This year's annual Medicare Open Enrollment period runs from October 15th to December 7th. Whether you're already on Medicare or about to claim your benefits for the first time, seniors need to make sure they get the care they need at a price that fits with the rest of their comprehensive financial plan.
On today's show, we answer listener questions about Medicare Open Enrollment to help you get ready for this important part of your annual planning process.
1. “What is the difference between traditional Medicare and Medicare Advantage? Is one more popular than the other?”
Let's do a quick review of the ABCD's of Medicare:
Medicare Part A is hospital insurance that covers inpatient hospital care, skilled nursing facilities, hospice, lab tests, surgery, and home health care. Seniors who earned income and paid taxes do not pay a premium for Part A.
Medicare Part B is medical insurance that covers doctors and other health care providers' services, outpatient care, durable medical equipment, home health care, and some preventive services. In 2023, the base monthly premium for Part B was $164.90, which covers 80% of your medical costs. Single filers earning more than $97,000 in 2022 income and joint filers earning more than $194,000 may have to pay an Income Related Monthly Adjustment Amount (IRMAA) on top of that base premium.
Medicare Part C, or Medicare Advantage, wraps together Parts A & B, and sometimes Part D prescription drug coverage. Medicare Advantage plans typically cover the 20% that traditional Medicare Part B doesn't, as well as some of the services Medicare doesn't cover, like vision and dental. Some Advantage plans also include health care perks, like paying for a gym membership. The trade-off is that while traditional Medicare B plans work anywhere that Medicare is accepted, signing up for an Advantage plan restricts you to a network.
A little more than half of the seniors on Medicare signed up for Advantage plans in 2023 and about half of the folks we work with at Keen Wealth are also on Advantage plans.
2. “My husband and I are retired. He just turned 65 and is now covered by Medicare, but I am 62. Can I enroll in Medicare during the Medicare Open Enrollment period?”
No. Medicare is healthcare coverage for individual seniors, not families. When you turn 65, you will enroll in your own plan, which might be very different from your husband's depending on your specific needs. Until then, you'll have to purchase individual health care from your state's marketplace. But before you sign up for a plan, make sure you run some numbers with your financial advisor to see if you're eligible for subsidies that could bring down the cost of your monthly premiums.
3. “I am in traditional Medicare and do not want to make any changes to my coverage. How does the Medicare Open Enrollment period affect me?”
If you're happy with your coverage, then technically you don't need to do anything during Open Enrollment.
But you should review your coverage and the plans available to you every year, especially your Part D plan. Formularies and prices change every year. If you don't review your coverage and you stay on a plan that's no longer covering the medication you need, you could be on the hook for much higher healthcare costs next year.
There have also been recent changes to the law that could affect Part D plans and your drug costs next year. Starting in 2023, the price of drugs can't rise any higher than the rate of inflation from one year to the next. And in 2024, the government will start implementing caps on the catastrophic coverage threshold for annual drug costs.
This time of year, seniors should also keep an eye out for any official correspondence from their current insurers. Some Medicare Advantage or Part D plans might not be offered next year. If your plan is canceled and you don't review your options, you'll automatically be moved to traditional Medicare Part B.
4. "I did not sign up for Medicare Part B when I first became eligible, but I do want to sign up now. Do I have to pay a penalty for late enrollment?"
Seniors can sign up for Part B three months before their 65th birthday and up to three months after. If you don't, you are subject to a 10% penalty on the cost of your monthly premium for the rest of your life. The only exception to this rule is if, at 65, you're still working and covered by your employer's plan or by a working spouse's plan.
5. "I recently made some travel plans. Does Medicare cover health care costs outside of my home state? What about outside of the U.S.?"
Traditional Medicare covers you anywhere in the U.S. where Medicare is accepted. Again, Medicare Advantage ties you to a network of providers. So frequent travelers who are on Advantage plans should use Open Enrollment to look for plans that will cover them if something happens away from home.
Outside of the U.S., Medicare typically doesn't cover very much. If you're planning to travel abroad you might want to look into supplemental "Medigap" plans or trip insurance policies that include medical coverage.
6. "OK, you've convinced me to review my Medicare options. What should I do?"
You can go to Medicare’s website to compare and select plans. If you call Keen Wealth to schedule your annual review before Open Enrollment ends on December 7th, we can help you coordinate with a trustworthy healthcare professional to make sure your Medicare plan and your comprehensive financial plan are in sync.
I hope this episode demonstrates how complex Medicare can be and how important it is to select the best plan for you. Let’s work together to lock down the coverage you need so that you can enjoy retirement more in 2024.
Bill Keen is a financial advisor with nearly 30 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he focuses on 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 Forbes, 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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