Happy Medicare Season!
You might not be getting any Hallmark cards marking this Fall tradition, but if you are Medicare eligible, I know your mailbox is stuffed with notices from insurance companies, health care brokers, and the US government. That’s because the open enrollment period during which seniors can change their Medicare policies runs from now until December 7th. And even if you’re planning on sticking with your current coverage for another 12 months, there are some important things about your coverage as well as your spouse’s coverage that you should be considering before open enrollment closes.
On today’s show, we tackle four of the most common Medicare questions we’re fielding from clients at Keen Wealth right now. Hopefully this conversation will help you sort out the important notices about your health care coverage from the junk mail that belongs in your shred pile.
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1. When should I sign up for Medicare?
With a few exceptions, such as folks who are collecting Social Security disability, Medicare eligibility starts at age 65.
It’s important to understand that Medicare covers individuals, not families. So, you and your spouse will both need to enroll in Medicare separately. You might get the same plans, or if your health care needs are different, you might not. And if you’re not both 65 or older when the primary insurer retires, the younger spouse is going to have to make other arrangements for his or her health care, such as buying coverage off the healthcare exchange.
There are some instances where you might decline Medicare coverage at 65. You might still be working and getting insurance from your employer. Or you might be getting insurance from your spouse’s employer. But be aware that your enrollment period for eligibility begins three months before your 65th birthday and lasts until three months after your 65th birthday. If you don’t sign up for Medicare during that 7-month window or explain to the government why you’re delaying signing up, you’re subject to a penalty.
For the rest of your life.
No kidding! The government will charge you 10% of additional premiums per year, forever, if you don’t make a decision during your initial enrollment period.
So, what should you do with those letters from the Centers for Medicare & Medicaid Services? Make sure you open those, especially if this is your first year of eligibility for Medicare.
2. How much does Medicare cost?
No, Medicare is not free.
Technically, you’re not “charged” for Medicare Part A, which covers your hospital visits. But the only reason you won’t be billed a Part A premium is because you’ve been paying FICA taxes your whole working life. I’ll leave it to you to decide if that’s really free or not.
However, Part A is just one part of your Medicare picture. You will have to pay for a Part B plan, which covers expenses like doctor’s visits, and probably a Part D plan, which covers prescription drugs.
In 2019, Part B cost $135.50 and covered 80% of expenses. You can cover that 20% gap with a Medicare Advantage program, which is typically a very low premium or even free, or you can buy a supplemental “Medigap” policy, which charges a higher premium than Advantage plans, but gives you greater flexibility.
If you’d like a bit more information about the A, B, C, Ds of your Medicare options, take a look at this two-part blog series I wrote about Building Your Bridge to Medicare.
3. That sounds complicated. I already have Medicare and I like my plan, so I don’t have to do anything … Right?
Sort of… If you want to stick with the coverage you have, go ahead and continue to pay your premiums.
But it really is in your best interest to roll up your sleeves and dig into your options during Medicare Season every year. The plans that the government offers change. Monthly premiums change. And most importantly, your needs and your spouse’s needs are going to change as you both age. It’s important to make sure you’re getting the coverage you need and not paying extra for anything you don’t need.
In fact, we’ve had clients who’ve economized their health care expenses significantly just by comparing prescription drug costs at all their local pharmacies. It might be convenient to grab your prescriptions from the big box retailer where you do all your other shopping, but that little pharmacy across the street could be significantly cheaper.
4. But … That still sounds complicated. Where can I get help?
Clicking around a government website might not sound appealing, but Medicare.gov really does a good job of breaking down different topics and leading you to the answers you need. They also provide access to Medicare reps you can chat with right there on the website.
Another option is to call up a health care broker who can help you sort through your options and settle on plans that are right for you and your spouse.
And if you don’t know a good health care pro, call up my team at Keen Wealth. Helping our clients transition to Medicare is part of our checklist-driven process. We can help with this topic from the financial side, and we can get you in touch with reputable professionals who will help you on the enrollment side.
You’re not going to find a Medicare Season card from us in your mailbox but remember that we’re always here to help with this and any other part of your retirement planning.
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Bill Keen is a CHARTERED RETIREMENT PLANNING COUNSELOR℠ and independent financial advisor with more than 25 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he specializes in providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.
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