How To Save With Medicare: The Top Things To Know
The Medicare Annual Enrollment Period (AEP) is one of the most important times of the year. Running from October 15 to December 22, 2022, this period is critical for those who use Medicare to fund their healthcare services.
Many people claim to be confused and frustrated with the Annual Enrollment period. A ClearMatch poll revealed that more than half of Medicare users don't look forward to reviewing their plan every Fall. However, educating yourself on the options and making informed decisions about your healthcare options can save you a bunch of money.
Here's everything you need to know about Medicare and the AEP.
Medicare For Those 65 and Older
Most Americans are eligible for Medicare right before their 65th birthday. (You may also become eligible earlier if you are disabled or have a couple specific ailments.) Either way, Medicare is primary healthcare insurance for almost every American over 65.
Once enrolled in Medicare, any health insurance that previously existed becomes a secondary insurer. It's important to know that this is true even if a retiree hasn't applied for Medicare yet. For this reason, it's extremely important to go through the application process, especially in the first year you are eligible.
Medicare and Its Four Parts
Medicare is made up of four different parts, each focused on a different aspect of healthcare and their costs. As you evaluate your options for the AEP, be sure to keep the following Medicare Parts in mind:
- Part A - refers to hospital insurance. It covers most care associated with hospital visits, inpatient stays, nursing, home health, hospice care, and palliative care.
- Part B - refers to basic medical insurance, medical equipment, and necessary doctor services. It also contains some coverage for preventative medical care, which includes lab tests, x-rays, mental health care, and even some home care services. There's also some coverage for ambulance rides. However, there is a monthly premium to pay for Part B
- Part C - refers to Medicare Advantage Plans. These plans are by private healthcare companies who have contracts with the federal government. Medicare Advantage Plans often include most of the things covered in Parts A and B, along with some extras like vision, hearing, and dental care. Unlike Parts A and B, Medicare Part C isn't supplied directly by the government.
- Part D - refers to a variety of plans that cover prescription medications. Not all Part D plans cover the same types of medication, so be sure of what you need before you pick your plan. Part D plans are not provided by the government, as they are an optional extra plan to help cover the cost of medication.
Choose Your Plan Carefully
Original Medicare plans are made up of Parts A and B. For an extra cost (but more coverage), you can opt for Part C, otherwise known as Medicare Advantage. If you need coverage for prescription medication (and anticipate that you will in the future), you may also need to add in Part D.
The point is that there are a lot of different combinations. You'll need to form a solution that suits your individual needs and budget. For example, enrolling Part C may give you fewer out-of-pocket expenses, but also limit which network of doctors you can visit for care.
Figure out what components of your healthcare are the most important to you. Then evaluate your Medicare options and choose the best plan for you. This should, in theory, save you some money on your healthcare costs in the long run.
Medicare Application Deadline
You should absolutely apply for Medicare as soon as you are eligible. For most people, that is three months prior to your 65th birthday. To add some pressure, the deadline for applying is four months after that birthday. That's a seven-month window to get your application done, so there's really no excuse.
If you miss the window, you may have to pay penalties to apply late. Otherwise, you'll go without coverage until the next enrollment period. The good news is that if you've also applied for Social Security, you'll automatically be enrolled in Medicare Parts A and B.
The late enrollment fees are anywhere between 1% and 10% of your premiums. These penalties will add up to hundreds of dollars every year. When you're a retiree with a fixed income, these penalties can really hurt your budget. So do yourself a favor and don't procrastinate.
Alternatives to Medicare
If you don't actually retire when you hit 65, you have a few different options. Some of them are out of your control, but they still exist.
If you continue working and your employer has more than 20 employees, you have the choice to double up on Medicare and your employer-provided health insurance or drop your work-sponsored plan in favor of Medicare. If your employer has fewer than 20 employees, though, you'll have to enroll in Medicare no matter what.
If you have coverage through your spouse's employer-provided health insurance, you may be able to delay enrolling in Medicare without a penalty. Make sure to examine your spouse's plan carefully, to make sure you're following its terms and conditions.
What If You Can't Afford Medicare?
Medicare is designed to be an affordable healthcare insurance program for retirees. However, there's still a cost associated, depending on what level of coverage you need. If you find yourself struggling to afford even basic Medicare premiums, you should consider a Medigap Policy (also known as a Medicare Supplement Plan).
A Medigap policy, if you qualify, will help you with extra medical expenses like coinsurance, copayment, and deductibles. For more information, contact Medicare directly on their website or toll free at 1-800-MEDICARE (633-4227)