Written by : Linda Patch, Financial Advisor
Does anyone want to talk about Medicare? Anyone? Maybe not, but it’s one of those things that we all need to know about. And it’s complicated, so let’s get started!
What is Medicare?
As you may know, Medicare is health insurance offered through the federal government for people who are 65 years old or older (as well as those with disabilities or certain illnesses). You must be eligible for Social Security benefits in order to qualify for Medicare.
What are the different parts of Medicare?
There are several components of Medicare, and each one covers a different aspect of healthcare needs. The most common ones include:
Part A, which covers hospitals, nursing facilities and home health services
Part B, which covers doctor visits, diagnostic tests and durable medical equipment
Part D, covering prescription drugs, and
Part C, also known as Medicare Advantage, which is an alternative to Original Medicare, and covers everything Original Medicare covers, plus options to add vision, hearing and dental insurance. It also usually includes Part D for prescription drugs.
There are strict rules regarding Medicare enrollment.
One tricky part of starting down the Medicare path is enrolling on time. You can begin the process during a seven-month period starting three months before your 65th birthday called the Initial Enrollment Period. If you don’t sign up during that period, you could be assessed a late penalty as well as higher premiums.
However, if you miss this initial enrollment window, you can still sign up during the annual general enrollment period held from January 1st through March 31st each year. But remember, there can be undesirable consequences for enrolling late.
For those who have already begun taking Social Security retirement benefits, they will be automatically enrolled in Medicare Parts A and B, and it will take effect on the first day of the month in which he or she turns 65.
What if I’m still working at age 65 and I have health insurance through my employer?
There are exceptions if you are still working at age 65 and have health insurance coverage through your employer. In this case, you have a special enrollment period to sign up for Medicare without penalties. That enrollment period begins the month after you terminate your job, and it runs for eight months.
You may want to consider signing up for Medicare Part A on time, even if you do have health insurance coverage from your employer, because it is usually free, and it could cover some of the out-of-pocket expenses your other insurance doesn’t cover. However, if you are currently contributing to an HSA through your High Deductible Health Plan with your employer, you cannot continue contributing to that account if you sign up for Medicare too.
Can I get coverage for my spouse under my Medicare plan?
Some people believe that if they are covered, their spouse is also covered, but that is not the case. There is no family coverage under Medicare, and each spouse must file for his or her own Medicare plan.
How much will I pay?
If you are still reading this article, here are some details about the cost of coverage for each part of Medicare:
Part A: Most people qualify for Part A with no monthly premiums, as long as you or your spouse paid Medicare taxes for a certain length of time while working. In this case, it is considered a premium-free benefit. However, you will still likely have to pay a deductible and coinsurance costs for Part A.
Part B: There are monthly premiums for Part B based on your earnings. If your Modified Adjusted Gross Income (MAGI) two years ago was less than $85,000, your premium for 2019 is set at $135.50. Those monthly premiums go up as your income bracket goes up. And if you don’t sign up for Part B during your initial eligibility period, your premiums will be substantially higher for as long as you own your Part B policy! The deductible is $185 per year for 2019, and there is typically a 20% coinsurance after the deductible has been met.
Part C or Medicare Advantage Plans: These plans are administered by private insurers approved by Medicare, and there is a wide variety of coverages offered and coinciding costs. You must be signed up for Parts A and B to participate in a Medicare Advantage (MA) plan. Along with your Part B premium, you will also (usually) have another premium for your MA policy. It is important that you carefully compare plans and see which one will best meet your healthcare needs. Part C costs more than the original Medicare, but without this, or other supplemental insurance, you may have coverage gaps leaving you with medical expenses you can’t pay.
Part D: This prescription drug plan is also provided through private insurance companies, but Medicare pays for a portion of the costs. There are two ways to get this plan. You can either add Part D to your Medicare Parts A and B, or you can get prescription drug coverage through a Medicare Advantage (Part C) plan. The average cost for Part D premiums in conjunction with Parts A and B for 2018 was $34. These plans will also usually have a deductible, which can vary widely by plan, but Medicare mandates a cap on that deductible. In addition, most Part D plans also have a copay and coinsurance.
Plan Finder can help!
So, how do you possibly navigate all this information? Medicare has a Plan Finder tool that can help you find the best plan for your needs and budget. You can input your personal information, including the prescription drugs you use, along with your zip code and find the plan in your area with the best prices for your situation.
Where do I start?
And who knew? You actually sign up for Medicare through the Social Security office, not Medicare! You can contact them as follows:
*Online at www.SocialSecurity.gov.
*By calling 1-800-772-1213 Monday through Friday, from 7AM to 7PM.
*In-person at your local Social Security office. You can find the nearest office by going to https://www.ssa.gov>locator.
Finally, what is the difference between Medicare and Medicaid?
Both programs provide health coverage, but they are funded and run by different government entities in behalf of different populations. Medicare serves those over 65 or who have a disability, whereas Medicaid is run by the state and federal government providing health care for low income families. For more information on Medicaid, visit Medicaid.gov.
Moeller, P. (2016). Get What’s Yours for Medicare. New York: Simon & Schuster
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