Medicare Part B provides basic physician, lab, and outpatient benefits.  Medicare pays their portion (typically 80%) directly to service providers. Part B has an annual deductible, and you’ll often be billed “copays” for services.  There is no annual maximum for your out-of-pocket expenses. There is a monthly premium for Part B, which is based on your income.  If you are already claiming Social Security benefits, Part B premiums are usually deducted from your Social Security check.

PRO:  Medicare pays majority of your doctor and lab expenses.

RISK:  No annual maximum for your out-of-pocket doctor and lab expenses.

SOLUTION:  Enroll in Medicare Supplement or Medicare Advantage plan.

Private insurance carriers have contracted with Medicare to provide you with everything in Part A and Part B in a single plan.  You must be enrolled in Medicare Part A and Part B to be eligible for a Part C plan.  These Part C plans (also known as “Medicare Advantage”) often provide additional benefits.  Prescription drug, dental, hearing, and eyesight benefits are examples.  You may be limited to a network of doctors and hospitals who work with the private insurance carrier, and your coverages may be geographically limited.  The insurance carrier pays their portion directly to the providers.  Plans often have annual deductibles, and you’ll often be billed for “copays” for services.  Your annual exposure to medical costs is limited to a maximum each calendar year.  Some Medicare Advantage plans have a low monthly premium, while some have a $0 monthly premium.

PRO:  Low or $0 monthly premium.

PRO:  Your annual out-of-pocket expenses are limited.

PRO:  Prescription drugs may be covered, and other additional benefits may be included.

PRO:  You can change Medicare Advantage Plans each January 1^st.

RISK:  Your preferred doctors and hospitals may not be in plan’s network, or you often travel outside your local area.

SOLUTION:  Consider a Medicare Supplement instead.

RISK:  If you have health issues in the future, you may no longer be able to move to a Medicare Supplement plan from a Medicare Advantage plan.

SOLUTION:  Consider a Medicare Supplement instead while you have a “Guaranteed Issue” option (for example, when you first enroll in Medicare).

Medicare Parts A & B do not include prescription drug coverage (although some drugs administered by a physician may fall under Part B).  Part D plans, also known as Prescription Drug Plans, are offered by insurance carriers.  Part D plans have a deductible, and you’ll often be billed for “copays” for prescriptions, although some copays may be $0.  There is a monthly premium for Part D plans.

PRO:  Medicare and the insurance carrier pay a portion of your prescription drug expenses.

PRO:  You will not incur the full cost of expensive prescriptions if you are prescribed one.

PRO:  You can change Part D plans each January 1^st.

PRO:  Many Part D plans have low monthly premiums.

Medicare Supplements are additional coverage from a private insurance carrier in addition to Medicare Part A and Part B.  Also called “Medigap” plans, these plans fill in the gaps in the coverage of Medicare Part A and Part B.  After Medicare pays their portion to the providers (roughly 80%), these plans may pay most of what’s left.  Depending on the plan, there may be deductibles and “copays”.  These plans are accepted by any doctor or facility that accepts Medicare, giving you the maximum flexibility and choice.  These plans do not include drug coverage, so you need to add a Part D drug plan.

PRO:  Maximum flexibility as the vast majority of hospitals, doctors, and labs accept Medicare.

PRO:  Guaranteed Issue when you first sign up for Medicare, so your health status does not matter.

PRO:  Not limited to your local area, so a good choice if you travel or spend time in other locations.

RISK:  Monthly premiums increase as you age.

SOLUTION:  You can switch to Medicare Advantage plan later.

Most people become eligible for Medicare on the first day of the month they turn 65.  In these cases, your Initial Enrollment Period (IEP) is a very important time.  Your IEP is as seven-month period:

• The 3 months before your 65th birthday month
• Your birthday month and

• The 3 months after your 65th birthday month

During your IEP, you can enroll in any of the various Medicare plans.  During this time, Medicare Supplement plans are “Guaranteed Issue”, which means that, unlike later, there are no pre-existing conditions, and you are assured that you can enroll in a Medicare Supplement.  Your IEP is also applicable to enrollment in Medicare Advantage and Prescription Drug Plans.

If you continue to work past age 65, and choose to remain on your employer’s health plan, you have 8 months after you leave your employer’s plan to enroll in Medicare Part A and Part B.

RISK:  You will incur a permanent penalty on your Part B and Part D premiums if you do not enroll when you are first eligible.

Each year from October 15th through December 7th, you can change Medicare Advantage and Prescription Drug plans. 

Changes you make will become effective on January 1st of the next year.

PRO: If your health status changes, you can move to a more appropriate set of plans.

There are several Special Enrollment Periods (SEPs), each with specific requirements.  One example is when you move to a different state.  Another example is if the insurance plan you’re currently on is unavailable for the next year.  You have various timeframes to change plans based upon your eligibility for an SEP.

RISK:  If you miss an SEP, you may be unable to make desired changes, and you could incur permanent penalties due to periods without Part B or Part D.

SOLUTION:  Always be proactive with any changes that could affect your Medicare plans.