10 Things You Need to Know About Medicare

10 Things You Need to Know About Medicare

How to get the most out of this health insurance program for retirees.

Maximizing Medicare
Medicare pays for much of the cost of hospital stays and doctor’s office visits for people ages 65 and older. This 50-year-old government health insurance program has also more recently added preventive care and prescription drugs to its covered services. Here's how Medicare beneficiaries can make the most of the program.

What's covered.
Hospital care is covered by Medicare Part A. Medicare Part B is medical insurance that pays for doctor's visits and outpatient services. Medicare Advantage plans or Medicare Part C are an alternative to traditional Medicare offered by private insurance companies, typically with different premiums and restrictions. Prescription drug coverage is provided through Medicare Part D.

How much you are paying into the program.
Workers and employers each pay 1.45 percent of employee earnings into the Medicare system. Self-employed workers contribute 2.9 percent of their income. People who earn more than $200,000 for individuals and $250,000 for couples pay an additional 0.9 percent tax on that income.

Enrollment deadlines
You can first sign up for Medicare during a seven-month window around your 65th birthday. Coverage can start beginning the month you turn 65. If you fail to sign up during this initial enrollment period, you could be charged higher premiums for the rest of your life. If you delay Medicare enrollment due to group health insurance through your current job, sign up for Medicare within eight months of leaving the job or the coverage ending to avoid the penalty.

Premium amounts
Most people don't pay a premium for Medicare Part A. The standard Medicare Part B premium is $104.90 in 2015, but costs are higher for retirees with a modified adjusted gross income above $85,000 for individuals and $170,000 for couples. Medicare Part D premiums vary depending on your plan choice.

Out-of-pocket costs
There's a $147 Medicare Part B deductible in 2015, after which you will be charged 20 percent of the Medicare-approved amount for most services. There’s no annual limit on out-of-pocket costs. Medicare Part A has a $1,260 deductible if you are hospitalized, and additional costs apply if your hospital stay exceeds 60 days.

Free services
Medicare provides many preventive care services, such as flu shots and mammograms, without any cost-sharing requirements. Beneficiaries are also eligible for a free wellness doctor's visit once each year. However, tests and services performed during the wellness visit could result in additional charges.

Prescription drug coverage
Retirees must choose between an average of 30 different Medicare Part D prescription drug plans, which each have different covered medications, premiums and copays. The covered medications and their costs also change annually, so it’s a good idea to shop around for a new plan each year during the open enrollment period.

How to make changes.
Medicare beneficiaries can make changes to their Medicare Part D prescription drug coverage each year during the open enrollment period from Oct. 15 to Dec. 7. This is a good time to check that the medications you use will continue to be covered at an affordable price and to switch plans if they won’t.

How to supplement Medicare.
A Medigap plan will pay for some of traditional Medicare's out-of-pocket costs. Remember to purchase a Medigap policy during the six-month period that begins when you're 65 or older and enrolled in Medicare Part B, otherwise you could be charged significantly higher premiums or denied coverage if you try to buy a policy after that.

What's not covered.
Medicare typically doesn't cover eyeglasses, dental care or hearing aids. Medicare also won't pay for more than 100 days of long-term care such as nursing home stays or assisted living.

Related: See all Medicare articles

This content originally appeared on U.S. News & World Report.

Medically reviewed in March 2020.

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