From Retirement Now Newsletter October 28th, 2021
Last week I discussed some Medicare decisions you need to be taking (if you’re on Medicare) during the annual election period that is currently going on right now. Continuing on with the theme of Medicare… I came across a good article that summarizes in 11 points a good deal about how Medicare works.
Now there is a lot of confusion on how the Medicare system works because it does have a lot of moving parts.
For instance you have the alphabet of Parts: A, B, C, and D
But then you also have the alphabet of Medicare Supplements: Plans A, B, C, D, F, G, etc.
Then there are Advantage Plans and Prescription Drug Plans.
So with anything, as more features and benefits are added the more complex something becomes.
Back to the article I came across. It’s from Kiplinger and is titled “Medicare Basics: 11 Things You Need To Know.”
Here is the list:
1 Medicare comes with a cost. Part A is free for most people if they, or their spouse, paid Medicare payroll taxes for at least 10 years. Part B requires a monthly premium of $148.50 in 2021 and it will likely be increased for 2022.
2 A Medigap Plan can fill the gaps in traditional Medicare, and by “traditional” Medicare it means Parts A & B. You can switch Medigap Plans (also called Supplements) at any time during the year. However you may have to go through underwriting. If you are still within 6 months of signing up for Part B you will be accepted with no underwriting. Plan F Supplement was the most popular but is not available to people that were not on Medicare before 2020. But Plan G is the closest to Plan F, the only difference being it doesn’t cover the Part B deductible.
3 Consider Medicare Advantage plans. This is Part C of Medicare. There are many different plans with different monthly premiums. There are some zero premium plans as well. You will typically have co-pays and co-insurance costs with these plans and you need to make sure your provider is in network, or else you may pay more for services. Advantage Plans do not work in conjunction with Medigap plans.
4 High income earners pay more for Medicare. The Part B deductible is typically $148.50 in 2021. But if you make over $88K (single) or $176k (married filing jointly) your Part B monthly premium could be anywhere between $207.90 to $504.90… depending on how much higher your income is. Same is true for Part D prescription drug plans, they could add an additional $12.30 to $77.10 per month to your prescription drug plan’s monthly premium.
5 When to sign up for Medicare. If you’re already drawing Social Security you’ll be automatically enrolled in Part A and B when you turn 65. You can choose to turn down Part B. But if you keep it they will deduct the premium from your Social Security check. If you’re not drawing Social Security yet you will need sign up for Part A & B, and you will have 3 months before the month you turn 65, the month of, and 3 months afterward, a total of 7 weeks to sign up.
6 The Medicare Enrollment Periods. There’s the 7-month period mentioned above to sign up for Part B. If you miss that window there’s a time from January 1st to March 31st to sign up for Part B, with coverage starting July 1st. Then there’s the Open Enrollment period (going on right now) which goes from October 15th through December 7th where you can make changes to Part D drug plans and Part C Medicare Advantage Plans. Then from January 1st through March 31st Medicare Advantage enrollees can make a switch to a different plan or disenroll and go back to Original Medicare.
7 The Part D doughnut hole has been filled. The doughnut hole was a point in a prescription drug plan where you had to pay much higher out of pocket costs for your drugs. But in 2020 it went away. Now, for 2021 at least, once the total amount your plan has paid for drugs reaches $4,130 you will pay 25% of any additional costs, this percentage used to be higher before the doughnut hole was filled.
8 Preventive services. You get a free annual wellness benefit. You also get cardiovascular screenings (every 5 years), annual mammograms, flu shots and other screenings.
9 Telehealth offerings expanded. Medicare Advantage plans have been doing this for years. But thanks to COVID this has been expanded under traditional Medicare as well.
10 Medicare doesn’t cover everything. Long term care is not covered by Medicare. These include things like care to help you with activities of daily living, like eating, bathing etc.
11 You can appeal Medicare decisions. If you disagree with coverage provided, you can appeal the decision.
Remember, Medicare is just one part of an overall retirement plan. If you need help with your retirement feel free to reach out to me for a 20-minute phone chat to ask any questions you may have.