Your Guide to Medicare: 4 Key Questions Answered

Your Guide to Medicare: 4 Key Questions Answered

When you turn 65, you will be eligible to enroll in Medicare and reap benefits from a program you have contributed to during your working life. Yet getting the most out of this federal health plan can be daunting. According to the National Council on Aging, more than half of baby boomers ages 60 and older find the program and its alphabet soup of parts A, B, C and D confusing so start by considering these four questions.

Question 1: How do I sign up?
A: If you are already receiving Social Security, you become automatically enrolled in Medicare parts A and B (“Original Medicare”) at 65. You will receive a Medicare card two or three months before your birthday, and coverage starts the first day of the month in which your birthday falls. Part A covers hospitalization and comes with no premiums, as long as you or your spouse paid into Medicare while working. With Part B, which covers medical services, you do pay premiums, but you have the option of withdrawing if you have other health coverage.

If you are not yet receiving Social Security, you will need to apply for Medicare during one of the designated annual enrollment periods. Your initial enrollment period lasts for seven months, beginning three months before the month in which you turn 65. You may also enroll without penalty within eight months of when you stop working or your employee health coverage ends. If you miss that window, you may be subject to penalties that, in the case of Part B, could last as long as you remain covered.

Question 2: Should I enroll at 65 if I am still working and have health insurance?
A: Consider enrolling in Part A anyway, as it is premium-free and may cover expenses not included in your employer’s plan. Premiums for Part B may be higher as a result of your income, so it could be wise to delay enrolling in Part B.

Question 3: Where do parts C and D come in?
A: Part C, known as Medicare Advantage, includes plans administered by private companies that offer the benefits of parts A and B, and often include such additional benefits as vision, hearing and dental coverage. Costs for Part C plans vary by insurer. Some plans may require referrals for specialty care or restrict you to doctors in a network, and you must already have parts A and B to enroll. Some plans limit coverage to a certain geographic area, so if you anticipate traveling a lot or relocating, Medicare Advantage might not be for you.

Part D offers prescription drug coverage. You must be enrolled in Medicare to sign up for a Part D plan, which you purchase from a private insurer. Although premiums, deductibles and co-payments vary by plan, the Affordable Care Act of 2010 limits the amount you can be charged for prescription drugs. Before enrolling in Part D, check whether you are already covered for prescription drugs under a Part C Medicare Advantage plan. If you do enroll, it’s a good idea to review your Part D coverage and costs each year to make sure it still meets your needs. If you want to switch to a different Part D plan, you can do that during the annual open enrollment period, from October 15 through December 7.

Question 4: What services are not covered by Medicare?
A: Original Medicare (parts A and B) does not cover co-payments, coinsurance or deductibles, or medical care when you travel outside the U.S. Services such as long-term care, acupuncture and cosmetic surgery also are not covered. Part C is likely to pay for additional services, though not for long-term care.

Many people supplement Original Medicare with Medicare supplemental insurance, also known as Medigap. These plans follow strict federal and state standards, and costs vary by policy and insurer. To guarantee availability, you must sign up within six months of enrolling in Part B. The official Medicare site, www.medicare.gov, offers detailed information about the program, and the site’s Medicare Plan Finder can help you compare plans available in your region.

For more information, contact The Menashe Morley Group in the Rancho Santa Fe office at 858-381-8113.

The Menashe Morley Group, serving the community for over 30 years: David Menashe is a Senior Vice President and Wealth Management Advisor, and Bruce Morley is a First Vice President and Wealth Management Advisor and John Naviaux is a Financial Advisor for Merrill Lynch, Pierce, Fenner & Smith Incorporated.

Past performance does not guarantee future results. Investing involves risk, including possible loss of the principal value invested. Merrill Lynch Wealth Management makes available products and services offered by Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S”) and other subsidiaries of Bank of America Corporation (“BofA Corp.”) “Merrill Lynch” refers to any company in the Merrill Lynch & Co., Inc., group of companies, which are wholly owned by Bank of America Corporation.  Investment products: Are Not FDIC Insured, Are Not Bank Guaranteed, and May Lose Value © 2014 Bank of America Corporation. All rights reserved.

Photo by Andy Templeton