4 Medicare Rules to Live By

Americans rely on Medicare for their healthcare coverage in retirement. Yet many people don't know how to take full advantage of the Medicare coverage they've earned. The five points below cover the most basic provisions of Medicare that every American should know. Learning them will go a long way toward helping you get as much from Medicare as you can.

1. When to get Medicare

The rules governing Medicare give most people access to the program when they turn 65. To avoid penalties, you need to sign up during the initial enrollment period, which starts three months before your 65th birthday and ends three months after it. If you have other healthcare coverage, then special enrollment periods are available later to give you access to Medicare after your existing coverage ends.

How you sign up for Medicare depends on your particular situation. Those who have already started receiving Social Security benefits before reaching 65 typically get enrolled automatically at age 65 unless they opt out. If you haven't gotten Social Security, then the Social Security Administration website has a signup tool you can use to enroll in Medicare.

2. What types of Medicare benefits are available

There are different parts to Medicare coverage. The program simply labels them Parts A, B, C, and D, but each offers protection against different types of health expenses. Part A hospital coverage provides benefits for inpatient care, and it's typically offered free of charge and funded by the payroll taxes that you or a spouse might have paid into the system. Part B medical coverage includes doctor visits, preventive medicine, and outpatient services, and you'll pay a monthly premium for Part B. Part D prescription drug coverage can pay for a portion of your medications, and it will cost you a separate premium.

You'll notice that we left out Part C, also known as Medicare Advantage. These alternatives to traditional Medicare use private insurers to provide coverage similar to what the government program offers. Medicare Advantage plans typically offer supplemental coverage as well. Premiums differ from what you'll pay under traditional Medicare, but in some cases, the coverage you get will be broader in scope and protect against risks that traditional Medicare doesn't.

3. How Medicare coordinates with other coverage

If you have access to other types of coverage as well as Medicare, it's important to know how the two types of coverage interact. The size of your employer determines how Medicare works with your primary insurer to divvy up your healthcare costs. Specifically, large employers with 100 or more employees must make their group health coverage primarily responsible for costs, leaving Medicare as a backstop. Those roles are reversed for small employers with fewer than 20 employees. A gray area exists for employers with 20 to 99 employees; you have to figure out whether or not the government will treat the health plan as a large group plan and thereby make it provide primary healthcare coverage.

The easiest way to go forward is to consult with your human resources representative and ask whether Medicare will have a role to play. That can guide your decision about whether to sign up for Medicare immediately or wait until your alternative coverage is no longer available to you.

4. How to change your coverage

The initial choices you make when enrolling in Medicare don't commit you for the rest of your life. Every year, you can make changes to your Medicare coverage during what's known as the "open enrollment period." From Oct. 15 to Dec. 7, you're allowed to make just about any Medicare move you want, including switching from traditional Medicare to a Medicare Advantage plan, from Medicare Advantage back to traditional Medicare, from one Medicare Advantage plan to another, or between different Part D prescription drug plans. Another period spans from Jan. 1 to Feb. 14 in which you can switch only from Medicare Advantage to traditional Medicare. A special enrollment period is available surrounding the date on which you lose coverage from a group health plan or other source.

Switching plans can be smart if your circumstances change. For instance, if you're in good health, you might initially sign up for a low-cost plan that's less comprehensive than some alternatives. If your health deteriorates, you can switch to a type of coverage that pays for more of your increased healthcare needs. Reviewing your coverage every year is a smart move that you shouldn't miss out on.

Americans need Medicare, and making the most of its coverage is important. Knowing more will help you make better decisions and use your benefits to the maximum extent possible.

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