Seven Tips to Make Medicare Work for You

3.Carefully consider the financial implications.

dollar billYou’ve worked hard for your money, and you’ll want to pay close attention to all the financial considerations when making Medicare decisions.

For Original Medicare coverage you’ll probably pay about $100 a month. Most Medicare recipients don’t pay premiums for Medicare Part A, but the majority of people currently enrolled in Medicare pay a monthly Part B premium of $104.90. If your 2011 income was over $85,000 ($170,000 if you filed jointly), your Part B premium will be higher.

Although you probably won’t pay a Medicare Part A premium, if you receive hospital services you’ll be responsible for paying the Medicare Part A deductible of $1,184 per benefit period. In some cases you may be obligated to pay this amount several times a year.

Although the Part B deductible is only $147 a year, there is 20% coinsurance for your doctor bills and outpatient coverage. If you have only Original Medicare coverage, you may be surprised how quickly your coinsurance charges can accumulate. And then there are excess charges—which we’ll discuss shortly.

For most people, the best option for keeping costs in check is to enroll in an affordable Medicare supplement plan. Coverage varies from plan to plan, but every Medigap plan is designed to fill the gaps in Original Medicare coverage and to save you money as a result. Unless you’re a gambler who never loses, you’ll want to check out Medigap plans from A to N as you examine the bottom-line implications of your Medicare decisions.

Medicare supplement plans can cost you from under $100 to over $200 a month, depending on the plan and on the company selling the plan. Prescription drug coverage is likely to cost about $30 a month, though you can easily pay more if you aren’t careful. Medicare Advantage costs vary, and some premium-free plans may be available in your area.

Regardless of your medical needs, it’s important to establish a budget taking into account what you can safely afford to pay for your health coverage. Give plenty of consideration to the long-term implications, keeping in mind that it’s better to pay a penny today than a dollar tomorrow. Be responsible to your pocketbook and to yourself.

It’s important to take the time at least once a year to evaluate exactly what you’re getting for your healthcare dollars. The best time to do this is probably before the start of the Annual Election Period, which takes place from Oct. 15 to Dec. 7 of each year. During the Annual Election Period you can join, drop, or switch Medicare Part C and Part D plans according to your updated needs and financial developments.

You have a further opportunity to make certain changes during the annual Disenrollment Period for Medicare Advantage, which in 2013 takes place from January 1 to February 14. If you decide the healthcare dollars you’re currently spending on Medicare Advantage can better be applied elsewhere, you can:

• Return to Original Medicare

• Apply for a Medicare supplement

• Enroll in a stand-alone Part D plan

If you decide your money would more wisely be spent on Medicare supplement insurance than Medicare Advantage—or if you’re not currently enrolled in a Medicare Advantage plan—you’re normally able to join a Medicare supplement plan at any time of the year. You need to be aware, however, that private insurance companies apply their own underwriting practices when it comes to Medigap policies and you may not always be able to get the plan you want.

4. Carefully compare the choices.

Now that you’ve established the nature of coverage you’ll need and set a budget, it’s time to start comparing.

You might start by learning key differences among the various Medicare supplement plans. Plan A, for example, offers the lowest level of benefits of any Medicare plan, and falls short of filling many of gaps in Medicare. For a nonsmoking male in his late 60s living in some areas, Plan A coverage may be available for as little as about $100 per month. But for only a little more money per month, that same nonsmoking male can purchase a Medigap Plan F policy, which provides much more comprehensive coverage than Plan A.

Don’t be fooled into thinking premium costs determine the quality of coverage. Sometimes only a few extra dollars can translate to an altogether different level of coverage. For example, look at the difference between what Medicare Supplement Plan A and Plan F offer:

Plan A coverage includes:

• Medicare Part A and Part B coinsurance after your deductible is paid

• Three pints of blood per year

Not included are skilled nursing care, Medicare Part A hospital deductibles, Medicare Part B medical deductibles, Medicare Part B excess, or medical costs incurred during foreign travel.

Medicare Part B excess refers to costs providers charge above the Medicare-approved amount. For example, if the Medicare-approved charge for a treatment or procedure is $1,000 but your health provider charges $1,500, the 80% Medicare reimbursement will apply only to the Medicare-approved charge, in this case $1,000. If enrolled in Medigap Plan A, you will be responsible for the remaining $500 excess.

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