Seven Ways to Avoid Medicare Traps and Costly
Blunders Offered by Consumer Reports
Baby boomers should sign up at least three months
early to save thousands of dollars; free ranking Medicare Advantage,
Medicaid plans
Nov. 1, 2010 - If you're about
to turn 65, you'll be part of the first wave of baby boomers signing up
for Medicare. Consumer Reports Health recommends signing up as
early as three months ahead of your birthday. Failing to do so could
potentially cost you thousands of dollars down the road. That's one of
seven tips for navigating the Medicare maze.
Seniors urged to
review their health and drug plan coverage for any changes their plans
may be making for 2010 before the annual enrollment begins November 15
"If you don't
stay on top of the process when you first sign up, you can blunder into
decisions that could lock you out of certain types of coverage, costing
you thousands in extra premiums and out-of-pocket costs," said Nancy
Metcalf, senior program editor, Consumer Reports Health.
"Medicare is
filled with traps so it's well worth your time to dig into the details
of the program and make sure you choose wisely based on your individual
needs."
Here are 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.
If you sign up
during the first three months, your Medicare coverage starts at the
beginning of your birthday month. If you sign up during your birthday
month, then coverage starts at the beginning of the following 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 has paid Medicare taxes for more than a
decade (or is married to someone who 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,
then you will fall into what is potentially Medicare's biggest trap and
you'll be hit with a permanent increase in your premium of 10 percent
for every year that you could have signed up but didn't. There are some
special rules for certain groups, detailed at
www.ConsumerReportsHealth.org.
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 will pay a premium
penalty for late enrollment, but for Part D, it's 1 percent extra for
every month that you could have enrolled but didn't.
If you have low
drug bills now and feel that Part D is unnecessary, think through that
calculation and weigh your immediate savings against the penalty later
on should you need costly prescription drugs. Use
Consumer Reports' Best Buy Drugs, which provides drug ratings for
more than 35 common medical conditions, to gauge the cost of drugs.
The free program
provides ratings based on cost, safety and efficacy, detailing the costs
associated with different doses for most available drugs in each
category.
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, an $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 will not have
Medigap to cover any deductibles and co-pays, which can vary from plan
to plan. Thus, one of the downsides of an Advantage plan is potentially
higher out-of-pocket costs if you get seriously ill.
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, so before signing up for anything, find out exactly how your
retiree plan works with Medicare.
DON'T
accidentally lock yourself out of Medigap coverage.
Buying a Medigap
plan can be tricky, particularly if you have developed a pre-existing
condition. 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 (go to
www.shiptalk.org to find your state's program).
DO recheck
your Plan D formulary every year.
All Part D plans
have a formulary, a list of covered drugs. Bear in mind that the
formulary can change from year to year, meaning that your drug could
drop off the formulary or move to a more expensive payment tier. Plans
can also put new restrictions on drugs, such as requiring your doctor to
get approval from the insurer before prescribing them. You can change
to a new plan once a year if your plan makes changes that don't work for
you.
Use the
interactive formulary finder at Medicare.gov and stay on top of the best
drug choices for your condition by using drug reports published for free
at
www.ConsumerReportsHealth.org (click on the Prescription Drug tab).
Ranking of
top Medicare Advantage HMOs
In addition to
the do's and don'ts spelled out in the report, free rankings of 183
Medicare Advantage HMOs are available online at
www.ConsumerReportsHealth.org. The Rankings are produced by the
non-profit National Committee for Quality Assurance (NCQA), the main
U.S. group that sets measurement standards for health insurance,
accredits plans, measures the quality of care they achieve, and publicly
reports the findings.
Subscribers can
access more detailed information such as how well plans perform based on
consumer satisfaction, providing preventive services, and treating
common conditions. Rankings and more detailed information on 104
Medicaid plans will be made available for free.
