5 Medicare secrets you should know

Medicare may help some 45 million seniors afford doctor visits and prescriptions, but that doesn't mean it makes it easy for them to do so. The federal health insurance program is filled with confusing options and complex regulations.

Navigating Medicare can be a nightmare for anyone, let alone seniors whose survival depends on the coverage they receive from this critical program.

Here are 5 secrets that will help you squeeze the most out of your Medicare coverage and avoid some all-too-common pitfalls.
Coverage restrictions could bankrupt you

If you suffer a stroke, it's likely that you'll need prolonged care at a skilled nursing facility. By "prolonged", I mean a year or longer. That type of care can cost as much as $10,000 a month, according to Medicare consultant Jim Plonsey, President of Medicare Training and Consulting.

Think Medicare is going to cover that astronomical bill? Think again.

In order to get any reimbursement, you need to meet all of the following conditions:
  • You have Medicare Part A, with unused days remaining in your hospital benefit period;
  • You were in a hospital for at least 3 consecutive days and entered the nursing facility shortly thereafter;
  • You need skilled nursing care for the condition for which you entered the hospital;
  • Your doctor has ordered the skilled nursing care;
  • The skilled nursing facility is Medicare certified.
Even if you fulfill all of those requirements, you still won't be in the clear if you need prolonged care. Medicare stops paying skilled nursing costs after 100 days, no matter how dire your need for further care remains.

Incur those costs on your own and your retirement nest egg could be wiped out. To help protect your assets, consider consulting with an attorney who specializes in elder law. A good place to start is the web siteof the National Academy of Elder Law Attorneys. Its 4,000 members agree to be bound by a rigid code of "Aspirational Standards." Advance planning can pay big dividends.

"Advantage" plans aren't as advantageousas they may seem

The pitch is enticing: Buy a "Medicare Advantage" policy (known also as Medicare Part C) and you'll get all of the benefits of Medicare Parts A and B (hospital and medical coverage), as well as prescription drug coverage that is better than what you get from Medicare Part D.

Lower costs and better coverage all packaged into one policy? The choice should be a no-brainer, right?

Almost twenty percent of Medicare participants think so and have purchased these plans, which are offered by private insurers including Wellcare and Humana.

Advantage plans clearly offer some benefits: They cost less than if you have to enroll in Medicare and buy private insurance to fill the gaps in coverage ("known as "Medigap" plans) and you can get extra benefits like hearing and vision screening and even dental care.

But these policies can also be a trap for the unwary. Most Advantage plans require you to use designated doctors and hospitals or to pay an additional fee if you obtain care from providers outside their network. For those living in rural areas this can prove to be a costly restriction. "Many hospitals and doctors in rural areas are not in the network," says Medicare consultant Jim Plonsey.

Even if you are happy with the plan, the insurer may not be. Without justification, they can boost your premiums, change your benefits or drop your policy altogether. Even worse, if your plan is discontinued (either by you or the insurer) you may not qualify for Medigap insurance due to pre-existing conditions.

Look before you leap into an Advantage plan. The Medicare web pagehas excellent tools for comparing your options.

Climbing out of the "doughnut hole" will cost you

Medicare Part D is supposed to help seniors deal with the high cost of prescription drugs. And, at first, it does a great job of that. After a $295 deductible, it covers 75% of drug costs. But then something strange happens. After your drug costs hit $2,700, all of a sudden you are 100% responsible for the next $3,453. Once you accrue more than that amount, Medicare coverage kicks in again.

This gap in coverage is known as the "doughnut hole."

Medicare offers suggestions for minimizing the financial pain of falling into the doughnut hole:
  • Use generic drugs
  • Check out national and community-based charity programs
  • See if the drug company has an assistance program
  • See if your state has an assistance program
  • Contact Social Security to see if you qualify for extra help.
I have a better suggestion: Change the law!

Health care reform legislation pending in Congress would lessen the burden. It provides that seniors in the doughnut hole would pay only 50% of the cost of their brand name medications, instead of the 100% they now incur.

Medicare covers a kidney transplant, but not all of the drugs needed for recovery

Generally, Medicare recipients must be 65 years of age or older. But there are a couple of exceptions.

Younger people who have permanent kidney failure, requiring dialysis or a kidney transplant, may also qualify for Medicare coverage. The bad news is, for those under 65, Medicare coverage for the critical immunosuppressive drugs they require are only covered for 36 months after the transplant. (If you are a 65 or older Medicare recipient, there is no time limit on coverage for immunosuppressive drugs.)

According to the National Kidney Foundation, the average cost of immunosuppressive drugs is $17,000 a year.

What happens if your Medicare coverage runs out and you can't afford the continuing costs of these drugs? You can get another kidney transplant, of course!

Medicare will pay the cost of the second transplant (around $125,000). Then the 36-month clock starts all over again.

Some members of Congress agree this makes no sense. Bills have been introduced in the House and the Senate to end the 36-month limitation on coverage for immunosuppressive drugs.

Medicare may cover weight loss surgery

In February 2006, the Centers for Medicare & Medicaid Servicesexpanded coverage to include defined procedures for weight loss surgery (called "bariatric" surgery). Medicare announced its final coverage policy on this past February.

There are a number of requirements you must meet to qualify for coverage, however:

  • You need to have a Body Mass Index (BMI) of 35 or higher;
  • In addition to morbid obesity, beneficiaries must have serious health conditions, like hypertension, coronary artery disease or osteoarthritis;
  • The surgery must be performed in approved surgery centers.
Dan Solin is the author of the newly published book,The Smartest Retirement Book You'll Ever Read (Perigee Books 2009). His prior books include the New York Times bestsellers, The Smartest Investment Book You'll Ever ReadandThe Smartest 401(k) Book You'll Ever Read. See SmartestInvestmentBook.com. Read more about Dan Solin.
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