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What Does Medicare Really Cover?

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Approaching retirement and curious to know how you’ll handle health care expenses? Medicare will likely play a role in helping you mitigate those costs in your golden years.

The federal government offers Medicare as an insurance program for permanently disabled Americans and those 65 or older. The Social Security Administration is responsible for funding the program, and most of its funding comes from a Medicare payroll tax you might have noticed on your pay stubs (it ranges from 1.45% to 3.8%, depending on your employment status and income level).

But what does Medicare actually cover? Read on for a quick overview.

Who’s Eligible for Medicare Coverage?

The majority of working Americans become eligible for Medicare coverage when they turn 65. You may also qualify if you’re younger and have been disabled for at least two years and receive Social Security benefits, if you receive kidney dialysis treatment, or if you are in end-stage renal failure.

In most cases, you’re automatically enrolled into Medicare once you start receiving Social Security payments. You need to opt out if you don’t want the coverage.

John K. Ross IV, an elder law attorney and partner at Ross & Shoalmire with multiple offices in Texas says eligibility is straightforward because it’s simply based on age. But the program does become much more complicated when you start digging into the details of what specific benefits make the most sense for you.

“Retirees need to make decisions around whether they’ll choose the traditional Medicare program versus Medicare Advantage,” he says. He adds that disputing Medicare’s coverage refusals is something most participants in the program will deal with at some point.

How Do You Enroll in Medicare Coverage?

You’ll be automatically enrolled into Medicare if you:

  • Already receive Social Security benefits
  • Are under 65 and are disabled, or have ALS
  • Receive benefits from the Railroad Retirement Board

But you need to sign up for Medicare if:

  • You don’t get Social Security benefits (which could be the case if you’re 65 or older but still working)
  • You have end-stage renal disease

If you need to manually apply, you can do so online here. You also have the option of going to your local Social Security office or calling to apply at 1-800-772-1213.

The Basics of What Medicare Really Covers (and What It Doesn’t)

The main part of Medicare is broken down into two parts: A and B.

What Medicare Part A Covers

It covers several broad categories of hospital care and services you receive while hospitalized.

That includes:

  • Hospital care limited to 90 days each benefit period and a lifetime reserve of 60 additional days for those who exhausted the initial 90 days coverage
  • Skilled nursing care
  • Home health services
  • Care in hospice for those with a life expectancy of less than six months

You can receive this coverage for free as long as you paid at least 10 years into Social Security.

“If you’re not eligible for free Part A coverage, the cost in 2017 is $413 per month if you paid into Medicare for less than 30 quarters while working,” says Desmond Henry, CFP® and founder of Afflora Financial Life Planning. “It costs $227 per month if you paid in between 30 and 39 quarters.”

What Medicare Part B Covers

Medicare Part B covers doctor’s visits and outpatient care. This can include medical equipment and physical therapy. It may cover some preventive care services, too, like screening for certain diseases including cancer and glaucoma.

Here’s a full list of what Part B provides for:

  • All outpatient services
  • Doctor’s visits and home health visits that don’t require a hospital stay
  • Medical equipment
  • Clinical research
  • Ambulance services
  • Durable medical equipment
  • Mental health and preventative services
  • Second option prior to surgery
  • Limited outpatient prescription drugs and drugs that cannot be self administered
  • Diagnostic tests

The costs for Part B are more complicated than Part A. “The standard Part B premium for 2017 is $134 per month, but this may be higher based upon your income level,” says Henry.

And as important as it is to understand what Medicare really covers, it’s also essential to know what the program does not offer to those on the plan.

“Medicaid does not pay for long-term care such as in-home sitters services, and assisted living and nursing-home costs,” says Ross.

Henry goes into even greater detail. “Medicare won’t pick up the tab for hearing aids, eye exams and glasses, and dental care,” he says.

Henry explains other services like cosmetic surgery and alternative medicine get excluded from coverage, too. “People don’t typically realize that Medicare generally does not cover medical expenses when you are outside the United States or territories, either,” he adds.

What Medicare Part C Covers

Medicare coverage gets more complicated when you look at additional parts of the program. There’s also Medicare Part C, which is also known as Medicare Advantage Plans.

Whereas Medicare is a program offered by the federal government, private insurance companies offer coverage with Medicare Advantage Plans (which the government still regulates).

Medicare Advantage must provide services that are comparable or “equivalent” to what’s covered by Medicare Parts A and B. Some Part C plans offer more services not included in traditional Medicare, including prescription drug coverage.

That might help you get the coverage you need if Medicare Parts A and B aren’t sufficient for you — but that also means there’s a huge variation between all the Medicare Part C plans available, both in terms of services provided as well as the costs of the plans.

Prices also depend on the state you live in, the provider you choose, and whether you choose an HMO or PPO plan. eHealthInsurance has a tool that can help you compare a variety of Medicare Advantage plans to see which one may work best for you.

Don’t Forget About Medicare Part D

Parts A and B of Medicare provide for both hospital care as well as outpatient services and doctor’s visits — but it doesn’t cover prescription drugs. That’s where Medicare Part D comes in.

Part D plans are also offered by private insurers and are separate policies from Medicare Parts A and B. Just like Part C coverage, Part D plans vary widely in what they cover and their costs.

What’s the Future for Medicare Under the Trump Administration?

The White House and Republicans in Congress have promised to repeal the Affordable Care Act and are in the process of proposing radical changes to the current health care system.

But most of the proposed changes affect Medicaid, not Medicare. There are proposals that would change the “funding mechanism” for the Medicare program, but beneficiaries are unlikely to feel those changes directly.

And there’s disagreement between the Trump administration and House Republicans over how Medicare should be handled moving forward. Trump has merely said he wouldn’t cut the program.

But Speaker Paul Ryan has talked about making the following changes:

  • Introducing exchanges to Medicare, allowing cartier jewelry replica private insurers to compete with the traditional, government-run program.
  • Providing subsidies to help people pay their premiums, based on income.
  • Requiring insurers to offer coverage to all to ensure everyone in Medicare retained access to benefits.

Again, this is all just talk for now. The House’s initial bill to change the Affordable Care Act failed to pass, and any suggested changes are a long way from implementation.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Kali Hawlk
Kali Hawlk |

Kali Hawlk is a writer at MagnifyMoney. You can email Kali at [email protected]

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Featured, Health

5 Ways to Keep Medical Debt From Ruining Your Credit

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

iStock

Your physical well-being isn’t the only thing at stake when you go to the hospital. So, too, is your financial health.

According to the Consumer Financial Protection Bureau, more than half of all collection notices on consumer credit reports stem from outstanding medical debt, and roughly 43 million consumers – nearly 20% of all those in the nationwide credit reporting system – have at least one medical collection on their credit report.

Now, you might be inclined to think that, because you’re young or have both a job and health insurance, medical debt poses you no risk. Think again. According to a report from the Kaiser Family Foundation, roughly one-third of non-elderly adults report difficulty paying medical bills. Moreover, roughly 70% of people with medical debt are insured, mostly through employer-sponsored plans.

Not concerned yet? Consider that a medical collection notice on your credit report, even for a small bill, can lower your credit score 100 points or more. You can’t pay your way out of the mess after the fact, either. Medical debt notifications stay on your credit report for seven years after you’ve paid off the bill.

The good news is that you can often prevent medical debt from ruining your credit simply by being attentive and proactive. Here’s how.

Pay close attention to your bills

Certainly, a considerable portion of unpaid medical debt exists on account of bills so large and overwhelming that patients don’t have the ability to cover them. But many unpaid medical debts catch patients completely by surprise, according to Deanna Hathaway, a consumer and small business bankruptcy lawyer in Richmond, Va.

“Most people don’t routinely check their credit reports, assume everything is fine, and then a mark on their credit shows up when they go to buy a car or home,” Hathaway said.

The confusion often traces back to one of two common occurrences, according to Ron Sykstus, a consumer bankruptcy attorney in Birmingham, Ala.

“People usually get caught off guard either because they thought their insurance was supposed to pick something up and it didn’t, or because they paid the bill but it got miscoded and applied to the wrong account,” Sykstus said. “It’s a hassle, but track your payments and make sure they get where they are supposed to get.”

Stay in your network

One of the major ways insured patients wind up with unmanageable medical bills is through services rendered – often not known to the patient – by out-of-network providers, according to Kevin Haney, president of A.S.K. Benefit Solutions.

“You check into an in-network hospital and think you’re covered, but while you’re there, you’re treated by an out-of-network specialist such as an anesthesiologist, and then your coverage isn’t nearly as good,” Haney said. “The medical industry does a poor job of explaining this, and it’s where many people get hurt.”

According to Haney, if you were unknowingly treated by an out-of-network provider, it’s would not be unreasonable for you to contact the provider and ask them to bill you at their in-network rate.

“You can push back on lack of disclosure and negotiate,” Haney said. “They’re accepting much lower amounts for the same service with their in-network patients.”

Work it out with your provider BEFORE your bills are sent to collections

Even if you’re insured and are diligent about staying in-network, medical bills can still become untenable. Whether on account of a high deductible or an even higher out-of-pocket maximum, patients both insured and uninsured encounter medical bills they simply can’t afford to pay.

If you find yourself in this situation, it’s critical to understand that most health care providers turn unpaid debt over to a collection agency, and it’s the agency that in turn reports the debt to the credit bureaus should it remain unpaid.

The key then is to be proactive about working out an arrangement with your health care provider before the debt is ever sent to a collection agency. And make no mistake – most providers are more than happy to work with you, according to Howard Dvorkin, CPA and chairman of Debt.com.

“The health care providers you owe know very well how crushing medical debt is,” he said. “They want to work with you, but they also need to get paid.”

If you receive a bill you can’t afford to pay in its entirety, you should immediately call your provider and negotiate.

“Most providers, if the bill is large, will recognize there’s a good chance you don’t have the money to pay it off all at once, and most of the time, they’ll work with you,” Dvorkin said. “But you have to be proactive about it. Don’t just hope it will go away. Call them immediately, explain your situation and ask for a payment plan.”

If the bill you’re struggling with is from a hospital, you may also have the option to apply for financial aid, according to Thomas Nitzsche, a financial educator with Clearpoint Credit Counseling Solutions, a personal finance counseling firm.

“Most hospitals are required to offer financial aid,” Nitzsche said. “They’ll look at your financials to determine your need, and even if you’re denied, just the act of applying usually extends the window within which you have to pay that bill.”

Negotiate with the collection agency

In the event that your debt is passed along to a collection agency, all is not immediately lost, Sykstus said.

“You can usually negotiate with the collection agency the same as you would with the provider,” he said. “Tell them you’ll work out a payment plan and that, in return, you’re asking them to not report it.”

Most collection agencies, according to Haney, actually have little interest in reporting debt to the credit bureaus.

“The best leverage they have to get you to pay is to threaten to report the bill to the credit agencies,” he said. “That means as soon as they report it, they’ve lost their leverage. So, they’re going to want to talk to you long before they ever report it to the bureau.

“Don’t duck their calls,” he added. “Talk to them and offer to work something out.”

Take out a personal loan

Refinancing your medical debt into a personal loan is another move you can consider making, particularly if you can get a lower interest rate than you could with a credit card, and you aren’t able to secure a 0% credit card deal. Peer-to-peer lender LendingClub has an APR starting at 6.95% and Prosper starts with an APR as low as 6.95%, and LendingClub‘s origination fee is 1.00% - 6.00%.

Even better, SoFi offers personal loans at a APR as low as 5.99% and has no origination fee (although you do need a relatively high minimum credit score to get a loan, at 680).

MagnifyMoney’s parent company, LendingTree, features a handy personal loan tool* where you can shop for the best loan for you.

*You may or may not be matched with any lender mentioned in this article. Based on your creditworthiness, you may be matched with up to five different lenders in our partner network.

Bottom line

Dealing with medical debt can be particularly stressful, as you have to worry about money matters along with managing health issues. However, having medical debt does not have to spell disaster. If you follow one or more of the steps above, you should be able to keep your finances healthy.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Featured, Health, News

How Weight Loss Helped This Couple Pay Down $22,000 of Debt

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Photo courtesy of Brian LeBlanc

Brian LeBlanc was fed up. The 30-year-old policy analyst from Alberta, Canada, had struggled with his weight for years. At the time, he weighed 240 pounds and had trouble finding clothes that fit. He decided it was time to change his lifestyle for good.

LeBlanc started running and cutting back on fast food and soft drinks. He ordered smaller portions at restaurants and avoided convenience-store foods. About a year into his weight-loss mission, his wife Erin, 31, joined him in his efforts.

“The biggest change we made was buying a kitchen food scale and measuring everything we eat,” Brian says. “Creating that habit was really powerful.”

Over two years, the couple shed a total of 170 pounds.

But losing weight, they soon realized, came with an unexpected fringe benefit — saving thousands of dollars per year. Often, people complain that it’s expensive to be healthy — gym memberships and fresh produce don’t come cheap, after all. But the LeBlancs found the opposite to be true.

Erin, who is a payroll specialist, also managed their household budget. She began noticing a difference in how little money they were wasting on fast food and unused grocery items.

Photo courtesy of Brian LeBlanc

“Before, we always had the best intentions of going to the grocery store and buying all the healthy foods. But we never ate them,” she says. “We ended up throwing out a lot of healthy food, vegetables, and fruits.”

Before their lifestyle change, Brian and Erin would often eat out for dinner, spending as much as $80 per week, and they would often go out with friends, spending about $275 a month. Now, Brian says if they grab fast food, they choose a smaller portion. Now they might spend only $22 on fast food per month, instead of over $200.

What’s changed the most is how they shop for groceries, what they buy and how they cook. Brian likes to prep all his meals on Sunday so his lunches during the week are consistent and portion-controlled. They also buy only enough fresh produce to last them a couple of days to prevent wasting food.

Losing weight — and student loan debt

Photo courtesy of Brian LeBlanc

Two years after the start of their weight-loss journey, they took a look at their bank statements to see how their spending had changed. By giving up eating out and drinking alcohol frequently, they were spending $600 less a month than they used to, even though they’ve had to buy new wardrobes and gym memberships.

With their newfound savings, the LeBlancs managed to pay off Brian’s $22,000 in student loans 13 years early. Even with the $600 they were now saving, they had to cut back significantly on their budget to come up with the $900-$1,000 they aimed to put toward his loans each month. They stopped meeting friends for drinks after work, and Erin took on a part-time job to bring in extra cash. When they needed new wardrobes because their old clothing no longer fit, they frequented thrift shops instead of the mall.

When they made the final payment after two years, it was a relief to say the least.

Now the Canadian couple is saving for a vacation home in Phoenix, which they hope to buy in the next few years, and they’re planning to tackle Erin’s student loans next. They’re happy with their weight and lives in general, but don’t take their journey for granted.

“There were times we questioned our sanity, and we thought we cannot do this anymore,” says Erin. But they would always rally together in the end.

“There are things that are worth struggling for and worth putting in the effort,” Brian says. “Hands down, your health is one of those things.”

Other Ways Getting Healthy Can Help Financially

Spending less on food isn’t the only way your budget can improve alongside your health. Read below to see how a little weight loss can tip the scales when it comes to your finances.

  • Spend less on medical bills. Health care costs have skyrocketed over the past two decades, but they’ve impacted overweight and obese individuals more. A report on the “state of obesity” in America found that obese adults spend 42% more on healthcare per year than those of normal weight.
  • Buy cheaper clothes. Designers frequently charge more for plus-size clothing than smaller sizes. Some people claim retailers add a “fat tax” on clothes because there are fewer options for anyone over a size 12. It might not be fair, but it’s the way things are.
  • Save on life insurance. Your health is a huge factor for life insurance rates. Annual premiums for a healthy person can cost more than for someone who is overweight, because BMI (body mass index) may be a factor for determining pricing.

Getting Healthy for Cheap

Still worried that an active lifestyle will require you to spend more money? Here are some tips on keeping costs low while you improve your lifestyle.

  • Get a family membership. Gyms often provide a discount if you sign up for a family membership instead of an individual one. Most of these deals are only beneficial for households with children, but some might offer a lower price if you sign up with a spouse or partner. Always ask the gym about any special deductions they might have.
  • Skip the fancy gym. Many would-be exercisers skip the gym pass because they assume it will be expensive. Before you give up, call around and compare prices. Try your local YMCA, as they often have income-based membership.
  • Shop at thrift stores. Finding inexpensive workout clothes can be another barrier to exercising. Who wants to spend $75 on yoga pants? Don’t visit the mall for your new duds. Your local thrift shop or consignment store will have running shorts and tank tops for only a few dollars. Secondhand clothes also make more sense if you’re in the midst of losing a lot of weight and changing sizes frequently.
  • Go vegetarian. Meat is often the most expensive item in your grocery cart. If you’re trying to eat healthier and concerned about money, try vegetarian protein options like lentils, beans,and quinoa. You don’t have to fully adopt the vegetarian lifestyle, but just reducing your meat intake can have a significant impact on the grocery bill.
  • Buy frozen produce. Frozen produce is often as healthy as buying fresh, but it can be significantly less expensive. Frozen veggies and fruit also last longer, decreasing the risk of food waste. You can often find coupons, and the long shelf life makes it easy to stock up if there’s a sale on your favorite green beans.
  • Cut back on eating out. Ever wonder how restaurant-quality food can be so much better than what you make at home? You guessed it: more salt, more sugar, more butter and more fat. By limiting the meals you eat out, you’ll avoid all that — as well as those outrageous restaurant markups. If you do eat out, you can do your best to pick the healthy choice. You may also choose to take advantage of cashback credit cards that may reward you for your healthy dining out.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Zina Kumok
Zina Kumok |

Zina Kumok is a writer at MagnifyMoney. You can email Zina here