At age 65, if you are a U.S. citizen, you qualify for Medicare. Given the continual rising costs of healthcare this is a welcomed benefit. However, it does not arrive in the mail neatly wrapped in a bow – it can be very confusing. Recently the financial television show CNBC included a segment on its website outlining some of the issues that confront new recipients. Below are some of the highlights:
The initial enrollment period runs for seven months beginning three months before the month you turn 65 and ending three months after you turn 65. Those who have paid into Medicare for at least 10 years qualify for Part A at no cost. Part A covers the more catastrophic type of events such as hospital stays, skilled nursing facilities and hospice care. However, if a worker has not paid in enough hours some, or all, of the premium must be paid out of pocket. This can run up to $411/month.
People should also enroll in Part B which covers more routine items such as doctor visits and outpatient care. The standard premium is currently $121.80, which is an out of pocket expense. For those who cannot afford the premium there are government programs to assist.
The Social Security Administration automatically signs up anyone already receiving social security and then automatically deducts the premiums from their Social Security check. Even if you have deferred your Social Security benefits DO NOT miss the sign up window. Doing so will likely prove to be quite costly in the form of penalties, surcharges in future years and paying for coverage until the next general enrollment period, which runs January 1 through March 31 each year with coverage beginning July 1. There are two possible exceptions to this rule. The first is if you are covered by a younger spouse’s employer plan and the second is if you continue to work and are covered by your current employer’s plan. Regardless, don’t assume you are in the clear—make sure you research whether you need to sign up!
People can have the option of enrolling in Part C known as Medicare Advantage. These are the plans offered by private insurance companies and cover such things as vision, dental and prescriptions. Alternatively, if you have parts A&B you can sign up for Medigap to help cover health costs such as co-pays, deductibles and coinsurance. If you only desire prescription coverage you can opt for Part D which is slightly less expensive than Part C.
As advisors, we help guide clients through some of the basic ins and outs. However, we also strongly recommend you contact your local Social Security Office or www.ssa.gov as well as other websites to assist with enrollment and any questions you may have.
All comments and suggestions are welcome.
Denise Farkas, CFA®