Medicare: The Basics

Medicare is a complex topic but also an important tool for financial planning during your retirement. You will no doubt be inundated with flyers, pamphlets, and marketing materials from multiple companies and organizations—as you approach your 65th birthday. It can become very overwhelming, so here are five quick things that will help you get a basic understanding of Medicare and what you need to do now to prepare for the big 6-5!

1.) Medicare is health insurance for people 65 or older and people under 65 with certain disabilities. Original Medicare (Parts A & B) pays for about 80% of your health care costs. There are (4) main ‘Parts’ you will hear when talking about Medicare.

Part A– Hospital Coverage- part of Original Medicare
Free to most people

Part B– Doctor Coverage- part of Original Medicare
Has a monthly premium (based on income*) and a yearly deductible (the 2017 deductible amount is $183

Part C– Medicare Advantage- offered by private insurance companies
Takes the place of Original Medicare and usually combines Rx coverage

Part D– Rx Drug Coverage- offered by private insurance companies
Separate monthly premium

Original Medicare pays approximately 80% of qualified expenses, which leaves a gap of 20% that would be out-of-pocket for you.

There is currently no cap on the amount that the 20% could reach.

2.) It is important to know what qualified expenses are. Your ‘Medicare & You’ guide will have detailed information on this but here are a few examples of things Medicare does not cover: long-term care, eye exams for glasses, most dental care, dentures, hearing aids or exams, prescription glasses or exams, cosmetic surgery, routine foot care and acupuncture.

3.) You have options! You can choose Original Medicare (Parts A & B) or you can choose a Medicare Advantage Plan instead.You can also choose to add Supplemental coverage (for an additional monthly premium) to Original Medicare that would cover the approximate 20% gap in out-of-pocket expenses.

4.) There are penalties and fees for failing to enroll into Parts A, B, and D within a specified time frame. There is a 7-month window around your 65th birthday in which you can sign-up for Medicare and have guaranteed approval for any Rx drug, Advantage, or Supplement Plan you choose. You need to enroll in Medicare during this 7-month window to avoid late enrollment penalties/fees.

The 7 months covers 3 months prior to, the month of, and 3 months after your 65th birthday month.

You can enroll in Medicare online (www.medicare.gov) or at your local Social Security office.

5.) Use your resources! Medicare’s website (www.medicare.gov) is a wonderful tool to research, compare and shop for plans, companies, etc.If you are currently employed or covered by an employer health plan, talk to someone in your HR or benefits department as soon as you turn 64; the timing for signing up and your coverages may vary from the normal Medicare process.

As the time approaches, make sure that you complete the necessary steps to take advantage of the Medicare benefits which you have earned. For more detailed information, click here for our upcoming Parsec Newsletter  for an article called “Medicare: What you need to know before you turn 65.”

 

Lori King, RP®, Client Service Specialist

 

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