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8 Frequently Asked Medicare Questions

Selena Maranjian, The Motley Fool

More than half of Americans worry a great deal about the availability and affordability of healthcare, and 23% of them worry a "fair amount" about it, per a recent Gallup survey. That's not surprising, given the steep cost of care and the rate at which it has been increasing over the years.

The same survey found about half of respondents agreeing that it's the government's responsibility to ensure healthcare coverage. We might not yet have a country where the government ensures coverage for all, but at least we have Medicare, which does a good job for tens of millions of Americans aged 65 and older.

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Medicare is likely to be extremely important to you, either now or in the future, so be sure you understand how it works and what it does. Here are answers to a bunch of frequently asked questions about Medicare.

1. What do Part A, Part B, Part D, and so on refer to?

There used to be just one kind of Medicare, but enrollees now have two main choices: "original" Medicare or a Medicare Advantage plan. Original Medicare includes Part A (hospital coverage) and Part B (physician/medical insurance). Part D is optional, and provides prescription drug coverage, including insulin supplies. In addition, many enrollees opt to add on a private "Medicare Supplement Insurance" plan, commonly referred to as Medigap, to pay for more of what Medicare doesn't pay.

You might wonder if there's a Part C. Well, there is -- Medicare Advantage plans, sometimes referred to as Part C. They're plans that are offered by private insurers but are regulated by the U.S. government. They must offer at least as much coverage as original Medicare, but many go well beyond that, typically including prescription drug coverage and sometimes vision, dental, and/or hearing coverage, too.

2. Is Original Medicare or a Medicare Advantage plan better?

There's no single plan that's best for everyone, so take some time to read up on all the options available in your region and make your decision thoughtfully. Original Medicare is standard nationwide, but different Medicare Advantage plans are offered in different regions by different insurance companies.

Don't just compare premiums, either, because Medicare Advantage plans may offer different co-payments, deductibles, and so on. Compare total expected out-of-pocket costs, and consider other pros and cons, too. For example, Medicare Advantage plans are typically rooted in your local area, limiting you to a certain network of providers (though some networks can be rather large). If you plan to travel a lot, original Medicare may be preferable as it's honored by providers nationwide. On the other hand, some Medicare Advantage plans offer limited coverage abroad, which original Medicare does not do. The Medicare website's Plan Finder can help you compare plans and choose.

Medicare Advantage plans can sometimes be your best bet, as they may cost less and generally provide more coverage -- remember that they are required to offer at least as much as you'd get with Part A and Part B. Among the more than 58 million folks in Medicare, more than 18 million are estimated to be in Medicare Advantage plans as of 2017.

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3. How can I find the best plans and facilities?

As you narrow down the contenders, be sure to check out each one's star rating. Medicare has a five-star rating system for services and facilities such as hospitals, dialysis centers, Medicare Advantage plans, nursing homes, and more. A five-star rating is the best you can get, but as of December, when nearly 4,000 hospitals were rated, only 337 earned all five stars. Among the 384 Medicare Advantage contracts evaluated in 2018, only 23 (not 23%) were awarded five stars, but 44% of the ones that also offered Part D prescription drug coverage earned four or five stars, which is pretty good.

The rating system for hospitals takes into account measures such as the rate of post-surgical infections and emergency room wait times. Medicare Advantage plans are evaluated on measures such as how well they're keeping their members healthy (via screenings, checkups, and more), how well they're managing members' chronic conditions, and how good their customer service is. You'll find the star ratings of plans available to you by using the Medicare Plan Finder at the Medicare website.

4. Can I change my mind after choosing a plan?

Yes. There's an annual election period that goes from October 15 to December 7 each year, and during that period you can switch to a different Medicare plan if you'd like -- including switching into or out of a Medicare Advantage plan. There's also a special enrollment option, letting you switch into a five-star Medicare Advantage plan at any other time of the year, if one is available to you. Plan offerings change from year to year, so it's smart to review all your options and their costs each year.

5. When should I sign up for Medicare?

This is a more important question than you might expect, because if you're late signing up to be a Medicare enrollee, it can cost you a lot. The regular eligibility age for Medicare is 65. You can sign up anytime within the three months leading up to your 65th birthday, during the month of your birthday, or within the three months that follow. That's your seven-month-long "Initial Enrollment Period" (IEP). Miss it and your part B premiums (which cover medical services, but not hospital services) can rise by 10% for each year that you were eligible for Medicare but didn't enroll.

If you are late, you can still enroll during the "general enrollment period," which is from Jan. 1 through March 31 of each year -- though that coverage won't begin until July and the late penalty might apply.

There are a few loopholes, though. If you're already receiving Social Security benefits as you approach 65, you'll likely be enrolled in Medicare automatically. (You'll know this has happened because you'll receive your Medicare card in the mail three months before your 65th birthday.) Most people start collecting Social Security before age 65 (the earliest one can start is 62), so the penalty won't affect as many people as you might think.

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6. What does Medicare cost -- is it free?

Medicare can be very inexpensive for some people, but it isn't free. Original Medicare's Part A is free for most people, but it carries a deductible ($1,340 for 2018) -- and it's not a simple annual deductible, either. Instead, it applies per "benefit period," with a benefit period beginning when you are admitted to a hospital or a skilled nursing facility and ending once you've not received inpatient care for 60 consecutive days. Thus, if you are in and out of hospitals frequently, you may have to pay that deductible several times in a single year.

Part B, meanwhile, charges monthly premiums -- which are $134 for most folks in 2018 -- and features an annual $183 deductible. After you pay the deductible, you'll generally be paying 20% of the Medicare-approved cost of various products and services. Premiums and costs for Parts C (Medicare Advantage plans) and D (prescription drug plans) vary widely. Some Medicare Advantage plans charge no premium at all, and all of them cap your in-network out-of-pocket spending at $6,700 for 2018.

It's worth noting that while you might be paying 20% of this or that expense, there are some services that Medicare offers at no extra cost to you. For example, you'll pay nothing out of pocket for an annual wellness visit with your doctor, as well as for certain screenings, such as mammograms, colonoscopies, diabetes screenings, and many more.

7. What care is covered by Medicare, and what isn't covered?

Part A covers hospital inpatient care, skilled nursing facility care, and some home healthcare and hospice care. Part B covers physicians' services, service from other healthcare providers, certain therapies, lab tests, home healthcare, durable medical equipment (such as blood sugar monitors, wheelchairs, or crutches), and some preventive services such as screenings and vaccines. Lots of other items or treatments are covered (some only under certain conditions), such as artificial limbs, ambulance services, hospice care, mental healthcare, and transplants.

There are plenty of common (and sometimes costly) issues and expenses that Medicare doesn't cover, though. For example, it generally doesn't cover vision, hearing, or dental expenses, as well as basic home health help, such as assistance with bathing or toileting -- unless you're also receiving skilled nursing care. Alternative medicines or treatments (such as acupuncture, acupressure, homeopathy, or chiropractic care) are generally not covered. Care you receive while outside the U.S. is not covered, either, with original Medicare.

When it comes to Part D, lots of prescription drugs are covered, but not all. Weight-loss pills, erectile dysfunction treatments, fertility drugs, and over-the-counter medicines are among those not covered.

8. How should I best use my Medicare plan?

To get the most bang for your Medicare bucks -- and perhaps to live longer, too -- proactively use your coverage instead of just waiting to get sick.

Screenings and preventive care (again, often available at no extra cost to you) can help identify problems early, before they grow worse and more costly. These include mammograms, colonoscopies, diabetes screenings, flu shots, and even smoking and tobacco-use cessation counseling. Here's how powerful regular care can be: According to a 2014 study from the Insured Retirement Institute, "A 65-year-old male in excellent health can expect to live to age 87, while the same male in poor health (e.g. high blood pressure, high cholesterol, and tobacco use) has a life expectancy at age 65 of approximately 81 years." For women, excellent health offers a life expectancy of 89 and poor health only 84 years. That's five or six extra years of life!

Don't ignore wellness benefits, either. You're entitled to one wellness visit with your doctor annually, at no extra charge, in order to review your health. Don't skip this, as it gives your doctor a chance to discuss ways to get you healthier instead of just addressing the illness or injury you walked in with. You may have access to other benefits, too, such as discounts on gym memberships. Find out what your plan offers. When you're shopping for a Medicare plan, review available wellness perks, too, to see which would serve you best.

The more you know about Medicare, the better decisions you can make -- which can improve your health while keeping more dollars in your pocket.

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