I have a group of friends who first came together in a special 6th grade class and continued in school together through high school. About 10-year ago we began having informal reunions every two or three years. This year, since I am one of the first to turn 65 and have some background in healthcare, I have been asked to provide some tips on signing up for Medicare to the group, which I summarize in this blog.
Many of us who previously worked in the private sector generally have a negative view of government programs. But, my experience strong suggests Medicare is easier than you think. In signing up for Medicare I found the government website (Medicare.gov) and dealing with the Centers for Medicare and Medicaid Services (CMS) to be much better than dealing with the private health insurance companies, including those offering employer sponsored plans and individual policies and the companies that administer Medicare Supplemental and Part-D drug insurance.
The Basics
- You are eligible for Medicare on the first day of the month in which you turn 65 unless your birthday is the first of the month, in which case you start the first day of the prior month.
- You are required to sign up for Medicare within a seven-month period before and after your 65th Ideally you should sign up in the three months before the month in which you turn 65. You may face higher premiums if you delay signing up unless you remain covered by an employer’s insurance policy.
- There are two main parts to Medicare – Part A (Hospital Insurance) that covers inpatient and post-inpatient services and Part B (Medical Insurance) that covers medically necessary doctor and outpatient services.
- Because co-payments for Medicare Part A and Part B can be significant with a long hospital stay or prolonged illness, most Medicare members also purchase a Medicare Supplemental Insurance policy from a private insurance company to help cover deductibles and co-pays.
- Many insurers offer Medicare Supplemental policies and you will be inundated with offers as you approach 65 but all must offer a standard set of plan options (A – N) from which you can choose.
- Medicare offers a prescription drug benefit, Medicare Part D, for which you must sign up through a private company separately from Part A and B.
- Medicare members also have the option of combining A, B and D coverage into a single policy call a Medicare Advantage Plan, or Part C, which is a Medicare Managed Care or HMO/PPO type policy. These policies can offer cost advantages, additional benefits and better-integrated services but may also restrict options for healthcare providers and drugs.
The Cost
Medicare Part A is generally free to those that have paid Medicare taxes over the year. Medicare Part B has a sliding fee scale tied to income with monthly premiums ranging from $104.90 for individuals with incomes of $85,000 annually or less up to $335.70 for individuals with income above $214,000 annually (income based on most recent tax return on file). Supplemental insurance premiums range from about $70 per month to $225 per month depending on the plan you choose.
Part D also has a sliding monthly premium fee scale based on income but it is essential in selecting a Part D Plan to consider the annual deductible and co-pays for the drugs you use, not just the monthly premium, to determine the total costs you can expect to pay. The base monthly premium for a Part D Plan is generally less than $50 with income based additions of $12 to $71 per month in 2015 for individuals with incomes over $85,000. Medicare and others provide on line tools that will assist you to select the most cost effective Part D Plan based on the cost of insurance and the deductible and co-pays for the specific drugs that you take and you can change plans annually.
In some cases Medicare Advantage or Part C plans may offer lower costs or more comprehensive coverage than an A-B-D plan with supplemental insurance but Medicare Advantage plans can limit the caregivers or medications you may be able to use.
Key Decisions
Unless you remain covered under an employer’s healthcare plan, or are covered by certain other approved exceptions, you need to sign up for Medicare or face significant penalties for delay.
The key question is whether to sign up for Original or Traditional Medicare – Part A, Part B and Part D with supplemental insurance or for a Medicare Advantage (Part C) Plan. The key advantage of Original Medicare is that you have full choice over your physicians, hospitals and other care providers while a Medicare Advantage Plan may restricted the care providers you can see and otherwise limit or direct utilization.
There are also important choices to be made about which Medicare Supplemental Plan to select, with a broad range of premiums and deductibles, some offering coverage outside the US and some not. The best Part D Plan for each person will vary based on the drugs they use, so using an online tool to evaluate plans is key to making this decision.
I selected an Original Medicare Plan with Parts A, B and D and a Medicare Supplemental Insurance Plan from AARP/United Healthcare. I wanted to preserve the ability to use my present primary care doctor, so I did not consider Medicare Advantage options. My choice of a Medicare supplemental insurance provider was influenced by many frustrations in dealing with CareFirst (the Blue Cross/Blue Shield provider in Maryland) and by a consultation with former stock analyst colleges that follow health insurance providers. I also decided to purchase my Part D Plan through AARP/United Healthcare but, because I take few drugs, I did not spend a lot of time shopping for a Part D Prescription Drug Plan.
Other Resources
This short introduction to Medicare should be supplemented with information from Medicare and supplemental insurance providers. See particularly “Medicare & You 2015” available free at Medicare.gov and available online and downloadable to e-readers for free. AARP (aarp.org), among others, also offers a general Medicare Guide and sponsors a Medicare Supplemental Insurance Program offered through United Healthcare. In the Medicare & You guide, Medicare also indicates you can contact your State Health Assistance Program (SHIP) or call 1-800-MEDICARE (1-800-633-4227) and say Agent to get individual help but I did not try either of these.
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