November 8, 2019

Medicare: What You Need To Know

We are in the midst of the annual Medicare enrollment period, a time when Medicare recipients can make changes to their coverage for a start date of January 1, 2020. Ending December 7th, this is the time each year when you are allowed to change from Medicare to a Medicare Advantage program, or back to traditional Medicare from an advantage plan. You can change from one supplemental policy or company to another, and change your Part D drug coverage. In case you had forgotten, the flood of junk mail over the past few weeks would have served as a strong reminder.

Does it pay to switch? Not always, but looking at options every year is a wise decision. Betty and I are switching to a different Part D coverage plan, for example. The one we have this year imposed a 100% rate increase...yep, double. Instead, we picked one that covers the drugs we take at the pharmacy we use at 50% less than this year's monthly premium. Just by spending 20 minutes on line, we saved nearly $1,000 in costs for next year.

So, this post has a dual purpose: urge you to do some comparison shopping, and for those approaching Medicare age, a brief review of what can be a complicated system.
 I am covering Medicare, not Medicaid which is an entirely different program. As with most federal programs and health insurance coverage, there are enough exemptions and differences to fill 20 posts. I will only attempt to explain the usual, most common situations.

Medicare is a federal program that pays for certain health-related expenses for people 65 and older (and younger in certain situations). While many costs are covered, an individual enrolled in Medicare is responsible for certain deducibles and copays. Some services are not covered at all and others for only a limited period of time.

There are four parts of Medicare:

Part A is hospital insurance. Copays, and deductibles will determine what you pay. Usually there is no premium for Part A.

Part B is medical insurance that helps pay for doctor visits, outpatient care, preventive health care, and equipment. There is a monthly premium for Part B.

Part C is better known as Medicare Advantage. This is coverage provided by Medicare approved private insurance companies.

Part D is prescription drug coverage. This is also run by Medicare-approved private insurance companies.

Most folks get Part A and Part B automatically. If you receive benefits from Social Security you will automatically get Part A & B coverage starting the first day of the month you turn 65.  If you aren't yet receiving Social Security (because you are still working for waiting until your full retirement age of 66) you must sign up 3 months before your 65th birthday to get Medicare coverage. In this case you will get a bill every three months to cover your Part B premium.

If you must sign up (as noted above) there is something called the Initial Enrollment Period which is the period from 3 moths before until 3 months after your 65th birthday. If you miss this window your benefits will be delayed.

If you decide to wait until after the Initial Enrollment Period, there is a general Enrollment Period during the first three months of each year. However, if you use this option, realize your part B premiums will be higher for the rest of your life.

If you are covered by a group health plan at your place of employment  and then want to start Medicare, there is another time period, called the Special Enrollment Period that generally allows you to avoid the higher premiums for late sign up.

With me so far?

Other Factors to Consider

Medicare does not pay 100% of most services. So-called Obamacare has put in place several free screening tests for those on Medicare, like colonoscopies and mammograms. The current political system keeps changing the parameters of what Medicare will or will not cover, so don't take what I am writing today as gospel truth for the future. Double-check your specific situations.

Most doctor visits, tests, drugs, and equipment are going to cost you money...usually something approaching 20% of the total, discounted rate. That's where Medigap coverage enters the picture. This is a policy, sold by a private insurance company, that acts as secondary coverage to Medicare. It pays what is left over after Medicare pays what it will. As a point of reference, our Medigap, or supplemental policy, has worked perfectly for the last several years. We have had to pay nothing for any service or procedure after Medicare and the supplemental policy have taken care of all charges.

Just like the rest of Medicare there is a specific enrollment period for Medigap coverage. You can buy any policy that is offered for sale in your state, regardless of your health status. The amount of supplemental coverage, the monthly cost, and any deductibles are different for each policy offered. You decide how much supplemental help you want and can afford. A word to the wise, though: if you decide to buy a less expensive policy at some point in the future from the same company it may be allowed to prevent you from doing so due to pre-existing conditions, at least for a period of time. 

Speaking of costs, Part A Medicare coverage costs you nothing since you already paid into the Medicare fund while you were working. Part B coverage does carry a monthly cost. For 2019 most have paid $135.50 per month. Higher income folks will pay more and the rate is likely to increase slightly next year.  There is also a $185 deductible. 

Part D prescription coverage costs vary depending on the plan you select and the level of drug coverage. Again, Obamacare has lowered the payments you must make when you enter the drug "donut hole." 

What is Covered?

There is no simple answer to that question. Medicare publishes a booklet that is an excellent resource. In general, here is what you can expect:

Part A pays part or all of inpatient hospital care, inpatient care at a skilled nursing facility, hospice care services, and home health care services for a defined period of time. As you might guess there are all sorts of qualifications and exclusions for this list but this is the primary purpose of Part A coverage.

Part B helps cover medically necessary services like doctor visits, outpatient care, durable medical equipment, and several preventive services and screenings.

Part C is the designation of Medicare-approved private insurance companies that has various coverage options and costs. You still have Part A and Part B coverage, but the specifics are likely to be different from original Medicare. Generally, coverage is more complete and the costs may be lower. But, that comes with network restrictions and gives the company the ability to deny coverage for certain procedures or tests.

Part D covers some of your prescription drug costs. If you don't need a lot of drugs now, it still may be wise to take this coverage because of late enrollment penalties. Part D is provided by private insurance companies and varies widely in costs and coverage. There are usually copays and deductibles involved. As my example above notes, rates can vary widely and change dramatically from year to year. 

Importantly, these items are not covered by Medicare (not a complete list...some of these services are covered by some Medicare Advantage Plans):
  • Routine Dental care
  • Dentures
  • Cosmetic surgery
  • Hearing Aids
  • Exams for fitting hearing aids
  • Long term care

If you'd like more detailed information or see if specific services are covered, this government website should be your first stop.

On a personal note, Medicare, along with a supplemental policy and Part D drug coverage, has been a blessing for us. While we are still spending close to $700 a month for premiums and prescriptions, the process is so simple: no paperwork, no claim forms, no hassle. Before both of us reached coverage age we were spending over $900 a month. Today I am sure we would be forced to pay almost double that for much poorer coverage through the private insurance market, if we weren't Medicare-qualified.

There are many advantages of turning 65, but one of the most cherished in Medicare coverage. It is a life-changer!

Questions? Feel free to ask. Comments? Feel free to type away!


  1. Ken and I have been very happy with our Humana Gold HMO Advantage Plan here in Arizona. I have some friends on the Aetna and Blue Cross PPO plans also in Az..the policies and coverage vary a lot from state to state. We pay no more than the regular Medicare premium and have a large network of doctors and hospitals.Drug coverage with some copays. WE pay nothing for primary doctor visits and $35 for specialists. I have a primary who has no problem giving me a referral to specialists such as ENT when I had an ear wax problem, and Ken obtained a referral to ophthalmology for an eye issue. I also get a $200 allowance for glasses/contacts and a free eye exam,hearing exam, and some help with hearing aids if we need them. WE both get a $75 per quarter allowance to purchase over the counter items from a catalogue..such as vitamins, sunscreen,toothpaste,electric toothbrush! And more! We are covered for emergencies if we are out of state or out of country (we always buy travel/medical coverage when traveling.) We do have a $3000 out of pocket max per year..should we need hospital or surgery there are some copays so this amt. would be worst case and we have an HSA which is set aside for that. I am still praying for a time when all Americans have access to affordable health care!

  2. Congrats, Bob, on crafting a solid explanation of a very complicated subject. Alan and I are not yet eligible for Medicare; however, I have personal experience with it from two different perspectives. My cousin and I were legal guardians to an elderly aunt, and at the time I retired from the workforce I handled the Personnel function for our local school district which encompassed group health insurance for current staff members and retirees. Although the district wasn't responsible for handling retirees' Medicare coverage, I did help them make the transition to Medicare and ended up learning quite a bit about it because of that.

    I can't stress enough how important it is to enroll in Medicare Part B (and, if desired, a supplemental policy and Part D prescription coverage) at the time of your initial enrollment period. The penalty for late enrollment is an increased monthly premium that may be temporary or may stay with you the rest of your life depending on the situation. My understanding is that the later you are in enrolling, the higher the penalty, but I don't know whether or not that's still true. I have personally seen the penalty invoked twice and it's a shame to see extra dollars go toward Medicare that could have been used for necessities or pleasure. If you are within 4 months of your 65th birthday and haven't received an enrollment packet from Medicare, be sure to reach out to the agency yourself. It will be your fault, not Medicare's fault, if your enrollment is late. If you will be turning 65 and are covered under your employer's or former employer's group health insurance plan, be sure to speak to a Medicare representative for information about your initial or special enrollment period.

    I have one concern about Medicare Part C coverage (Medicare Advantage plans). It seems that many retirees choose an Advantage plan because the premiums are often lower than traditional Part B premiums, and vision or dental coverage is sometimes included. My concern is that I have read twice now that if someone in a Part C Medicare Advantage plan chooses to switch back to traditional Part B Medicare during an annual open enrollment period, companies offering supplemental coverage can refuse a person coverage due to pre-existing conditions - because they didn't enroll in the supplemental coverage during their initial Medicare enrollment period. That, to me, is frightening, and something that I plan to look into when Alan and I are close to becoming eligible for Medicare.

    Despite the fact that Medicare can be quite complicated, it's critical that we educate ourselves about it. Keep reading and asking questions until you understand your coverage, your rights and your responsibilities. Best to learn now and avoid any big surprises later.

    1. I don't think pre-existing conditions can be used to turn you down for a supplemental policy if switching back to traditional Medicare Parts A & B, unless you attempt to do so during a period other than open enrollment. Because the rules do change, please double-check with someone at Social Security before you do so.

      You can have pre-existing conditions applied if you want to change to a supplemental policy that is less expensive with the same company during the open enrollment period. I wanted to move from a Plan F to a Plan G in 2018 but was denied because I had visiting a doctor for a followup on my heart issue. Even though the heart problem was in 2015, because I went to a cardiologist in 2017, I was told I had to wait 2 full years after that final checkup. Next year I will be able to make the change.

  3. Why is there so much pressure put on us to change to Medicare Advantage? I keep thinking if it saves them so much money then it must be taking something away from those of us still on Medicare traditional. I've been to several of their informational seminars and they paint a rosy picture but still haven't wanted to make the switch.

    1. I'd like to know this, too. Medicare Advantage is a product of health insurance corporations. (Traditional Medicare is a government service.) Nothing prevents any U.S. corporation from doing anything they want, such as unlimited premium increases, or simply dropping all coverage. Where will that leave us, "the customers"? I am suspicious.

    2. Medicare Advantage policies must provide the same level of service as the government run program. But, and this is a disqualifying "but" for me: being private companies, they are free to restrict the doctors you can see, facilities you can use, and can impose some restrictions on care that traditional Medicare does not.

      A recent study shows that some Advantage companies are routinely denying coverage for something that should be covered. Eventually, most coverage is granted after appeals, but who needs that stress and headache.

      People like Madeline (above) are very happy with their plans. There are extra services offered and often Part C is cheaper. It is an important decision, so I advise a thorough review of your options when deciding between Advantage and Medicare. The good news is once a year you can change your mind and switch back and forth.

    3. Many Doctors want to be on the Advantage plans.They pay pretty good,better than Medicare in some cases. In our area, all the major hospitals belong to most of the Medicare Advantage plans. Here in Az.Humana has a good track record.I'm not as familiar with the other companies. I know is some areas, such as Gila County, there are few doctors to begin with, and not many Advantage plans are even offered.I also have heard of smaller Doctor/hospital panels in other states.. I think Arizona has some of the best managed plans, probably due to the number of retirees in our state.

  4. I have been thrilled with my medicare advantage plan to the point of suspending my federal health insurance. I have a no cost plan that has a 3500 out of pocket maximum annually and charges me nothing to see my own provider and 35 to see a specialist. Like Madeline I am allowed 75 dollars in over the counter meds. I cannot imagine any reason to change to a supplemental, ever, although in my case it would go my federal insurance-which would put be back to being on original medicare which was okay. I have started creating a medical.account with the money that would have gone into my federal plan.

    1. Your situation is support for the argument that Advantage or Medicare choices are individual, based on the perceived value from each. For you, an Advantage plan meets your needs. Good choice.

    2. Obviously just as with regular insurance you need to compare the up front fee WITH the out of pocket costs. Last year I had forty dollars in out of pocket costs, As well as the insurance. But I personally am willing to put the couple hundred I WOULD have paid into what I guess I would call my little retirement version of an HSA Savings account and deal with it this way.

  5. Also just clear to Mary above, people with an advantage plan do also have part B. They just have advantage instead of a supplemental. Part B still comes out of my SS monthly .

    1. That is true. Part B is required to purchase Part C (Advantage) plans.

  6. Such timely information for me! I have been looking into this as I turn 65 Feb 20. I did meet with the Social Security office earlier this wee, and they said I was “ all set and signed up” but they did not mention, and I did not know to ask, how the Part B outdo be paid since I am holding off on taking SS until my full retirement age of 66 and 2 months. Not told a bill sent every 3 months, so thanks to you I guess I will have to go and ask to make sure. I had visited the local Office of the Aging but asked to return after 12/7 when open enrollment is over since they are busy. We did speak briefly and I was give some info....told them I anted the best coverage with little or no OOP and would rather pay up front for good policy. It was recommended I get “G” and am thinking AARP ...(United Health Care)...any thoughts on the “G” policy from those who have it. I will sit with them when I have an appointment later to input info on medication that I am on to get best policy. Any thoughts from anyone if I have a choice of providers.....hearing some are Walmart or mail order such as Mediscripts and Express scripts........any thoughts would be appreciated. If all this goes through, are there any other things I need to do or look into or do. You and your readers / commenters have been a great help and support this past year and a half when I was making the decision of weather to retire or not......could I make it myself, etc. I will be happy to get off of COBRA and the close to 1,600 a month I have been paying, but so worth it to have been able to get out of a very stressful work situation and soo much better for my health. Thank you again. Any further thoughts and ideas are welcome.

    1. One word of caution. The bill from Medicare for Part B coverage arrives really close to when it is due. Betty's bill arrives just 10 days before it is due. Since I don't want to risk her payment arriving late through the U.S, mail, I pay electronically through our checking account the day the bill comes in.

      I have a note on my calendar to pay the amount (always the same in a calendar year) a few days before it is due if I haven't receieved a bill through the mail. Why they cut it so close, I have no idea, but be aware!

      Part F from the AARP policy is what I have, but it is being phased out. The only difference between F and G coverage, is the annual Part B deductible, which is $185 this year. That cost is covered by Part F and not by Part G. Otherwise they are identical. Betty has G and I will switch to G next year. The difference in premiums is more than the $185 deductible. The G plan provides the most complete supplemental coverage, but is more expensive than other plans. I have been very happy.

      My Part D is the Walmart Value plan through Humana. The cost is very reasonable. If you only need Tier 1 or 2 prescriptions it is a great deal as long as you have a Walmart pharmacy nearby. If your drugs are more expensive (Tiers 3, 4 or 5) other plans would be better.

      Hope this helps.

    2. Karen, I turn 65 in December and am not getting Social Security (ever). I signed up for Medicare in October. I received the first bill on Nov 8 which covers Dec, Jan, and Feb. It was $406.50 and due Nov 25. So, be ready for that. There are some options to pay monthly, but I decided to continue paying quarterly. Just wish it was on a typical quarterly schedule like estimated taxes. I have not been paying anything for a very good health insurance plan through my pension and will now have to pay Part B, but the Medicare Advantage plan I must sign up for next fall is very good and no extra cost. I have the optional dental insurance at $11 a month now and will continue that as it has saved me a lot of money.

  7. While none of us likes paying for medical insurance, it is a necessary evil we must contend with. For Deb and I we have Medicare as well as her career employer's insurance to cover virtually all our needs. For the two things not covered by either of those avenues (specifically vision and dental) I subscribe to plans from my last employer for those. The vision coverage tends to be better since they cover much of Deb's contacts and the like, making the premiums reasonable. I will give the dental insurance one more year to see if it is worthwhile, since most retiree dental insurance plans leave a lot to be desired. If I find the dental coverage not worth the premiums I will self-insure us for dental coverage. Otherwise we are pretty well set with our medical insurance, since Deb's retiree coverage from her prior employee does a good job supplementing our Medicare.

    Best of luck to everyone trying to navigate the web of insurers and products in this space. As for the discussion of Medicare Advantage plans, I rank most insurance companies on a lower scale than used car dealerships, so I avoid them as much as possible. That includes ignoring their pitches for annuities let alone their medical insurance mailings and endless emails.

    1. Betty and I have used a dental discount plan for several years. I would guess we save $300 in a typical year, more when a crown or something more involved is needed. I have never thought dental insurance was worth the price tag.

      I agree with you about Advantage plans. Having a for-profit company telling me who and how I can manage my health is not in the cards. That said, there are folks who are very pleased with this approach. It is good this option exists.

  8. I have made this comment before, and certainly don't want to sound like a broken record, but I'm sure I can speak for most Canadians when I say that this is all just mind-boggling to us. At least with your Medicare you get a taste of what we have here for everyone, regardless of age.

    Even then, from what you have presented here, you still have many more decisions to make about your coverage and costs. It may be a bit of an oversimplification, but we Canadians basically pay our taxes and get the full range of care (except for purely cosmetic procedures). And those taxes are about half of the total per capita cost of health care for the average American.

    Good luck to all of you as you sort through all of that!

    1. We love our freedom of choice, even if it costs too much and provides below average care!

    2. I think what Dave P is really commenting on is "The Paradox of Choice". As Dave P lives where the healthcare system operates in a fairly straightforward manner and where the amount of choice relatively small. The system Bob Lowry is outlining is a healthcare system that has, for better or worse, much more choice. Choice is seen generally as a good thing but it is also true that choice, especially if you have a lot of choices, has downsides.

      American psychologist Barry Schwartz wrote a book on "The Paradox of Choice" in 2004 that discusses this topic generally (this is not only a healthcare thing). If you are interested, below is a link to Barry Schwartz's TED Talk on The Paradox of Choice.

    3. I am grateful to be able to pay my taxes and have straightforward full coverage in our Canadian system. When I retired, I did choose to purchase an extended health policy through my previous employer that provides some extra coverage for vision, drugs, physio, hearing aids, massage, and most importantly, medical travel insurance for when I travel to the U.S. or elsewhere internationally. To date, I have paid in more than I have used, but it does provide peace of mind to know that a medical emergency if it occurred overseas and my travel costs would be covered.


  9. It's the "So-called" Affordable Care Act.

    1. I assume the quote marks mean you don't agree with the program. For my family, it cut our expenses tremendously before we qualified for Medicare. Of course, certain members of Congress have done their best to weaken and harm it, without presenting an alternative, unless someone is comfortable going back to pre-existing condition exclusions, no drug coverage, huge increases, and a lack of affordable basic health and preventive exams.

    2. I agree with the program. But too often the term "Obamacare" gives opponents an opportunity to knock the ACA just because they don't like Obama. And to be honest, in my experience when someone uses the term "so called", it's usually meant as an insult.

    3. Got it, and you are right about how some use the Obamacare name as a negative.

  10. Thank you so much for for insights. Very helpful.
    Looks like I will be in tier 3 or 4 for medications. Anxious to see who I will have to use as with COBRA I need to use Express scripts with has been fine, but also Walgreens which is absolutely horrendous to get correct meds from and even reorder or get them to answer a phone! Will pay more so I do not have to deal with that chain! Thank you for your posts and insights especially on topics like this. So very helpful to me.

    1. I'm very glad this post helped you. There is a lot to consider and research. Luckily, the website is an excellent, unbiased place to find answers and run comparisons between different plans and companies.

  11. This process is so complex. When I approached 65 and needed to make a decision, I decided to visit an insurance agent recommended by a friend. She was really helpful in explaining the options and I didn't feel she tried to push me in any given direction. I did note that I had six months without any medical exam/qualification to access supplemental, etc. While I tried that for my first six months, when renewal time came around, I decided that it was costing more than I was willing to pay given I am healthy and have good genes . The amount of the premiums can be saved and used if need be, but at least they're not paying for things I'm not using.

    We also decided to go with an Advantage plan in our area, because it covers any doctors or care we choose (it's our state Blue Cross Network). We also have a local healthcare system that is very comprehensive and DH was initially using their Advantage plan. So we had to look at the specifics of our usage (DH used a lot of lab tests last year, for example, and the costs/co-pays were quite different between plans) and compare where our out of pocket came from. Of course, this year, he's needed far less, so we'll be comparing them again this month and making decisions based on our current situation.

    As for dental and vision, I agree they're fairly ineffective. We do get bi-annual cleanings, but any "real" dental work is only covered about 50%. It does seem that our teeth and our eye prescriptions need updates more often as we age. I suppose that's how things are as they wear out. :-)

  12. Appreciate the information. I will be 65 in about 16 months and I’ve started thinking I need to learn more about this. This is a great start. Thanks Bob.


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