10 Things Everyone Should Know About Medicare

Retirees who don’t meet specific deadlines could pay significantly higher premiums.


Free preventative care. Many preventative services are now covered without a deductible or other cost-sharing requirements, due to provisions of the Affordable Care Act, including bone mass measurements and breast cancer screenings. But additional costs could be charged if a problem is found. For example, colonoscopies are covered at no cost, but if a polyp is found and removed during the colonoscopy, you may then have to pay 20 percent of the Medicare-approved amount for the doctor's services and/or a copayment to the medical facility.

How to pick a Part D plan. Retirees get to choose a new Medicare Part D prescription drug plan each year during an annual enrollment period from October 15 to December 7. It's a good idea to shop around for a new plan even if you're happy with your current coverage because premiums, covered medications, out-of-pocket costs and the plans offered change each year. "While you're always automatically renewed in the same plan from one year to the next, it is smart to take a look, ideally every year, to see what's happened with your own plan, whether the premium has increased and whether your needs have changed," says Jack Hoadley, a health policy analyst at Georgetown University. "You can often save money simply by making a new choice." If you don't join a Medicare prescription drug plan when you're first eligible or go without prescription drug coverage for a period of 63 or more days in a row after you qualify, you may have to pay a late-enrollment penalty. There's also a coverage gap in many Medicare Part D plans, often called the "donut hole," but the gap is scheduled to be gradually eliminated by 2020.

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What is not covered. There are a variety of medical services commonly used by older people that Medicare doesn't cover, including routine dental or eye care, dentures and hearing aids. Medicare also does not cover extensive long-term care in a nursing home or assisted living facility.

Funding deficit. The Medicare hospital insurance trust fund is expected to be depleted earlier than the Social Security trust funds. The trust fund has paid out more in hospital benefits and other expenditures than it received in income since 2008, and is projected to be exhausted in 2024, according to the 2012 Social Security and Medicare Boards of Trustees reports. Potential strategies to fix the funding shortfall include increasing the payroll tax from 2.9 percent to 4.25 percent, reducing expenditures by 26 percent or some more gradual combination of the two approaches.