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Medicare For Dummies®

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For most people, turning 65 or otherwise becoming eligible for Medicare feels like stepping into alien territory without a map. The signposts you think should be there often aren’t immediately visible. When you ask for directions, you can’t always be sure you’re being pointed down the right path.

Medicare For Dummies, 3rd Edition, is the map you need. It gives accurate, practical information about Medicare in plain language. It shows you how to skirt pitfalls and avoid wrong turns that can cost you dearly. My goal is to help you make informed, confident decisions that take you where you want to be. How can I promise that? Because this book is, in essence, the result of thousands of questions I’ve received over the years from people just like you.

I know from many of those questions that people eligible for Medicare often receive incorrect information from sources — such as government officials — they should be able to trust. That’s why, in these pages, I not only give you info that’s firmly based in law but sometimes also identify certain specific regulations (by name, number, and website) that you can use if you need to prove to an official the legal authority for a particular point about eligibility, enrollment, late penalties, and so on. You can’t find these useful references, which I offer as a kind of consumer empowerment, in other guides.

Confusion about Medicare is almost inevitable for two main reasons. Its regulations apply to different people in different ways, according to their specific circumstances, so the decisions you need to make may be unlike the next person’s. Also, it offers an array of choices that can be bewildering if you don’t know how to sift through them to get to the one that’s right for you.

So think of your Medicare card as your passport into the terrain of guaranteed health care, where you’re welcome regardless of income or pre-existing medical conditions, but you still have to find your way around. And consider this book the road map that helps you navigate the highways and some of the more obscure byways of that system and keeps you on track.

About This Book

This third edition of Medicare For Dummies provides information that was accurate at the time of going to press. But the new administration and Congress that came to office in January 2017 have announced proposals for radically changing three of the major programs described in this book — the Affordable Care Act (Obamacare), Medicaid, and Medicare itself. At the time of this writing, none of these proposals have passed into law. And, in the case of Medicare, any major change to the program wouldn’t take place for several years and wouldn’t affect people older than 55 at the time it goes into effect.

Therefore, in the chapters that follow, you find out what you need to know to get through the Medicare maze right now and get the most out of your coverage. You find answers to some questions that are barely addressed — and sometimes not touched upon at all — in official consumer publications about the program. You discover where to turn for additional help, if you need it. And, as in any For Dummies book, you can easily locate and understand the specific information you’re looking for because of the reader-friendly organization and straightforward language.

As you may expect from a program run partly by a federal bureaucracy and partly by private insurance plans, you’re going to meet some unavoidable jargon in this book. These terms are worth getting to know because notices you get from the government or the plans — or any to-and-fros you have with either — will be easier to understand. So I use the following conventions:

  • I explain new terms in Medicare-speak the first time they appear in the text. They’re also defined in the glossary in Appendix B.
  • When you see the word Medicare used on its own, it usually means the whole Medicare program (as in “When you join Medicare …”). Sometimes it means the federal agency that runs Medicare (as in “Medicare may send you a notice …”). The agency’s official name, the Centers for Medicare & Medicaid Services (CMS), appears as the source of information in some tables.
  • I typically refer to the basic Medicare program (Part A plus Part B) as “traditional Medicare.” I call the private plans that comprise the alternative Part C program “Medicare Advantage plans” or “Medicare health plans.”
  • I use the terms Part D and Medicare drug coverage interchangeably to discuss the Medicare prescription drug program. I refer to the plans that provide this coverage as “Part D plans” or “Medicare drug plans.”

Feel free to skip anything marked with the Technical Stuff icon as well as the sidebars — those chunks of text that appear in shaded boxes. They’re not necessary to understanding how to find your way through Medicare. Still, you may find them interesting. Ever wonder how on earth Congress dreamed up some of the more oddball bits of this program? You can find the answers in sidebars scattered throughout this book.

Within this book, you may note that some web addresses break across two lines of text. If you’re reading this book in print and want to visit one of these web pages, simply key in the address exactly as it’s noted in the text, as though the line break doesn’t exist. If you’re reading this text as an e-book, you’ve got it easy — just click the address to be taken directly to the page.

Foolish Assumptions

This book assumes that you don’t have any working knowledge of Medicare — really, none at all! But even if you do, you can still find practical insights and useful tips to help you navigate the system more quickly, easily, and confidently. If you recognize yourself in any of the following scenarios, you can find help in these pages:

Another point: This book assumes no political standpoints. Medicare has always been a controversial hot potato, gingerly tossed between those who think of it as a social safety net that should be extended to everyone and those who see it as an expensive luxury that is a growing drain on the economy. If you hold strong opinions, fine; that’s your privilege. But in these pages, the only “us versus them” undertone is a bias toward consumers (us) rather than politicians, government bureaucracies, and insurance companies (them). The aim of this book is to help you understand and deal with the system as it is now. If you want it changed — or don’t want it changed — please tell your members of Congress, not me!

Icons Used in This Book

Icons are those cute drawings you see in the page margins now and again. Here’s what they mean:

remember This icon signals important information. If you take anything away from this book, it should be info highlighted with this icon.

tip This icon draws your attention to on-target advice and practical insights that will save you time, effort, and maybe even money.

warning This icon raises a red flag to alert you to a Medicare rule or potential pitfall that may trip you up if you remain blithely unaware of it.

technicalstuff This icon points out information that’s interesting but not crucial to understanding the ins and outs of Medicare.

Beyond the Book

In addition to the material in the print or e-book you’re reading right now, this product also comes with some access-anywhere goodies on the web. For important Medicare do’s and don’ts, pointers on enrolling in Medicare at the right time, and key sources of Medicare help, go to and type “Medicare For Dummies Cheat Sheet” in the Search box.

Where to Go from Here

Nobody expects you to read this book cover to cover. It’s not a thriller or a bodice-ripper! But it does act as a plain-language reference to a program that millions of people use but few understand. So you can jump in anywhere to the bit you need, at whatever point you happen to be when grappling with Medicare. For example:

  • Want to know how Medicare works? Start with Part 1 to see what Medicare covers, how much it costs, and how you can lower expenses.
  • Don’t know when you should sign up or how to go about it? Chapters 6 and 7 show you the way, according to your circumstances.
  • Need to make a choice among Medicare’s many options and private plans? Find out how to do so in Chapters 9, 10, 11, and 12.
  • Want to get the best out of your Medicare coverage and avoid pitfalls? You’ll find lots of pointers in Part 4.

Part 1

Getting Started with Medicare


Set the record straight on common assumptions and misconceptions about Medicare and how it compares with other types of health insurance.

Discover the basics of Medicare with a quick primer on how it’s divided into four separate programs: Part A (hospital stays), Part B (doctors’ and outpatient services), Part C (Medicare’s private health plans), and Part D (prescription drug coverage).

Find out which services Medicare helps pay for, which services it doesn’t cover at all, and which ones come with certain coverage limits.

Recognize what you’re likely to pay toward your costs in Medicare — the basic premiums, deductibles, and co-payments, plus the premium surcharges you may have to pay if your income is over a certain level.

Get the scoop on ways to reduce your out-of-pocket expenses in Medicare, including special help if your income is under a certain level.

Chapter 1

The Nuts and Bolts of Medicare: What It Is and How It Works


check Addressing common concerns you may have about Medicare

check Getting a handle on the different parts of Medicare

check Knowing that you have choices and time-sensitive decisions to make

Medicare is a federal government insurance system that helps tens of millions of seniors and people with disabilities pay for their health care. It’s the only truly national health-care program in the United States — meaning that it’s available regardless of your income, the state of your health, or where you live nationwide — and it has been enduringly popular since it began in 1966.

Yet Medicare works like no other insurance you may have known in the past. To avoid total confusion, you’re wise to gain at least a broad understanding of how the program is put together and how its rules may affect you personally.

This chapter provides an overview of the program: addressing common concerns about how Medicare is different from other types of health insurance; describing the four parts of Medicare coverage (A, B, C, and D); and providing a checklist for the decisions that you have to make in choosing among the coverage options that Medicare offers.

tip This stuff is basic information aimed primarily at people who are new to the program. (You can find more details of benefits and costs in later chapters.) But if you’re an old hand looking for specifics in navigating Medicare more easily, feel free to skip these pages and plunge into Part 3 or 4.

Addressing Some Upfront Questions

When the prospect of becoming a Medicare beneficiary looms on the horizon, you suddenly become aware — if you’re like most people — of how little you know about the program. And even if you think you know, can you be sure that the information you have is accurate? Based on the questions I receive all the time, I can tell you that a lot of perceptions about Medicare are way off base; quite often, they’re gleaned from the Internet or even mass emails that are deliberately designed to spread misleading information and scare seniors.

But if you’ve had health insurance in the past, especially from an employer, you may be nervous about how Medicare coverage compares with it. So before I examine how Medicare actually works later in this chapter, I want to tackle some of the concerns people frequently raise about the program:

Coming to Terms with the ABCs (and D) of Medicare

Do you really need to know the details of what Parts A, B, C, and D stand for? Doesn’t Medicare just pay its share of your bills and that’s it? Well, not entirely. Medicare’s architecture is more than a tad weird, but each of its building blocks determines the coverage you get and what you pay.

Besides that, however, is the simple fact that making sense of the information in the rest of this book is difficult unless you understand what Parts A, B, C, and D actually mean. The following sections break down the basics.

Part A

Medicare Part A is usually described as hospital insurance — a term originally coined to distinguish it from medical insurance (Part B). But the phrase is misleading. “Hospital insurance” sounds as though Part A covers your entire bill if you’re admitted to a hospital, but it doesn’t work that way. The services you receive from doctors, surgeons, or anesthetists while you’re in the hospital are billed separately and are covered under Part B. And you don’t even have to be hospitalized to get services under Part A, because some are provided in settings outside the hospital or even in your own home.

remember A more accurate way to think of Part A is as coverage primarily for nursing care. It helps pay for the following:

  • The services of professional nurses when you’re admitted to a hospital or a skilled nursing facility (such as a nursing home or rehab center) for short-term stays or when you qualify for home health services or hospice care in your own home
  • A semiprivate room in the hospital or nursing facility
  • All meals provided directly by the hospital or nursing facility
  • Other services provided directly by the hospital or nursing facility, including lab tests, prescription drugs, medical appliances and supplies, and rehabilitation therapy
  • All services provided by a home health agency if you qualify for continuing care at home, as explained in Chapter 2
  • All services provided by a hospice program if you choose to stop treatment for a terminal illness, as explained in Chapter 2

The vast majority of people in Medicare are eligible for Part A services without paying any premiums for it. That’s because Part A is essentially paid for in advance by the Medicare payroll taxes that you or your spouse contributed from every paycheck while working. I explain the details of how that setup works — and your options if you don’t qualify for premium-free Part A — in Chapter 5.

But of course Part A services themselves aren’t free. You still pay deductibles and co-payments for specific services. I itemize these costs in Chapter 3 and explain how you may be able to lower them in Chapter 4. I also provide more-detailed information on certain Part A coverage issues in Chapters 2 and 14.

Part B

remember Many people in Medicare never need to go into the hospital, but almost everybody sees a doctor or needs diagnostic screenings and lab tests sooner or later. That’s where Part B — known as medical insurance — comes in. The wide range of services it covers includes

  • Approved medical and surgical services from any doctor who accepts Medicare patients, whether those services are provided in a doctor’s office, in a hospital, in a long-term-care facility, or at home
  • Diagnostic and lab tests done outside hospitals and nursing facilities
  • Preventive services such as flu shots, mammograms, screenings for depression and diabetes, and so on, many of which are free
  • Some medical equipment and supplies (for example, wheelchairs, walkers, oxygen, diabetic supplies, and units of blood)
  • Some outpatient hospital treatment received in an emergency room, clinic, or ambulatory surgical unit
  • Some inpatient care in cases where patients are placed under observation in the hospital instead of being formally admitted
  • Inpatient prescription drugs given in a hospital or doctor’s office, usually by injection (such as chemotherapy drugs for cancer)
  • Some coverage for physical, occupational, and speech therapies
  • Outpatient mental health care
  • Second opinions for non-emergency surgery in some circumstances
  • Approved home health services not covered by Part A
  • Ambulance or air rescue service in circumstances where any other kind of transportation would endanger the patient’s health
  • Free counseling to help curb obesity, smoking, or alcohol abuse

You must pay a monthly premium to receive Part B services unless your income is low enough to qualify you for assistance from your state. Most people pay the standard Part B premium, which is determined each year by a formula set by law ($134 per month in 2017). If your income is over a certain level, however, you’re required to pay more.

You also pay a share of the cost of most Part B services. In traditional Medicare, this amount is almost always 20 percent of the Medicare-approved cost. Medicare Advantage health plans charge different amounts — usually flat dollar co-pays for each service. I go into detail about the out-of-pocket costs for Part B in Chapter 3, and I explain ways to lower them in Chapter 4.

Part C

In the previous two sections, I describe coverage provided by Part A and Part B, which together form what is known as traditional or original Medicare — so named because that was the extent of the program’s coverage when it began back in 1966. It’s also called fee-for-service Medicare because each provider — whether it’s a doctor, hospital, laboratory, medical equipment supplier, or whatever — is paid a fee for each service.

But these days Medicare also offers an alternative to the traditional program: a range of health plans that mainly provide managed care through health maintenance organizations (HMOs) or preferred provider organizations (PPOs). These plans are run by private insurance companies, which decide each year whether to stay in the program. Medicare pays each plan a fixed fee for everyone who joins that plan, regardless of how much or little health care a person actually uses. This health plan program is called Medicare Advantage or Medicare Part C.

remember Medicare Advantage plans must, by law, cover exactly the same services under Part A and Part B as traditional Medicare does. (So if you need knee replacement, for example, the procedure is covered — regardless of whether you’re enrolled in a Medicare Advantage plan or in the traditional program.) But the plans may also offer extra benefits that traditional Medicare doesn’t cover — such as routine vision, hearing, and dental care. Most plans include Part D prescription drug coverage as part of their benefits package.

Still, being enrolled in one of these plans is a very different experience from using the traditional Medicare program. Your out-of-pocket costs are different, and so are your choices of doctors and other providers. I discuss the differences between traditional Medicare and Medicare Advantage plans in Chapter 9. I describe the different types of plans, and how to compare them properly to find the one that best meets your needs, in Chapter 11.

Part D

Part D is insurance for outpatient prescription drugs — meaning medications you take yourself instead of having them administered in a hospital or doctor’s office. Medicare’s drug benefit was added to the program only in 2006, a full 40 years after Medicare began. Since then, it has saved huge amounts of money for millions of people and allowed many to get the meds they need for the first time.

remember Still, I can’t gloss over the fact that Part D is a complicated benefit that takes a lot of getting used to. Here are just some of the peculiar ways it differs from other drug coverage you may have used in the past:

  • Coverage goes through four distinct phases during a calendar year, and in each phase the same drug can cost a different amount.
  • To get coverage, you must select just one private plan that provides Part D drugs out of many plans (at least 15) that are available to you.
  • Different plans cover different sets of drugs, and no plan covers all drugs.
  • Plans set their own co-pays for each drug, and these amounts can vary enormously, even for the same drug.
  • Plans may require you or your doctor to ask permission before they cover certain drugs or to try a less-expensive version before they cover the one you were prescribed.
  • Plans are allowed to change their costs and benefits or to withdraw from Medicare entirely each calendar year.

If this all sounds mystifying, you’re probably wondering how on earth anyone can possibly navigate Part D to find good drug coverage. But yes, it’s possible! In Chapter 10, I describe a strategy for effectively comparing plans and finding the one that best meets your needs, and Chapter 12 lets you know who can help you do it. I also discuss what Part D covers (Chapter 2); the costs you can expect (Chapters 3 and 4); and how to troubleshoot any problems that show up (Chapters 13 and 14).