Medicare: What You Need to Know when starting

Medicare comes in four parts, each of which covers particular services or types of insurance. Virtually everybody who gets Medicare eventually enrolls in the first two parts, which have been around since the program started in 1966.

• Part A covers hospital inpatient care, some types of home health care, hospice care, and care in skilled nursing facilities. There is no premium for Part A if you or your spouse has earned at least 40 Social Security work credits. (Here are your options if you don't have those credits.)
• Part B covers doctor services, outpatient hospital care, preventive care, and some types of home health care. You have to pay a monthly premium for Part B. In 2014, it's $104.90 for individuals with an income of less than $85,000 a year and couples with an income of less than $170,000. Higher-income beneficiaries pay more.

The second two parts were added later.

• Part C, also known as Medicare Advantage, is an alternate way of getting your Part A and Part B benefits. Instead of the government paying your provider directly, Part C plans are run by Medicare-approved private insurance companies. If you elect to get your benefits through Part C, you must also be enrolled in Part A and Part B.
• Part D covers prescription drugs. This is an optional benefit that is only available through private insurance companies. Most Medicare Advantage plans include Part D. 

For more details on exactly what each part of Medicare covers, see Medicare's website.

No matter how you choose to receive your Medicare benefits, you will receive certain preventive services for free, such as immunizations and screening tests for breast and colon cancer.

When you can enroll

The "initial enrollment period" for Medicare consists of the three months before, the month of, and the three months after your 65th birthday. If you want your coverage to start the month you turn 65, sign up during that first three-month period.

If you are already receiving Social Security, Medicare will automatically enroll you. If not, you must enroll on your own either online through Medicare.gov or at a Social Security office.

When to enroll in Part A

Nearly everyone who becomes eligible for Medicare should enroll in Part A immediately, because it has no premium. This is true even if you are still working and have health insurance through your job. It will get you into the system and you'll start receiving "Medicare & You."

When to enroll in Part B

This is trickier. If you get it wrong, it can cost you money.

If you are already retired or will retire right at 65, the answer is simple: sign up for Part B the same time you enroll in Part A.  If you are still working, you're going to have to figure out the right time to enroll on your own.

It's really important not to mess this up. If you don't sign up for Part B when you should, you will be hit with a harsh late enrollment penalty. The penalty is a permanent increase in your Part B premium of 10 percent for every year that you should have been enrolled but weren't.

So for instance, if you sign up for Part B two years after you should have, your premium will be 20 percent higher.  

When to enroll in Part D, your drug plan

You should sign up for Medicare Part D at the same time that you enroll in Part B. It's important to be prompt. There is a permanent premium penalty for enrolling late.

There's one situation that will exempt you from this late enrollment penalty. That is if you have other drug coverage, such as an employer or retiree plan, that is as good as Part D coverage. (Your plan administrator can tell you whether your plan's drug coverage meets this qualification.)

Next: Medicare Advantage or Medigap—which to choose

Your first big decision upon signing up for Medicare is whether to get your benefits through original Medicare, with a supplemental Medigap plan, or through a private Medicare Advantage plan. Our guide walks you through the differences and discusses the pros and cons of each.

article from ConsumerReports Oct 16, 2014