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Finding a Way Through the Medicare Maze

April 09, 2001|Bob Rosenblatt

As you inch closer to the traditional retirement age, you might prefer to be spending time planning a cruise, visiting grandchildren or training for your first marathon. Instead, you may find yourself sitting confused at the kitchen table, hunched over a mass of papers dealing with medical insurance.

Let's try to clarify things.

For starters, if you have worked and paid Social Security and Medicare payroll taxes for 40 work quarters, or about 10 years, you become eligible for Medicare at age 65.

But the Medicare card doesn't come to you as a birthday gift. You need to enroll. There is a seven-month eligibility window that starts three months before your 65th birthday and continues for four months after.

You can sign up for both Part A, which covers hospital bills, and Part B, which helps pay doctor bills. The part B premium is $50 a month, and the money is deducted from your Social Security check.

If you miss the window and don't enroll in Medicare during the seven-month period, you can face a financial penalty and have to pay more for Part B. Every year you don't enroll for Part B, the cost will jump 10%.

If you didn't sign up when you were originally eligible, the next chance comes during the general enrollment period, which runs from Jan. 1 through March 31 each year. Coverage begins July 1 of that year.

Those older than 65 who do not have a history of paid work can buy into the Medicare system if they have been legal residents of the United States for at least five years. And disabled people of all ages are eligible for Medicare if they are receiving Social Security disability benefits.

Some people decide to keep working past age 65, and that can create a more complex situation.

If you are employed at a company with 20 or more workers that already offers health insurance, you and your spouse are entitled to coverage regardless of age.

If you have Medicare and private insurance, your company's group health plan is the primary payer of hospital and medical bills. Medicare is the secondary payer. Don't expect, however, that every dollar of every bill will be paid just because you have two insurance policies.

Remember that the rules with regard to Medicare as a secondary payer are extraordinarily complicated, said Aileen Harper of the Center for Health Care Rights, a Los Angeles-based health insurance counseling and advocacy program.

Here is one example of how Medicare might pay.

The doctor charges $200. The company health plan says it will approve payment up to $150 for that particular treatment. The company plan pays 80% of approved charges, or $120. That leaves a balance of $80 for the patient to pay.

Medicare would normally pay up to $100 for the same treatment if the bill had been submitted to Medicare initially. But the patient won't get $100, because he is not allowed to benefit from both the full company health coverage and full Medicare coverage. In this case, Medicare will pay $30, the difference between the company's approved limit and what it actually paid. The patient is personally responsible for the remaining $50.

If your policy at work is limited--if, for example, it provides skimpy mental-health benefits--you probably will want to sign up for Medicare, too, she said. Take a close look at the policy before deciding if it's worthwhile to pay the extra $50 a month for Medicare. "Generally speaking," Harper said, "if you have fairly good health coverage, it may not be cost effective to enroll in Medicare."

If your health insurance at work is through an HMO, or health maintenance organization, you have to use the HMO's network of doctors and hospitals. Medicare, however, allows you to see any doctor, including physician specialists, or hospital you choose. But an HMO is likely to offer prescription drug coverage that Medicare lacks. Decide which trade-off is most important to you.

If you decide to stick with the company's insurance and forgo Medicare for now, you don't have to worry about being penalized for not enrolling in Medicare. You can delay until you decide to stop working. Then you have an eight-month special enrollment period.

In a family situation, the calculations become even more intricate. Many workers have spouses who are younger and not yet eligible for Medicare.

Take the example of John Jones, who has health insurance for himself, his wife, Joan, and his two college-age children. John turns 65 and keeps working. He can drop his coverage at work and rely on Medicare only. But he decides instead to stay enrolled in the health insurance program at work because Joan and the kids still need the protection.

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