How to Get the Most Out of Medicare

Don’t understand Medicare coverage? You aren’t alone. Millions of Medicare subscribers have no idea what Medicare covers and costs or how to change it.

Yet if you don’t fully understand Medicare, it can cost you – you could choose the wrong coverage, wind up with higher premiums or copays, or miss out on crucial components you need for your health. Here’s how to maximize your Medicare coverage while minimizing your out-of-pocket costs.

Sign Up As Soon As You’re Eligible

It’s a common assumption that, as soon as you turn 65, you’re automatically enrolled in Medicare. Unfortunately, if you don’t take action after your 65th birthday, you might miss out on Medicare entirely.

According to Consumer Reports, you have six months to enroll in Medicare for the first time: three months before you turn 65 and three months after. Your coverage only begins when you enroll, so in order for Medicare to take effect when you turn 65, you need to sign up before your birthday arrives.

Medicare enrollment is only automatic in one specific case. If you’re already receiving Social Security benefits before you turn 65, the government will automatically enroll you in Medicare. Otherwise, if this isn’t the case, you have to sign up as soon as you’re eligible.

Wait too long to enroll and you could pay the price. While Medicare Part A is free for all seniors, Part B is not. Part B is designed for retirees. However, if you aren’t retired by age 65, make sure you take action to enroll in Part B right before you’re ready to retire. If you wait too long, you’ll pay a penalty – a penalty that increases by 10 percent every year. Wait until you’ve been retired for one year, you’ll pay a premium that’s 10 percent higher. Wait two or three years and you’ll pay 20 and 30 percent more, respectively.

And there’s one more reason you need to sign up ASAP: if you sign up for Part D too late, you’ll be hit with a permanent penalty that’s added to your monthly premium every single month, Medicare.gov reports. It’s a smart idea to sign up for Part D as soon as you sign up for Part B to cut costs and ensure you’re covered.

Know What Each Part of Medicare Covers

Signing up for and understanding how to use your Medicare coverage is much easier when you know exactly what’s covered. If you know the four different parts of Medicare, you’ll know just which to use for different medical and health needs.

The four parts of Medicare are:

  1. Part A, which covers hospital care, hospice care, and skilled nursing facilities. Part A has a small premium per month for some seniors.
  2. Part B, which covers doctors’ appointments, outpatient hospital care, preventative care, and some at-home healthcare for a monthly premium.
  3. Part C, which is also called Medicare Advantage, acts as a replacement for Parts A and B. Unlike Parts A and B, Part C is offered by private insurance companies, so premiums can vary.
  4. Part D, which covers prescription drugs only, is optional. Because most Medicare Advantage plans include Part D coverage, many seniors don’t need Part D enrollment.

With knowledge of these coverage components, you can better choose what you’d like to pay for and what you’d like to skip. For example, if you’re enrolled in Parts A and B, you’ll likely want to add Part D to cover the cost of your medications. However, if you choose a Part C (Medicare Advantage) plan, you won’t need to worry about Part D and you may not require Part B either.

And this could ultimately save you money on both premium and out-of-pocket costs. By opting into only the coverage you need, you won’t have to pay for expenses you never utilize.

Understand the Basic Costs

Another common Medicare misconception is Medicare is entirely free. While Medicare is funded by the government, only some parts of this senior healthcare are actually free. The majority of Medicare coverage options come with costs of some kind.

As Consumer Reports states, original Medicare (Parts A and B together) isn’t free. Though some seniors don’t have to pay a premium for Part A, there is a premium of $422 per month for others – and that’s on top of an annual deductible of $1,340. And Part B comes with a premium of approximately $130 per month.

The premiums and deductibles for Parts C and D vary, as these plans are optional and can be switched out for Medicare Advantage plans or no plan at all. These parts, however, come with costs similar to private insurance plans because they’re offered by government selected providers who offer plans outside of the Medicare system.

Part D in particular can become expensive, as it sets caps and out-of-pocket requirements on prescription medications – meaning individuals on many medications may wind up paying more.

Take Advantage of Open Enrollment

Once you’re armed with all of the information you need to know about the different parts of Medicare, Advantage plans, and supplemental insurance options, your work still isn’t finished. In order to maximize both your coverage and your costs, it’s important to take advantage of the Annual Enrollment Period (AEP), which is better known as open enrollment.

Each year from October 15 to December 7, Medicare subscribers get one chance to make changes to their coverage. During this brief window, you’re able to add or drop Medicare Advantage, change your Part C plan, and enroll in or drop Parts A, B, and D.

Why does this matter? Well, Medicare changes every year. Whether there are small changes to Medicare coverage, price changes in monthly premiums, or new plans offered, it’s crucial that you know what’s happening year after year.

During open enrollment, you can do research and a bit of comparison shopping. You can search for private insurance plans through Part C or Medicare Advantage, compare the premiums of options like Part D or supplemental gap insurance, and look into the coverage and copays of all of the available options. Doing this each year will ensure you’re paying the lowest price possible while still getting all of the coverage and care you need to stay healthy.

Here are a few tips to help you make the most of open enrollment and the Medicare options available during this period:

  • Look for annual changes. These must be mailed to all Medicare subscribers each year, so be on the lookout for updates and new coverage changes in summer and early fall.
  • Consider different plans’ quality ratings. On the Medicare.gov website, you can see star ratings for all plans. The plans with the best ratings are often the best both financially and coverage-wise.
  • Check copays and annual out-of-pocket limits. These are often the biggest expenses of any health insurance, including Medicare. Make sure you compare these costs and look into which will cover the procedures, visits, and health needs you use most.
  • Consider dental and vision coverage. Original Medicare doesn’t cover any vision or dental services, so you’ll want to consider gap or supplemental plans that do to keep your eyes and teeth healthy.

Remember, you have to work to find the Medicare parts and plans that’ll best benefit you and your health. To truly get the most out of your Medicare coverage, it’s crucial that you stay informed and up-to-date on annual changes, costs, and included services – and this will help you remain as healthy as can be too, long into your golden years.

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