Dear Savvy Living,

Can you give me a primer on Medicare? I turn 65 next year and could use some help to ensure I get the most out of my benefits.
Unsure Susan

Dear Susan,

If you're approaching your 65th birthday, you're about to enter the wonderful world of Medicare coverage (see www.medicare.gov) - but you're wise to plan ahead. There are many choices, rules and timetables that can be complex and confusing. A little homework now can help you find the best plan for your needs come enrollment time. Here's what you should know.

When to Sign Up

The first thing to be clear on is when to enroll. Everyone is eligible for Medicare at age 65, even if your normal retirement age for full Social Security benefits is later. To avoid possible mishaps, contact the Social Security Administration (800-772-1213; www.socialsecurity.gov) three months before you turn 65 to sign up. The initial enrollment period for Medicare runs for seven months, starting three months before your birthday month and continuing for three months afterward.

If you miss your initial enrollment period for Medicare Part B, you'll have to wait until the next general enrollment period, which runs from Jan. 1 to March 31 for benefits beginning the following July 1. You'll also incur a 10 percent penalty for each year you wait beyond your initial enrollment period, which will be tacked on to your monthly Part B premium. You can sign up for premium-free Part A, which covers hospital services, at any time with no penalty.

Working Seniors

Special rules apply if you're eligible for Medicare and still on the job. If you have health insurance coverage through your employer or your spouse's employer, you have a "special enrollment period" in which you can sign up. This means that you can delay enrolling in Medicare Part B and are not subject to the 10 percent late-enrollment penalty as long as you sign up within eight months of losing that coverage.

All-In-One Plans

Did you know that Medicare also offers a comprehensive health plan sold by private insurers called Medicare Advantage? These plans provide health-care, prescription drug coverage and additional services all in one policy, and thanks to generous government subsidies, these plans are better, cheaper and more readily available than ever before. Medicare Advantage plans are available through HMOs, PPOs, and now as private fee for service plans which allow you to use doctors and hospitals outside your network, usually at an additional cost. Some of these plans charge nothing beyond the cost of the Medicare Part B premium, which is $93.50 a month in 2007.

In contrast, if you opt for traditional Medicare (Part A and B), you'll need two additional insurance policies - supplemental medigap insurance and a Part D prescription-drug plan - to get the same level of coverage as a Medicare Advantage plan. And Advantage plans on average are cheaper than what you would pay for traditional Medicare, a medigap policy, and a stand alone prescription drug plan. To find and compare Advantage plans visit www.medicare.gov/mppf.

Fill the Gaps

If you choose traditional Medicare, it's a good idea to get a medigap policy (sold by private insurance companies) to fill in the gaps that basic Medicare doesn't cover. Policies come in 12 standardized versions, labeled A through L, and cost on average about $140 per month. See www.medicare.gov/mppf to compare policies.

Drug Coverage

Along with traditional Medicare coverage and a medigap policy, you also need to buy a Part D prescription drug plan if you want drug coverage. There are tons of options offering a wide range of coverage (premiums costs average $24 per month) so choosing can be difficult. You can compare drug plans at www.medicare.gov/mpdpf. Prices and coverage change yearly so even if you already have a Part D plan, it's a good idea to review your options during the open-enrollment period every year (Nov. 15 to Dec. 31).

Savvy Tips: For more information, see the 2008 "Medicare & You" handbook which is mailed out in October to all beneficiaries and those approaching age 65. You can also get free Medicare counseling from your State Health Insurance Assistance Program (SHIP). Call 800-633-4227 or visit www.shiptalk.org to find a local counselor.

Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Senior" book. The articles are offered as a helpful and informative service to our friends and may not always reflect this organization's official position on some topics. Jim invites you to send your senior questions to: Savvy Senior, P.O. Box 5443, Norman, OK 73070.