Medicare pays for much of the cost of hospital stays and doctor’s office visits for eligible beneficiaries. This government health insurance program has more recently added preventive care to its covered services. Here’s how to make the most of your Medicare benefit.
Hospital care is covered by Medicare Part A. Medicare Part B is medical insurance that covers doctor's visits and outpatient services. Medicare Advantage Plans are an alternative to original Medicare offered by private insurance companies, typically with different premiums and restrictions. Prescription drug coverage is provided through Medicare Part D prescription drug plans or is included in a Medicare Advantage prescription drug plan.
How much you are paying in
Employees and employers each pay 1.45% of the worker’s wages into the Medicare system. Self-employed workers contribute 2.9% of their income. People who earn more than $200,000 as individuals and $250,000 for couples pay an additional 0.9% Medicare tax.
You can first sign up for Medicare during the seven-month window that includes the three months before your 65th birthday, your birthday month and the three months after the month you turn 65. Coverage can start beginning the month you turn 65. If you fail to sign up during this initial enrollment period, you could be charged a late enrollment penalty for as long as you are enrolled in Medicare. If you delay Medicare enrollment due to group health insurance through your current job, sign up for Medicare within eight months of leaving the job or the coverage ending to avoid the penalty.
Most people don't pay a premium for Medicare Part A. The standard Medicare Part B premium is $144.60 per month in 2020, but could be higher based on your income. Premium costs increase significantly for retirees with a modified adjusted gross income above $87,000 for individuals and $174,000 for couples, to between $202.40 and $491.60 per month.
There's a $198 Medicare Part B deductible in 2020, after which you will be charged 20% of the Medicare-approved amount for most services. There’s no annual limit on out-of-pocket costs. For each benefit period, Medicare Part A has a $1,408 deductible if you are hospitalized, and additional costs apply if your hospital stay exceeds 60 days.
Medicare provides many preventive care services without any cost-sharing requirements, including flu shots and some types of cancer screenings. Beneficiaries are also eligible for a wellness doctor's visit at no cost once each year. However, tests performed during the wellness visit could result in additional charges.
Prescription drug coverage
Medicare beneficiaries must choose among a variety of Medicare Part D prescription drug plans, which each have different covered medications, premiums and copays. The covered medications and their costs also change annually, so it’s a good idea to shop around for a new plan each year during the Medicare open enrollment period.
How to make changes
Medicare beneficiaries can make changes to their Medicare Part D prescription drug coverage each year during the Medicare open enrollment period from Oct. 15 to Dec. 7. This is a good time to check that the medications you use will continue to be covered at an affordable price and to switch plans if they won’t.
How to supplement Medicare
A Medigap plan will pay for some of traditional Medicare's out-of-pocket costs. Remember to purchase a Medigap policy during the six-month period when you're 65 or older and enrolled in Medicare Part B. You could be charged significantly higher premiums or denied coverage if you try to buy a policy after that point.
What's not covered
Original Medicare typically doesn't cover several types of services older people frequently need, including dental care or hearing aids. Routine vision care, such as eye exams, glasses and contact lenses, won't be reimbursed. Medicare also won't pay for more than 100 days of long-term care or nursing home stays.
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