February 28, 2013

MEDICARE: A Quickie Tutorial

On Monday, I wrote about Steven Brill's Time cover story, in which he described Medicare as a potential salvation for our healthcare crisis (http://bit.ly/13eZMIN).

Today, I thought it'd help to provide a brief review of Medicare's basic features. There was a good "primer" in the January issue of the Washington Beacon, a local free monthly newspaper designed for people over 50. The following summaries came from that source:

Medicare isn’t Free
You get Part A (hospitalization) if you or your spouse has paid Medicare taxes for at least ten years. Part B (doctor visits and outpatient services) costs $104.90 per month in 2013. If you’re also receiving Social Security benefits, that amount will be deducted from your monthly SS payment. Part D (prescription drug coverage) is also available to buy; $30 a month is average.

You Can Pay More for “Medigap” Coverage
Traditional Medicare involves deductibles and co-payments; it isn’t free. There is a broad range of supplemental insurance available for purchase to help you with those costs. Those “Medigap” policies are identified by letters A through N. Plan F is the most popular, since it is pretty comprehensive. While every insurer’s Plan F must provide the same features, prices vary nonetheless. So it pays to shop around.

Yes, There’s an All-in-One Option
Instead of signing up for a Medigap plan and Part D, you can buy Part C, called Medicare Advantage. Part C is often a cheaper option, but typically requires a greater cost-sharing burden (deductibles, co-pays, out-of-pocket costs) by the policy-holder. If you choose C, you must still pay the monthly fee for Medicare Part B. I know, it’s a little confusing (at first).

If You Earn More, You’ll Pay More
Singles whose adjusted gross income (plus tax-exempt interest) exceeds $85K (or $170K for marrieds filing jointly) pay more for Parts B and D. As income rises, so does additional cost for these two features.

Watch Your Dates 
A seven-month initial enrollment period begins three months before the month in which your 65th birthday falls. If you delay starting Medicare for any reason, be careful, because penalties may apply.

Beware the Donut Hole
Part D’s dreaded “donut hole” begins in 2013 when your drug costs reach $2,970. At that point, and until those costs reach $4,750, you’re on your own. When you reach $4,750, “catastrophic” coverage commences, and the government picks up most of the tab. With healthcare reform, your exposure in the donut hole is LESS in 2013 than it was last year.

There’s More to Medicare this Year
Healthcare reform also brought a few other new free preventive services in 2013, including annual “wellness” visits, mammograms, flu shots, and screenings for cervical, prostate, and colorectal cancers.

What You Don’t Get
Traditional Medicare doesn’t cover long-term or “custodial” care. It also excludes routine eye and dental care. Dentures or hearing aids? Not covered by traditional Medicare.


In the “Your Money” section of AARP’s January-February, 2013 magazine, there’s an article titled “Have You Saved Enough for Your Health Care?” It begins this way:
You might think your medical costs will be taken care of once you qualify for Medicare. But you’ll quickly find that you’re still paying out of pocket, and probably paying much more than you expected.
The article quotes a Fidelity Investments estimate that a 65-year-old couple retiring this year will need (sitting down?) $240,000 to cover their future medical costs, excluding long-term care. That number includes deductibles and co-payments, premiums paid for optional coverage for prescription drugs and doctors’ visits, out-of-pocket drug costs, and the cost for dental care, hearing aids and eye glasses, which Medicare does not cover.

Sobering statistics.

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