Planning for Medicare might be something you would like to avoid; but if you are anywhere near age 65, then understanding how Medicare works, and knowing how to get the most out of it, is one of the most important tasks you’ll undertake. Take the time to explore your options and plan ahead; you’ll go a long way toward managing your retirement health care expenses. To that end, here are five things to know about Medicare planning.
Understand Medicare’s Parts
Medicare has three basic parts:
- Part A, the hospital insurance portion, covers medical services when you are in a hospital or a skilled nursing facility (SNF). Medicare Part A usually does not have a premium.
- Part B, also known as medical insurance, covers doctor visits, outpatient services, lab tests, home healthcare, durable medical equipment and more. Medicare Part B usually has a monthly premium.
- Part D is optional prescription drug coverage and includes insulin supplies. Medicare Part D usually has a premium.
Know How to Get Your Medicare Benefits
You generally have two ways to receive your Medicare benefits. You can enroll in Traditional (Original) Medicare (Parts A, B and optional D). If you do this, then you can also enroll in a Medicare Supplement plan, sometimes called Medigap, to help pay for costs not covered by Original Medicare. Original Medicare offers flexibility and when combined with the right Medigap plan, can significantly reduce your out-of-pocket health care expenses.
Or you can enroll in a Medicare Advantage plan. This rolls all of your Medicare benefits – Parts A, B and optional D – into one plan. Private insurance companies sell these kinds of plans. They are sometimes called Part C. By law, they must provide the same coverage as Parts A and B. In many cases, they provide much more. Since these plans are usually HMOs, you must receive your care from inside the plan’s network. Your choice of doctors, hospitals, and pharmacies may be limited; but your monthly premiums are often lower than with Original Medicare.
Understand What Medicare Covers and What it Does Not
Medicare covers quite a bit, everything from hospital care to lab tests. There are some things, though, that it does not cover, including home health care, vision tests and procedures, hearing tests, dental costs, alternative medicines and some prescriptions, including fertility drugs and weight loss pills.
Know What Costs to Expect
Planning for Medicare also involves understanding Medicare’s deductibles and premiums. For most people, Medicare’s Part A is free, but it has a deductible of $1,364 in 2019. This deductible is applied per benefit period, which begins when you are admitted to a hospital or a SNF and ends when you have not received inpatient care for 60 days in a row.
Part B has a monthly premium – $135.50 for most people in 2019 — and it has a $185 deductible. After the deductible, Original Medicare pays 80% of most products and services. The other 20% is up to you or your Medigap plan.
For 2019, the average monthly Part D premium is $33.19, but premiums vary via plan, region of the country and more.
Know, too, that a Medicare Advantage plan will cap your out-of-pocket spending. The most common 2019 Medicare Advantage plan out-of-pocket limits range from $3,400 to $6,700, depending on the plan. Once you have reached your annual limit, then your medical services are covered for the rest of the year at no cost to you. About a third of Medicare recipients are enrolled in a Medicare Advantage plan.
Enroll on Time
If you are receiving Social Security benefits at age 65, then you are automatically enrolled in Medicare. If you are not receiving Social Security benefits at age 65, then you will have to manually enroll in Medicare and can do so within the three months leading up to your 65th birthday, during your birthday month or within the three months after your birthday. People who enroll late may have to pay higher premiums so pay attention as age 65 approaches.
Medicare is complicated. It takes planning and foresight to ensure that you make the right decisions at the right time to get the most out of it for the rest of your life. This means understanding Medicare’s parts and the differences between Original Medicare and Medicare Advantage, knowing what Medicare covers and what it does not cover, understanding the deductibles and premiums and making sure you enroll on time. If the process seems overwhelming, then contact us so we can guide you through it, map out a plan and make sure all your bases are covered. Our firm is standing by and looks forward to working with you.