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10 Medicare must-knows By Kiplinger's Retirement Report
What you need to know to prevent being taken advantage of
1. MEDICARE COMES WITH A COST
Part B covers doctor visits and outpatient services, and it comes with a monthly price tag -- for most people in 2012, that monthly cost is $99.90. Part D, which covers prescription drug costs, also has a monthly charge that varies depending on which plan you choose; the average Part D premium is $30 a month.
In addition to premium costs, you'll also be subject to co-payments, deductibles and other out-of-pocket costs
2. YOU CAN FILL THE GAP
Medigap policies are identified by letters A through N. Each policy that goes by the same letter must offer the same basic benefits, and usually the only difference between same-letter policies is the cost. Plan F is the most popular policy because of its comprehensive coverage; it has a wide range of prices, from an annual $934 to $5,590 for a male, according to PlanPrescriber.com.
3. THERE IS AN ALL-IN-ONE OPTION
With Medicare Advantage, you don't need to sign up for Part D or buy a medigap policy. Like traditional Medicare, you'll also be subject to co-payments, deductibles and other out-of-pocket costs, although the total costs tend to be lower than for traditional Medicare. In many cases, Advantage policies charge lower premiums but have higher cost-sharing. Your choice of providers may be more limited with Medicare Advantage than with traditional Medicare.
4. HIGH INCOMERS PAY MORE
In 2012, high incomers pay from $139.90 to $319.90 per month per person, depending on their income level, for Part B coverage. They also pay extra for Part D coverage, ranging from $11.60 to $66.40 per month, on top of their regular premiums.
5. WHEN TO SIGN UP
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For those who have not started Social Security, you'll have to sign yourself up for Parts A and B, or Medicare Advantage. The seven-month initial enrollment period begins three months before the month you turn 65 and ends three months after your birthday month. To ensure coverage starts by the time you turn 65, sign up in the first three months.
People still working may want to delay signing up for Medicare, but they will need to follow the rules carefully to avoid significant penalties when they do eventually enroll.
6. A QUARTET OF ENROLLMENT PERIODS
Those who are still working, though, can sign up later without penalty during a special enrollment period, which lasts for eight months after you stop working (regardless of whether you have retiree health benefits or COBRA). If you miss your special enrollment period, you will need to wait to the general enrollment period to sign up.
Open enrollment, which runs from October 15 to December 7 every year, allows you to change Part D plans or Medicare Advantage plans for the following year, if you choose to do so. (People can now change Medicare Advantage plans outside of open enrollment if they switch into a plan given a five-star quality rating by the government.)
7. COSTS IN THE DOUGHNUT HOLE SHRINKING
Because of the health care law, the amount a beneficiary pays while in the doughnut hole is gradually shrinking, so that by 2020, beneficiaries will pay just 25 percent of the costs of their generic and brand-name drugs while in the coverage gap. For 2013, the discount on brand-name drugs in the coverage gap will rise to 52.5 percent, from 50 percent in 2012, and the federal subsidy for generics will rise to 21 percent, from 14 percent.
8. YOU GET MORE PREVENTIVE SERVICES
9. WHAT MEDICARE DOES NOT COVER
To cover those costs, you'll have to pay out of pocket or have long-term-care insurance. Traditional Medicare also does not cover routine dental or eye care and some items such as dentures or hearing aids. For more on tests, items or services that Medicare doesn't cover, check www.medicare.gov/coverage/your-medicare-coverage.html
10. YOU HAVE THE RIGHT TO APPEAL
If you think your health would be seriously harmed by waiting for a decision, you can ask for a fast decision to be made and if your doctor or Medicare plan agrees, the plan must make a decision within 72 hours.
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Kimberly Lankford is a Contributing Editor at Kiplinger's Personal Finance. Comment by clicking here.
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