New to Medicare: How to plan for Medicare  

Tamera Jackson by Tamera Jackson | Licensed since 2007
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This article was updated on: 10/20/2018

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If you or a loved one are new to Medicare or approaching Medicare eligibility, you may have questions about how the program works, what’s covered, the costs involved, and your benefit options. Here’s a look at how to plan for Medicare and your health-care needs.

How does the Medicare program work?

If you are new to Medicare, you may not know that there are four parts to the Medicare program:

  • Part A, hospital insurance
  • Part B, medical insurance
  • Part C, the Medicare Advantage program
  • Part D, prescription drug coverage

Original Medicare (Part A and Part B) is administered by the federal government, while Medicare Advantage and stand-alone Medicare Part D Prescription Drug plans are administered by private insurance companies contracted with Medicare. In most cases, you are automatically enrolled in Original Medicare when you sign up for Social Security benefits. If you want to enroll in a Medicare Advantage or Medicare Part D Prescription Drug plan, you must sign up with the Medicare health plan you select.

Although Medicare Part C and D are managed by private insurance companies, they must meet minimum coverage requirements set by the Medicare program. All Medicare Advantage programs must offer all the same coverage as Original Medicare, Part A and Part B (except for hospice benefits, which are still covered under Part A), but they may choose to offer additional benefits to their members, such as prescription drug coverage and routine vision, dental, and hearing services.

How much does Medicare cost?

As someone who is new to the Medicare program, you are probably wondering about the costs associated with Medicare plans. You might be relieved to know that most people do not pay for their Part A coverage. However, if you do not qualify for premium-free Part A, you can generally still purchase this coverage (in 2018, the premium could be as much as $422 each month). Like Part A, premiums for Part B are set by the federal government, and for most people, the average Part B monthly premium in 2018 is $130. If you are new to Medicare in 2018, you may pay a higher monthly premium in some situations, such as if you have income above a certain level ($85,000 for an individual, $170,000 for a married couple). Read more about the Medicare Part B premium.

It may be more difficult to plan for Medicare Advantage and stand-alone Medicare Part D Prescription Drug plan premiums, because these rates are set by the individual insurance companies. You must continue to pay your Part B premium, but you may pay an additional premium depending on the plan you choose.

Stand-alone Medicare Part D Prescription Drug Plan premiums also vary by the plan you choose. Enrollment in Part D is optional. However, if you think you might need this coverage and as someone who is new to Medicare, it’s important to plan for Medicare Part D coverage as soon as you are eligible, because you may pay a late-enrollment penalty for as long as you are enrolled in Part D if you delay. Most people only pay the Part D premium set by their plan; however, if your income is above a certain level, you may also pay an income-related monthly adjustment amount (IRMAA) as well.

How do I plan for Medicare out-of-pocket expenses?

If you enroll in Original Medicare, you are responsible for Part A and Part B deductibles, copayments, and coinsurance amounts, plus the full cost of any non-covered care. There is no out-of-pocket maximum for Original Medicare, meaning there is no limit on how much you could spend on health care. If you need help with Original Medicare costs, Medicare Supplement insurance plans (also called Medigap) might help you plan for the Medicare expenses you may need to pay out of pocket. These Medicare Supplement plans are offered by private insurance companies, and they may pay all or part of your certain Original Medicare costs such as deductibles and coinsurance amounts for covered Medicare services. Some may even offer coverage for services not included in your Original Medicare benefits. If you are new to Medicare, you can get a Medicare Supplement plan during the Medicare Supplement Open Enrollment Period. This period lasts for six months and automatically starts in the month you’re both 65 and enrolled in Medicare Part B.

Depending on the plan, Medicare Supplement coverage could include Part A coinsurance and hospital costs, Part B coinsurance, Part A hospice care coinsurance, skilled nursing facility care coinsurance, the Part A deductible, and more.

Medicare Supplement policies cannot be combined with Medicare Advantage plans and you cannot buy one if you have a Medicare Medical Savings Account plan. They are prohibited from providing coverage for prescription drugs. You may only buy them from companies licensed in your state to sell them. The individual companies that sell these plans determine the premiums.

What else should I know to plan for Medicare benefits?

You may want to start learning about Medicare if you’ll be eligible for the program soon, even if you don’t plan to start your Social Security retirement benefits right away. This may be especially important for Medicare Part B and Medicare Advantage Part D, because if you don’t enroll as soon as you are eligible, late-enrollment penalties may apply to your monthly premium.

Other things to consider as you plan for Medicare:

  • Do you take prescription drugs on a daily basis? You may want to consider a Medicare Advantage Prescription Drug plan or a stand-alone Medicare Part D Prescription Drug Plan.
  • Do you have a chronic disease or condition? Some Medicare Advantage plans, known as Special Needs Plans, are designed to optimize quality of care and minimize costs for people with qualifying conditions.
  • Do you prefer the convenience of accessing all of your Medicare benefits in one plan? Medicare Advantage plans offer this convenience, and many include benefits you may appreciate, such as coverage for wellness and fitness programs, or even discounted gym memberships.

If you have questions as you plan for Medicare coverage and out-of-pocket expenses, I’m happy to help you understand your options. You can get personalized information via email or schedule a telephone call at your convenience by clicking one of the links below. For a list of plans in your area you may qualify for, click on the “Compare Plans” button.

The product and service descriptions, if any, provided on these Medicare.com Web pages are not intended to constitute offers to sell or solicitations in connection with any product or service. All products are not available in all areas and are subject to applicable laws, rules, and regulations.

Benefits, premiums and/or copayments/co-insurance may change on January 1 of each year.

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