Medicare Twilight Zone
If you’re nearing age 65, you’re moving into a land of both shadow and substance; of things and ideas – you’ve just crossed over... into the MEDICARE TWILIGHT ZONE (dramatic music plays).
For many, that’s exactly what it feels like when they are first trying to understand the ins- and-outs of Medicare. By now, you probably know that Medicare is the government mandated healthcare program for adults age 65 and up who are no longer on their employer’s healthcare plan. But you still might be confused by some different Medicare options and jargon that comes along with them.
The different parts of Medicare are Parts A, B, C and D.
Part A is hospitalization, Part B is doctor’s services and tests and Part D is Medicare’s prescription drug benefit.
Part C, which is also called Medicare Advantage is a health plan offered by private insurers in an all-inclusive format. While many Medicare Advantage plans may have low or no premiums, they typically have slightly higher co-pays and deductibles than Original Medicare if you should ever need to use your insurance. Another potential downside would be that you are usually required to stay within the list of Doctors provided in you network. For many, this trade-off is well worth it. It comes down to personal preference.
Tip #1: Medicare is not free.
Some folks might be thinking “Wheeeeeee!!! When I get turn 65 the government will pay for my health care costs via Medicare.” Not necessarily so.
The costs of Medicare include a monthly Part B Premium of $134* that is taken out of your Social Security check each month (or higher depending on your income), a Part A Deductible of $1,316* per spell of illness, a Part B Deductible of $183*/yr. and a Part D Premium.
Then there are co-payments. Part A (hospitalization) covers the first 60 days. After that, days 61-90 you pay $329*/day and days 91-150 you pay $658*/day.
Part B pays for 80% of the assigned Medicare claim and you pay the other 20%. Anyone who has ever seen a medical bill knows that 20% could be an astronomical number, which is why many people choose to include a Medicare Supplement Plan or Medigap Insurance in their mix.
*2017 Prices via http://medicare.gov
Tip #2: Medicare does not cover everything.
Here is generally what it does not cover:
Care delivered outside the U.S.
Acupuncture and other alternative care
Amounts over Medicare-approved amountAmounts not covered by deductibles and coinsurance (20%)
Keep these things in mind when you are planning out your health care costs.
Tip #3: There is a penalty for failing to sign up for Medicare during the Initial Enrollment Period and it lasts for the rest of your life.
The penalty is 10% of the Part B premium for every 12-month period you failed to enroll in Part B. This can add up to a bunch of money wasted over your lifetime. You don’t want to find this out the hard way, so be acutely aware of when you should enroll in Medicare.
Tip #4: Know your Enrollment Periods.
Enrollment in Medicare Parts A and B is automatic for anyone receiving Social Security at age 65, so be very careful. Since full retirement age is now 66 and since many people choose to continue to work and defer Social Security, it may be no longer a given that people are receiving Social Security at 65. Therefore it is important to understand when they can, should or must sign up for Medicare.
Your Initial Enrollment Period begins three months before a person’s 65th birthday, and lasts a total of 7 months. There are special enrollment periods for those who have chosen to defer Social Security or have missed their initial enrollment period.
You only get ONE Initial Enrollment Period, however, if you ever want to make changes to your policy, the time to do it is during the Annual Election Period.
The Annual Election Period runs from October 15th – December 7th.
During this crucial timeframe, you can:
Change to a Medicare Advantage plan from Original Medicare, Part A and Part B.
Change from a Medicare Advantage plan to Original Medicare, Part A and Part B.
Change from one Medicare Advantage plan to another (regardless of whether either
plan offers drug coverage).
Enroll in a Part D prescription drug plan.
Change from one Medicare prescription drug plan to another.
Opt out of Medicare prescription drug coverage completely.
Changes you make during the AEP go into effect January 1 of the next year. This is especially important for folks with a Medicare Advantage Plan because these plans are allowed to change their fees and expenses annually. You absolutely need to review your plan every year for your benefit.
OK, let’s take a breather.
Now would be a good time to say that we offer a free Medicare Consultation to help you make the most informed decision possible. Making informed choices is easy and it starts with a simple conversation about what Medicare choices are available to you, how they differ from one another and how they fit with your own unique situation.
If you you'd like an experienced guide to help you wade through this Medicare Twilight Zone, CLICK HERE and let’s talk.