Making the decision of when and how to file for Medicare can be one of the most confusing and stressful choices retirees have to face. And rising healthcare expenses could have a major impact on how fast you are going through your retirement savings. There's a lot you’ll need to know, and you may have questions to ask your financial advisor. Here are 3 of the most commonly asked questions about Medicare and some information that will help you be prepared.
1. WHEN SHOULD I APPLY?
You can sign up for Medicare during a seven-month window, called your initial enrollment period, which includes the three months before the month you turn 65, your birthday month and the full three months following your birthday month.It’s a little known fact that even if you are not planning on receiving your monthly SS benefits at age 65, you still need to SIGN UP FOR MEDICARE B as you turn 65 if you want this coverage without paying a penalty.
Many people are confused as to whether or not they should sign up for Part B at the same time as Part A. Naturally, most folks don’t want to end up paying premiums for Part B if they don't need the coverage. But timing Part B enrollment is a bit trickier and late enrollment can cause a permanent premium increase. If you DON'T sign up for Medicare Part B (medical insurance) when you're first eligible, your coverage may not start right away & you may have to pay a late enrollment penalty for as long as you have Medicare Part B.
One important thing you should think about is if you are covered under a group health plan based on current employment or not. If you don't have employer group coverage, then you should apply during your seven-month initial enrollment period.
If you are covered under a group health plan – whether your own employer or your spouse's – you could qualify for a special enrollment period (often abbreviated as SEP). The eight-month SEP starts the month after the end of either employment or the group health insurance coverage based on that employment – whichever happens first. It is crucial that you keep in mind that COBRA coverage does not qualify as employer coverage.
There are other things you should consider as well. For example, sometimes smaller employers require Part B coverage to be integrated with their existing insurance plans, though larger employers may not. You can always talk to your human resources department or insurance specialist to know whether Part B coverage is necessary.
2. WHAT ARE THE DIFFERENT MEDICARE PLAN OPTIONS?
Medicare has four parts: A, B, C, and D… each with different costs. This simplified breakdown below will give you a better sense of what each part entails.
- Part A is hospital insurance, including in-patient care, skilled home care and hospice services.
A majority of seniors who paid taxes into Medicare during their working years do not have to pay premiums for Part A coverage.
- Part B is medical insurance, including doctor visits, lab tests and some medical equipment.
Most people paid the standard monthly amount of $109 for Part B insurance in 2017. The cost may be higher for people with higher reported incomes.
- Part C is known as Medicare "Advantage." These are health insurance plans offered by private companies that are approved and regulated by Medicare.
With an Advantage plan, you get complete Part A and Part B coverage, and you have the same rights and protections of original Medicare. Advantage plans usually charge higher monthly premiums because they offer additional services and broader coverage. For instance, Medicare does not cover routine dental care, hearing aids or vision care, and many Advantage plans do. And, most Advantage plans offer prescription drug coverage as part of their main plan, so you don’t have to buy this coverage separately.
- Part D is for prescription drug plans (PDPs).
PDPs provide insurance coverage for your prescription drug therapies, and most plans are structured with premiums, deductibles and cost-sharing guidelines. Many PDPs classify their list of covered drugs into "tiers" each priced differently. In general, drugs in lower tiers, such as generic drugs, cost less than those in higher tiers, such as brand-name drugs. Drug lists and costs can vary greatly from plan to plan, so it’s imperative to find out if your prescription drugs are covered and how much they cost when you choose a PDP.
3. WHAT IF I ENROLL IN THE WRONG PLAN?
Regardless of whether or not you think you’re enrolled in the right plan, you should be reviewing your Medicare plan regularly to ensure you’re getting the right coverage at the right price. You could find that you are indeed enrolled for your desired Medicare plan, but what if you enrolled in the wrong plan? Not to worry, you can always change your Medicare coverage. You can actually revise your Medicare plan once a year during open enrollment, a set period when you can review your health and prescription drug plans and change them if you want to. Medicare open enrollment typically takes place from Oct. 15 to Dec. 7, and any changes you elect to make will take effect on Jan. 1 of the following year.
To find out how you can make the most of your Medicare benefits, talk with your advisor about your health care needs in retirement today.
We’re dedicated to helping you make the right choice about your Medicare plan.
Through Complete Medicare Services, our advisors can give you a 1-on-1 consultation to review your needs.
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