Medicare

THE BASICS!

Part A: Hospital-ization.  No cost for coverage.*  Deductible & Copays apply If you work in the US you are taxed on your wages. One of the special taxes is for Medicare.  Once you’ve worked and paid into Medicare for 40 quarters, you qualify for Part A coverage with no premium payment.  If you haven’t paid in for 40 quarters, you would pay a monthly premium for Part A of $407 per month.   For anyone hospitalized, there is a $1,260 copay upon entering which covers you for 60 days.  Days 61-90 have a $315 daily copay.  Days 91+ have a $630 copay/day.
Part B: Doctors.  $104.90 Premium, $147 Deductible & Copays Apply* Unless you are disabled, your first opportunity to apply is 3 months prior to the month of your 65th birthday.  If you are still working and covered by an employer plan, you don’t have to sign up for Part B.  Generally premiums are $104.90 per month.  Programs exist to decrease or eliminate them for beneficiaries who are low income.  After paying the $147 deductible, you would pay for 20% of all covered expenses.  There are no limitations on how much you could spend annually if you were to encounter significant medical expenses.
Part D: Drugs** Part D covers drugs and generally speaking you can sign up for a Part D plan once you’ve signed up for Part B.  There are many plans available and they all treat drug costs very differently.  If you take any expensive drugs, you must choose your plan very carefully.

*  If you don’t sign up for Part B when you turn 65 or when you lose employer coverage, in the future you will be penalized by 10% per year for every year you didn’t participate.  So if you wait 5 years, you’d be paying 50% more in premiums when you do sign up.

** If you don’t enroll when you sign up for Part B, you will face penalties when you do acquire a plan.  The penalty is equal to 1% of the national average cost of a plan monthly and lasts from the time you sign up onward.  While that may not seem like much, they do add up pretty significantly.  If you didn’t have coverage for 5 years, that would be 12 months times 5 times $0.32 = $19.20 per month penalty, for the rest of your life.

Building on Basics

The whole point of insurance is to control your exposure to unexpected costs.  Once you are eligible for Medicare coverage your costs for managing health care generally goes down significantly, unless your employer has been paying for the lions share of the costs.  Yet Medicare alone leaves most people with more exposure than they are generally comfortable with.

So to build on the Basics there are generally two distinct paths:

1) Medicare Advantage Plans:  Generally these are localized HMO type plans, though there are some PPO and other types of arrangements.  The plan costs and benefits vary wildly by county (and in some cases, even by zip code).  For example, some counties might have plans that do not charge premiums, and have excellent benefits, while other counties have virtually no plans at all, or only plans that are rather expensive.  Often additional benefits are provided that are NOT covered by Medicare, such as gym memberships, dental, vision, hearing, acupuncture, transportation, etc. They also provide Maximum Out Of Pocket amounts, so in case of significant health problems, you know what your worst case scenario is.

These plans REPLACE Parts A&B, and in most cases also cover Part D benefits as well.  In most cases, you must see providors within a network, and have no coverage if you leave the network except in emergencies. It is important to review the cost/copay structure of a plan and see if it meets your individual needs.

2) Medicare Supplement Plans exist alongside Medicare Parts A&B paying for some or all of the deductibles and copays.  These plans are defined by the federal government and sold and serviced by various insurance companies.  These are much more flexible and in many cases reduce exposure greatly over a Medicare Advantage plan.  You don’t need to worry about networks, getting a referral to go to a specialist or getting treatments pre-approved as may be required with an HMO. So if you are someone who spends time in multiple locations this type of plan may serve you better. Unless you have creditable drug coverage, such as the Veterans Administration, you will need to get a Part D plan as well.

Speak to me or one of my advisors about what your options are and how you can get the best coverage available in your area.