residences and need medical care in different states? All these factors are likely to figure into the decisions you make.
Your financial situation also is important. You’ll learn through this guide that Medicare helps pay for medical care for older Americans and people with disabilities. But it’s not free. You’ll want to choose an option you can afford and build the array of out-of-pocket costs into your annual budget. And take time to review the ways the federal government can help you pay Medicare’s costs if you can’t afford them.
How to Make Sense of Medicare’s Options
Think of Medicare as a buffet. You’ll want to choose from it the options that you can afford and that will meet your particular medical needs. Here are the four basic parts of Medicare that will cover you for everything from hospital care to doctor visits to prescription drugs.
Part A — Hospital coverage
When you apply for Medicare, you will automatically be enrolled in Part A. It covers hospital stays, hospice care and some skilled nursing care that you may need after being hospitalized for a stroke, a broken hip or other episodes that require rehabilitation in a nursing home or other facility so you can get back on your feet.
Most people don’t have to pay a premium for Part A — you’ve already paid into the system in the form of the Medicare tax deductions on your paycheck. Part A isn’t totally free, however. Medicare charges a hefty deductible each time you are admitted into the hospital. It changes every year, but for 2019 it’s $1,364. You can buy a supplemental or Medigap policy to cover that deductible and some out-of-pocket costs for the other parts of Medicare.
Medicare pays for virtually all hospital services for the first 60 days you’re in the hospital. There are some exceptions — it won’t pay for a private room, for example.
Part B — Doctors and outpatient services
This part of Medicare covers doctor visits, lab tests, diagnostic screenings, medical equipment, ambulance transportation and other outpatient services.
Unlike Part A, Part B involves more costs, and you may want to defer signing up for Part B if you are still working and have insurance through your job or are covered by your spouse’s health plan. But if you don’t have other insurance and don’t sign up for Part B when you first enroll in Medicare, you’ll likely have to pay a higher monthly premium for as long as you’re in the program.
The federal government sets the Part B monthly premium, which is $135.50 for 2019. It may be higher if your income is more than $85,000. You’ll also be subject to an annual deductible, set at $185 for this year. And you’ll have to pay 20 percent of the bills for doctor visits and other outpatient services. If you are collecting Social Security, the monthly premium will be deducted from your monthly benefit.
Part C — Medicare Advantage
If original Medicare is a buffet, Part C is more like a sit-down meal, since a private insurer bundles together parts A and B and most likely D into one comprehensive plan.
If you decide on a Medicare Advantage — or MA — plan, you’ll still have to enroll in parts A and B and pay the Part B premium. Then, in addition, you will have to choose an MA plan and sign up with a private insurer.
The federal government requires MA plans to cover everything that original Medicare covers, and some plans pay for services that original Medicare does not, including dental and vision care. In addition, in recent years, the Centers for Medicare and Medicaid Services, which sets the rules for Medicare, has allowed MA plans to cover such extras as wheelchair ramps and shower grips for your home, meal delivery and transportation to and from doctors’ offices. Most MA plans also fold in prescription drug coverage. Not all MA plans cover the same extra benefits, so make sure to read the plan descriptions carefully.
MA plans generally are either health maintenance organizations (HMOs) or preferred provider organizations (PPOs). In HMOs you typically choose a primary care doctor who will then direct your care and usually will have to give you a referral to see a specialist. Under PPOs, there are networks of doctors that you can see and facilities you can use, often without the need of a referral. If you go to a provider who is not in the plan’s network, you likely will pay more.
Part D — Prescription drugs
This is the part of Medicare that pays for some of your prescription drugs. You buy a Part D plan through a private insurer. There are generally some premiums and other out-of-pocket costs, either flat copays for each medication or a percentage of the prescription costs. There may also be an annual deductible.
If you have really high prescription drug bills, you may be subject to the Medicare coverage gap, commonly known as the doughnut hole. Once you and your drug plan have incurred a certain amount of expense for your drugs, you’ll have to pay no more than 25 percent of the cost of brand-name prescription drugs and 37 percent of the price of generic drugs. For 2019, that amount is $3,820.
If your drug costs continue to mount, you may reach the point of qualifying for catastrophic coverage. For 2019, once you have paid $5,100 in medicine costs — just your costs, not what your Part D insurance plan has paid — you’ll be responsible for 5 percent of the cost for each of your drugs.
Be sure to check at Medicare.gov whether the plan you’re considered has the medicines you take on their covered lists — called formularies. Those lists change from year to year, so it’s important to recheck your plan every year at open enrollment time — from Oct. 15 to Dec. 7, 2019.
Making your decision
Now that you know the parts that make up Medicare, you’re ready to contemplate your big Medicare decision: choosing between the two options for getting your medical coverage — Medicare Advantage (sit-down meal) or original Medicare (the buffet). Here’s a quick look at the differences between these options.
Under original Medicare, you wouldn’t need referrals to see specialists and you would be covered throughout the United States. Premiums are set by the federal government.
You would need to sign up separately for several plans in order to be covered for all your medical needs. You’d want to consider a Part D plan for your prescription drugs and a Medigap plan to help cover your out-of-pocket costs, such as hospital deductibles and the 20 percent coinsurance for doctor visits and other outpatient services.
Medicare Advantage plans provide one-stop coverage, and many also offer some of those extra benefits explained above. Such plans also typically have lower out-of-pocket costs than original Medicare and have an annual cap on out-of-pocket costs, which original Medicare does not have.
Also under Medicare Advantage plans, you’d be dealing with a private insurer and have to select doctors within a network. So if, for example, you live in two places during the year, you may not be covered in whatever place is not your primary residence.