According to a recent survey, 90% of older Americans have either signed up for Medicare or are planning to do so—and for good reason. Healthcare is the biggest expense in retirement, which is why enrolling in Medicare is a smart choice for anyone who is nearing retirement age.
The road to that Medicare plan is quite complex, however. While you’ve probably heard about Medigap, Parts A to D and Medicare Advantage plans, you also need to learn about these six things that you might not know about Medicare:
You are not automatically enrolled to Medicare.
A lot of people think that they get enrolled in a Medicare plan automatically. It may be partially true because if you have Social Security Benefits, you’ll be enrolled in Part A and B starting on the first day of the month of your 65thbirthday. But if you want full coverage and avoid extra charges that you might not be willing to pay for, you need to be proactive about your Medicare enrollment. For instance, you have the option to remove Part B in your plan if you don’t want to pay for a monthly premium.
If you don’t have Social Security, you need to enroll within the seven-month window given to you, which starts the three months before your birthday and ends three months after your birthday. There is also a general enrollment period from January 1 to March 31 of every year. If you fail to sign up during these times, you may be charged for penalties and may incur permanently higher premiums.
Outpatient care is NOT free.
More than half of the respondents in a recent survey conducted by the Nationwide Retirement Institute believed that outpatient care is free, but in reality, it’s not. In fact, you need to pay a monthly premium of $134 and the costs increase if you earn more. Part A, which covers hospitalization is free if you or your spouse paid Medicare payroll taxes for at least ten years. But you can expect additional out-of-pocket costs for hospitalizations and even more expenses for hospital stays exceeding 60 days.
You can sign up for supplemental insurance.
Since Medicare is not entirely free and you would want to avoid out-of-pocket costs, you have the option to sign up for a Medigap supplemental insurance plan. Offered by private insurance companies, Medigap fills the gaps in your traditional Medicare including co-payments and deductibles.
Choose the right Prescription Drug Plan for you.
Each Medicare prescription drug plan covers a list of drugs. They are usually grouped in tiers and differ in cost depending on which tier they belong. To make sure that you choose the right prescription drug plan for your needs, try to look at the list of drugs for each plan first to see if your medicines are covered and how much they will cost. You also need to remember that you have to choose a prescription drug plan during your initial enrollment or you will be charged a late enrollment premium.
You need to learn about the doughnut hole.
You probably heard about the “doughnut hole” from one of your retiree friends but don’t understand it fully. A doughnut hole is the gap in your Part D plan where you’ll need to face higher out-of-pocket costs for your prescription drugs. The coverage gap begins when the total amount you and your plan have paid for drugs reaches $3,750. In the doughnut hole, you will enjoy 56% federal subsidy for generic drugs and 65% discount on brand-name drugs.
You can enjoy free preventive services.
Being a Medicare beneficiary means you can enjoy a list of preventive services for free. For instance, you get a free annual wellness visit to update your personalized prevention plan. You also get annual mammograms, flu shots and screenings for prostate, cervical and colorectal cancers. In addition, you can enjoy free cardiovascular screenings every five years.
Indeed, Medicare is one of the most complex decisions that you’ll ever make as part of your retirement plans. But if you do your homework and ask advice from the experts, you will definitely be able to enjoy the benefits of your Medicare plan during your retirement years.