Five Tips for Medicare Beneficiaries
By Peter Landau

What is one of the biggest financial surprises in retirement? Health care costs. It’s a growing concern among many Medicare beneficiaries. And it’s no wonder. There is an alphabet soup of terms to learn — Part A, Part B, Part D…and an ever increasing choice of plans. And the price tag for health care coverage for a 65 year old couple retiring today is estimated to be $215,000 during their retirement, according to research by Fidelity Investments. And yours could be more!

These five tips can help you find ways to cut your healthcare costs, minimize your out-of-pocket costs and better predict what those out-of-pocket costs will be, so you can worry less and enjoy life more.

1  Know what Medicare covers… and what it doesn’t
There are four “Parts” of Medicare that you’ll hear a lot about. Get familiar with what they cover and what they don’t. Remember these two key points:

• Medicare does not cover all of your health care expenses.
• It does not generally cover long-term care costs.

Part A pays for inpatient hospital, skilled nursing facility, and some home health care. For each benefit period Medicare pays all covered costs except the Medicare Part A deductible (in 2007 it is $992) during the first 60 days and coinsurance amounts for hospital stays that last beyond 60 days.

Part B covers Medicare eligible physician services, outpatient hospital services, outpatient laboratory and diagnostic services, certain home health services, and durable medical equipment. The Part B premium for 2007 is $93.50 per month for most people. You pay 20% of the Medicare-approved amount for most services after you meet the annual Part B deductible.

Part C is the name sometimes given to Medicare Advantage Plans. Medicare Advantage plans take the place of Original Medicare.

Part D provides coverage for prescription drugs. These plans are offered by insurance companies and other private companies approved by Medicare.

2  Don’t wait to sign up
Missing sign up deadlines can mean higher prices and fewer choices. Your 65th birthday is a key date for Medicare coverage. If you are already 65, November 15 of each year is an important date since additional plans are open for enrollment and you may find more choices in coverage.

Medicare eligibility – You first become eligible for Medicare on the first day of the month in which you turn age 65 (unless your birthday is the first of the month in which case you become eligible for Medicare on the first day of the month preceding your 65th birthday). You may enroll in Medicare starting three (3) months before the month in which you turn 65 up until three months after the month in which you turn age 65.

Part B – you should enroll in Part B of Medicare as soon as you first become eligible unless you have coverage from another source, such as through your or your spouse’s employer or former employer.

Part C – If you choose a Medicare Advantage plan, sign up when you are first eligible for Medicare. You can generally enroll in a Medicare Advantage Plan during the Annual Enrollment Period each year from November 15 to December 31. You may also be able to switch Medicare Advantage Plans from November 15 to March 31. If you move and your plan is no longer available, you will also be able to enroll in a different Medicare Advantage Plan which is available in your new location.

Part D – Individuals who are eligible for Part A and/or enrolled in Part B are eligible for a Medicare Prescription Drug Plan. If you don’t sign up when you are first eligible, you may have to pay a penalty when you do enroll for as long as you remain enrolled. If you didn’t join when you were first eligible, your next opportunity to enroll will be from November 15 to December 31, with coverage effective on January 1 of the following year.

3  Choose the right plan
Choose the right health insurance plan. Don’t make the mistake of focusing only on keeping monthly premiums down. Try to realistically factor in deductibles and co-payments. For prescription drug coverage, check the plan’s formulary and participating pharmacies before enrolling.

Consider a Medicare Advantage Plan (Part C). If you join one of these plans, you generally get all of your Medicare-covered health care through that plan. This coverage can include prescription drug coverage. Generally, these plans include extra benefits and lower co-payments than in the Original Medicare Plan. However, you may have to see doctors who belong to the plan or go to certain hospitals to get services. Everyone who is eligible for Medicare may enroll in a Medicare Advantage Plan (except for individuals with End-Stage Renal Disease) without having to answer medical questions. Many of these plans do not charge an additional premium beyond your Part B premium.

Consider a Medicare Supplement (Medigap) Plan. A Medicare Supplement policy is health insurance sold by private insurance companies to fill the “gaps” in Original Medicare Plan coverage. If you are in Original Medicare and have a Medicare Supplement policy, then Medicare and your Medicare Supplement policy will each pay their share of covered health care costs. If a Medicare Supplement Plan is right for you, enroll in the first 6 months after you turn 65 and have enrolled in Medicare Part B. During this period, you are guaranteed acceptance into any Medicare Supplement Plan offered in your geographic area by any company without your having to answer any medical questions. After this 6 month period is over, you may have to answer medical questions, and the insurance company may deny coverage or charge you higher rates because of your medical conditions.

4  Get Coverage for Prescription Drug Costs
Enroll in a Prescription Drug Plan when first eligible. These plans are offered by insurance companies and other private companies approved by Medicare. Your costs will vary depending on your financial situation and which Medicare Prescription Drug Plan you choose. If you have limited income and resources, you may get extra help to cover prescription drugs for little or no cost.

5  Shop and compare
With so many new plans in the market, it is in your best interest to periodically review your coverage to see if it is still the best choice to cover your current health care needs.

You have many choices when it comes to Medicare plans. First, you must decide if a Medicare Advantage Plan is right for you. Compare plans based on whether there is an additional premium over and above the Part B premium; whether the plan includes any extra benefits that would not be available to you in Original Medicare; whether the plan includes prescription drug coverage and if so, whether the drugs that you currently take are on the plan’s list of covered drugs.

If you don’t want the restrictions of a Medicare Advantage Plan, consider a Medicare Supplement Plan. All Medicare Supplement Plans in a given area are standardized, so the benefits will be the same, but the prices differ. Compare premiums and the way premiums are calculated — whether entry-age, attained-age or community rated. Remember that after your guaranteed acceptance enrollment period is over (usually the first 6 months after you turn 65), you may have to answer medical questions and you can be denied coverage or charged more because of your health status.

There are many different Prescription Drug Plans in your area. Each Plan will have different benefits, covered drugs (formularies), premiums and co pays, and rules pertaining to coverage during the Coverage Gap (also known as the Doughnut Hole). Don’t just pick the least expensive plan. You should actually calculate your projected out-of-pocket costs for each plan that you are considering. The Medicare Prescription Drug Plan Finder (www.medicare.gov) will allow you to do this and to compare several plans to one another.

The cost of health care coverage is too high to ignore. Take the time to shop and compare to make sure the plan you have is the right one for this point in your life. And, stay healthy. Those who are healthier find lower costs and more choices in health care coverage.

Peter M. Landau is Vice-President of Health Products and Special Markets for Longevity Alliance, Inc. Longevity Alliance, through its health care distribution partners, offers Medicare Supplement, Medicare Advantage and Medicare Prescription Drug plans.

More tips? Get a copy of Longevity Alliance’s new “How to Cut Health Care Costs: Tips for Medicare Beneficiaries”. Get a copy online at www.longevityalliance.com or call 1-800-713-6250, ext. 627.