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  • Writer's pictureCharles Yost

Your Guide to Medicare Coverage

MOST RETIREES RECEIVE health insurance through Medicare, the federal government's health insurance program for people age 65 and older. To maximize the value of the health plan, make sure to sign up at the correct time and take advantage of the free and low-cost services Medicare provides. Here's what Medicare covers and how much you can expect to pay for benefits and services.

What Is Medicare?

Medicare is a government health insurance program for people age 65 and older. Medicare helps cover the costs of health emergencies and chronic conditions, but it can also be used to help maintain good health. Medicare beneficiaries have to pay premiums and a variety of other out-of-pocket costs, and must make decisions about their coverage options.

What Does Medicare Part A Cover?

Medicare Part A covers hospital care and hospice. Part A will also pay for short-term stays at a skilled nursing facility if it follows a hospital stay of at least three days. Most retirees don't pay a premium for Medicare Part A, but there is a $1,408 deductible in 2020 and additional charges for long hospital stays.

What Does Medicare Part B Cover?

Medicare Part B is medical insurance that pays for doctor's visits and outpatient care. Part B provides a variety of free preventive services, such as an annual wellness doctor's office visit, flu shot and screenings for certain conditions. Beneficiaries can go to any doctor, specialist or other health care provider that accepts Medicare and is taking on new patients.

Most beneficiaries pay the standard Medicare Part B premium of $144.60 per month in 2020, but higher-income retirees pay more. "If your income is at least $87,000 or more, then you pay the income-related premium, which is indexed and rises with income," says Tricia Neuman, director of the Program on Medicare Policy at the Kaiser Family Foundation. Medicare Part B has a $198 deductible in 2020, after which beneficiaries are generally responsible for 20% of the cost of most doctor's services.

What Does Medicare Part C Cover?

Medicare Part C or Medicare Advantage Plans are an alternative to original Medicare in which private insurance companies pay for Medicare-approved and sometimes other services, but with different prices and restrictions than original Medicare. You may be required to use doctors in the plan's network and get a referral to see a specialist.

What Does Medicare Part D Cover?

Medicare Part D provides prescription drug coverage. Part D plans are private health insurance policies that follow rules set by Medicare. The premium for Medicare Part D prescription drug coverage varies depending on the plan you select. Plans can charge deductibles of up to $435 in 2020.

What Does Medigap Cover?

Retirees can purchase Medicare supplement insurance policies called Medigap to pay for original Medicare's out-of-pocket costs and additional services Medicare doesn't cover. Medigap policies typically cover the copays, coinsurance and deductibles of original Medicare in exchange for a monthly payment.

It’s important to enroll in a Medigap plan during the six-month period that begins when you’re 65 or older and enrolled in Part B, because after this enrollment period ends, you may not be able to buy a Medigap policy or could be charged significantly more.

What Isn't Covered by Medicare?

Medicare doesn't cover all of the health care services older people are likely to need in retirement. Medicare generally won't pay for glasses and contact lenses or the routine eye examinations to prescribe corrective lenses. Dental care and hearing aids are also commonly needed services that aren't covered. Perhaps most significantly, while short-term nursing home stays might be covered under specific circumstances, Medicare does not pay for long-term care.

When Should You Enroll in Medicare?

Retirees can first enroll in Medicare during a seven-month window that begins three months before the month they turn 65. Sign up at the beginning of this period if you want coverage to begin the month you reach age 65.

If you miss the initial enrollment period, you can sign up between Jan. 1 and March 31 for coverage that will begin July 1, but you will be charged late enrollment penalties for as long as you have Medicare. "Late enrollment penalties from Medicare can be long-term," says Anna Maria Chávez, executive vice president and chief growth officer at the National Council on Aging. "You don't want to have to worry about higher costs just because you didn't act when you became eligible at 65."

If you delay Medicare enrollment because you or your spouse is still working at a job with group health insurance, sign up within eight months of leaving the employer or health plan to avoid the penalty.

How Do You Sign Up for Medicare?

Social Security beneficiaries are often automatically enrolled in Medicare Parts A and B, with coverage starting the month they turn 65. If your birthday falls on the first of the month, coverage will start at the beginning of the prior month.

Medicare cards are mailed out to most Social Security beneficiaries three months before their 65th birthday, and Medicare Part B premiums are withheld from Social Security payments. However, you will need to actively sign up if you want prescription drug coverage, a Medicare supplement policy or a Medicare Advantage plan.

Workers who haven't signed up for Social Security will need to enroll in Medicare and pay the premiums out of pocket to receive coverage. You can sign up online at, by phone at 1-800-772-1213, or at your local Social Security office.

Once enrolled, you can review your coverage and make changes each year. "In general, people should shop every year and decide whether their prescription drug plan and Medicare Advantage plan is best for them," says Leslie Fried, senior director of the Center for Benefits Access at the National Council on Aging. "Look at your drug costs and provider network and make sure the plan still works for you."

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