As many of us start moving up the age scale, it might be prudent to know a little more about Medicare and what the process is. If you are under the age of 55, this will probably not interest you much, but all of the “Over 55’s” should start learning a little as we start planning for our Medical Future.
I will try to keep this as simple as possible so please discuss with your Financial Advisor before making decisions.
Here are some key questions:
- What should I sign up for?
- How much can I expect to pay?
- When do I need to enroll?
- What if I keep working beyond 65?
What should I sign up for?
Medicare typically is available at age 65 (or for younger people with disabilities). Planning early is always a good thing – even if you are much younger now.
Here are the different parts and what they cover:
- Part A (hospital coverage) covers things like inpatient hospital stays, some home health care, skilled nursing facility care and hospice; requires no out-of-pocket annual premiums; but has both annual deductibles and copays.
- Part B (medical coverage) covers things like doctor visits, outpatient services, X-rays and lab tests, as well as preventive screenings; carries both annual deductibles and copays; and requires monthly premium payments.
- Part C (Medicare Advantage) is a private all-in-one alternative to Medicare that covers the services associated with Parts A and B (and usually Part D). On the plus side, these bundled plans tend to be more affordable and may offer broader coverage (for example, vision, hearing and dental. Providers must be Medicare-approved. But the plans typically come with greater restrictions, and most plans act as HMOs and require plan participants to go to their network of doctors and health care providers.
- Part D (prescription drug coverage) is an optional add-on prescription drug coverage that requires monthly premiums, annual deductibles and copays. Your client will need to enroll in an approved plan and be covered under both Medicare Parts A and B (or Part C).
- Medigap is offered by private insurers to help fill any coverage gaps in Part A and Part B such as copayments, coinsurance, deductibles and potentially foreign travel health emergencies. There are 10 different types of Medigap plans—some cover more out-of-pocket costs than others.
Part A – available if you paid Medicare taxes for at least 10 years (40 quarters) If you paid less, you will be required to pay a premium.
If you are a high-income earner (Married $176,000 or higher) in the two years prior to filing for Medicare, there are surcharges that could be substantial that will be added to Part B and Part D.
Employer Plan or Medicare
You can choose to defer signing up for Medicare past 65 if you are working and are covered by your employer’s plan – no penalties involved. You will then need to enroll for Part A and Part B in the Special Enrollment Period that begins the month after your present coverage ends and lasts for 8 months.
Even if you are still working and covered by an employer’s plan when you turn 65, you may still want to sign up for Medicare as it is usually premium-free.
Deadlines and Penalties
This is more complicated than I want to go into here, but suffice it to say that you need to know the following:
Sign up in the 7 month enrollment period spanning the 3 months before you turn 65 and after.
There are annual enrollment dates that you want to be aware of:
- General enrollment period: Those who missed their IEP and SEP can sign up during Medicare’s General Enrollment Period (Jan. 1 to March 31) with coverage taking effect on July 1.
- Open enrollment period: You can join, switch or drop a plan each year from Oct. 15 through Dec. 7 with new coverage taking effect the following Jan. 1.
- Part C open enrollment period: If you enrolled in a Part C Medicare Advantage plan, you can change plans each year between Jan. 1 and March 31.
Important – There are no rewards for delaying your benefits, and indeed you can be penalized heavily if you fail to enroll on time. Part B penalties will mean you have a higher premium for life.
You can complete the enrollment process online at www.medicare.gov
About Dave
Dave Coen is a Retirement Income Certified Professional (RICP®) and Financial Advisor with SageView Advisory, and CEO of College Planning America. Along with his retirement financial industry experience, he is a College Planning Specialist. He works closely with individuals and families to provide comprehensive financial planning that addresses all elements of their financial picture. Learn more by connecting with Dave on LinkedIn. Please feel free to contact me if you would like to discuss how we can help you with your family’s plan either in person, over the phone, or on Zoom
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