Navigating the maze of Medicare

If you’re about to turn 65, you’ll be part of the first wave of baby boomers signing up for Medicare. Consumer Reports recommends seven tips for navigating the Medicare maze:
— DO sign up for Medicare before you turn 65. Even if you’re still working and have health benefits, you need to sign up for Medicare Part A, which covers hospital expenses. The initial enrollment period spans the three months before, the month of, and the three months after your 65th birthday. Sign up during the first three months and Medicare coverage starts at the beginning of your birthday month. If you wait until the last three months, you’ll face increasingly lengthy delays in the start of your coverage.
— DON’T delay Medicare Part B signup after you stop working. While Medicare Part A is free to anyone who’s paid Medicare taxes for more than a decade (or whose spouse has), Medicare Part B has a monthly premium ($96.40 or $110.50). Part B covers most other medical expenses, except for prescription drugs. If you don’t sign up for Medicare Part B the minute you or your spouse stops working, you’ll be hit with a permanent increase in your premium of 10 percent for every year you could have signed up but didn’t.
— DO understand that Part D, the prescription-drug benefit, has different rules. Part D is delivered exclusively through private plans with an average premium of about $41 a month in 2011. As with Part B, you’ll pay a premium penalty for late enrollment, but for Part D, it’s 1 percent extra for every month you could have enrolled but didn’t. If you have low drug bills now and feel Part D is unnecessary, weigh your immediate savings against the penalty later if you need costly prescription drugs.
— DON’T confuse original Medicare and Medicare Advantage. There’s the original government-run Medicare, which comes with substantial deductibles and co-insurance (for example, a $1,100 deductible for a hospital stay and 20 percent of outpatient doctor visits). People who don’t have a secondary retiree plan from their employer usually buy a separate private Medigap policy to help with those deductibles and coinsurance. About one in four Medicare recipients opt for the newer Medicare Advantage plans. These are private plans — mostly HMOs — that take the place of original Medicare plus Medigap, and usually the Part D drug plan as well. While you’ll probably pay lower monthly premiums, bear in mind that you won’t have Medigap to cover deductibles and co-pays, which can vary from plan to plan.
— DO find out how your retiree plan works with Medicare. Retiree plans take many forms such as stand-alone plans and plans similar to active-employee plans. Either type will pay secondary to Medicare. Declining your retiree coverage and signing up for a Medicare Advantage plan on your own can become a major pitfall. It’s worth noting that your employer might not let you re-enroll if you leave your retiree plan.
— DON’T accidentally lock yourself out of Medigap coverage. State laws vary, but in most locations you have the right to buy a Medigap plan without medical screening only at certain times, such as when you first sign up for Medicare Part B, when you lose your Medicare Advantage coverage because a plan shuts down or you move out of its service area, or when you lose your retiree coverage. Find out the rules of Medigap in your state by checking with your State Health Insurance Counseling and Assistance Program at www.shiptalk.org.
— DO recheck your Plan D formulary every year. All Part D plans have a formulary, a list of covered drugs. The formulary can change from year to year, meaning your drug could drop off the formulary or move to a more expensive payment tier. You can change to a new plan once a year if your plan makes changes that don’t work for you.

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