What You Need to Know About Medicare

By Maurie Backman Markets Fool.com

More than 50 million Americans rely on Medicare for healthcare coverage in retirement. Whether you're new to Medicare or need a refresher on how it works, here are a few key facts you ought to know about the program.

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It pays to enroll on time

While many Americans jump to enroll in Medicare as soon as they're able, others choose to wait. But failing to enroll on time could end up costing you. Your initial Medicare enrollment period begins three months before the month you turn 65 and ends three months after the month you turn 65. If you neglect to enroll during this seven-month period, then you'll still have the option to sign up during the general enrollment period, which runs from Jan. 1 through March 31 of each year. However, your Part B premiums could go up by 10% for every year you were eligible for Medicare but didn't enroll.

If you're already getting Social Security benefits by the time you turn 65, there's a good chance you'll be enrolled in Medicare automatically -- but that doesn't always happen, so be sure to verify your enrollment to be on the safe side. Furthermore, if you're still working at age 65 and wish to continue getting healthcare coverage through your employer, you can delay Medicare enrollment without incurring a penalty.

Many Medicare services are free

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Medicare enrollees are eligible for a number of preventative care services that come without any sort of co-pay. These services include wellness visits, flu shots, cardiovascular screenings, nutrition therapy, and alcohol and tobacco counseling. Women are also eligible for free annual mammograms. Identifying healthcare issues early on could not only improve your prognosis, but also save you a significant amount of money on medical costs, so it pays to take advantage of these free benefits. For a complete list of free Medicare services, check out this handy guide.

You'll pay a premium for Parts B and D

Most Medicare enrollees aren't subject to a monthly premium for Medicare Part A, which covers hospital visits, but you should expect to pay a premium for Parts B and D. In 2017, the standard premium for Medicare Part B, which covers preventative services, will be $134, though it may be higher depending on your income.

That said, current Social Security beneficiaries won't pay that much. The reason? Part B premiums increased by more than the Social Security cost-of-living adjustment (COLA) for 2017, but there's a "hold harmless" provision that ensures that recipients won't take a hit. So if you pay your Part B premiums directly through your Social Security benefits, then you'll face a smaller increase (the average premium for this group is $109).

You'll also need to pay a premium for Medicare Part D, your prescription drug plan. While premiums vary from plan to plan, the average is rising by 9% in 2017 to $42.17.

You can upgrade to Medicare Advantage

Offered by private insurers, Medicare Advantage (Part C) plans offer a number of benefits that Parts A and B do not. For example, most Part C plans offer coverage for vision and dental care, which original Medicare doesn't. Furthermore, while original Medicare doesn't cover healthcare services provided outside the U.S., many Medicare Advantage plans do. If you're planning to do a fair amount of traveling in retirement, then it pays to look into Part C for this benefit alone. Finally, Medicare Advantage has an annual out-of-pocket limit that caps your total liability at a preset amount (the exact number will depend on your plan). Original Medicare doesn't have such a limit, thus potentially exposing you to higher out-of-pocket costs.

Of course, Medicare Advantage has its drawbacks. For example, it typically limits you to a specific network of doctors. But there are enough benefits to Medicare Advantage to make it worth considering.

It's a good idea to read up on Medicare and learn more about the ways you can maximize your benefits. Though Medicare isn't perfect, it's ultimately designed to serve your healthcare needs, so the more educated you are, the more you stand to get out of it.

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