If you are approaching the age of 65, you may feel overwhelmed by the Medicare process. Or you may already be enrolled in Medicare wondering if you need more coverage. It’s not your fault. No matter where you turn be it television, social media, phone calls even text messages, you are being told you need a Medicare Advantage or Medicare Supplement plan. Maybe you do. Maybe you don’t. Before we dive into the pros and cons of these additional plans, let’s review Medicare, the cost, and coverage.
In 1966 Medicare introduced Part A for hospital insurance and Part B for medical insurance. Part A covers inpatient hospital care, skilled nursing, and hospice care. Part B covers outpatient services such as doctor visits, x-rays, lab tests, preventive care, emergency room visits, and medical equipment. Anyone who worked at least 10 years as a US Citizen and paid into FICA through payroll taxes will receive Part A with no monthly premium but will have to pay a deductible. Part B, however, comes with both a premium and a deductible. In 2024 Medicare Part A deductible is $1,632 annually while Medicare Part B monthly premium is $174.70 (if you meet the income test) with an annual deductible of $240. Your 2024 Medicare Part B monthly premium is based on the income you reported on your 2022 income tax return. If you earned $103,000 or less as an individual, or $206,000 or less if you are married and file your taxes together, you won’t pay any extra for Part B. Also worth noting is that after you meet your deductibles, you will still be responsible for 20% of all claims. There are also limitations on some services which is why you should check out the Medicare and You Handbook 2024. Also worth mentioning is that Medicare does not cover dental, vision, hearing services, or any long-term care expenses.
Now comes the tough part. Will Medicare Part A and B be enough coverage for you? This isn’t necessarily an easy question to answer. You may be healthy and financially able to take the risk of self-insuring. This simply means if you have a medical need that is not covered by Medicare Part A or B, you will pay the charges from your personal assets. Others of you may have insurance through your employer that you can carry into retirement that offers more value to you than Medicare Part B. And then there are some of you who aren’t healthy and will not be able to carry your employer’s health insurance into retirement. If that’s you, you have options. Regardless of which category you fall into, you will want to sign up for Medicare when you become eligible (age 65). Why you ask? 1) it’s free for most of us; 2) if you decline Medicare Part B you may have to pay a penalty that will increase your monthly premium by as much as 10%; and 3) at age 65 you qualify for guaranteed issue. This is a 6-month period that begins when you turn 65 or older and are enrolled in Medicare Part B wherein Medicare Advantage or Supplement companies must sell you a policy at the best available rate regardless of your health status and they cannot deny you coverage. This is a BIG deal!
I mentioned earlier if you are not healthy and cannot take your employer’s health insurance into retirement you have options. Those options include Medicare Advantage Plans. You may have heard mention of Medicare Part C and Part D and wondered why I haven’t discussed them in this post. That’s because Part C is Medicare Advantage Plans and Part D is Prescription Drug Plans. Both Parts C and D are Medicare-approved plans but are issued by private insurance companies. Part C is a private Medicare Plan that covers everything original Medicare Parts A and B cover and may also include Part D. The premium, deductible, co-pay, and coverage will vary from state to state and by insurance company. The thing to know is that they cannot deny you if you are within your 6-month guaranteed issue window. If you are not healthy and you will lose your insurance when you retire, this should help you breathe a sigh of relief.
Signing up for Medicare should not be taken lightly. It is a decision that will have a significant impact on your future finances. Please consult a seasoned Medicare Specialist 60-90 days prior to your 65th birthday to allow plenty of time to consider your options and make the best decisions for you and your family. If you need a Medicare Specialist referral, please go to JondaKnows.com/contact.