Finding the best Medicare option for your family
Last week we started to look at Medicare.
This week, we will continue on that path. Medicare is the primary source of medical insurance coverage for almost everyone over the age of 65. The main exceptions are an employee and spouse who are still working and covered by a credible health plan with 20 or more participants. People who retired and are on retirees' coverage must sign up for Medicare.
Many people hold off on retiring early because of health insurance costs. They believe that Medicare will take care of everything at 65. There are many things that Medicare does not cover. Long-term care can devastate retirement savings and there is no coverage for this in Medicare. Part A hospital cost has a deductible of up to $1,216 and conceivably you could be subject to this up to four times in a year. If you do any international traveling, Medicare will not cover expenses outside of the U.S.
Many seniors have issues with dental care, which is not covered. Also vision care and hearing aids are excluded. Cosmetic, acupuncture and alternative treatments are not covered. If you go to a doctor who charges more than Medicare-approved limits, you will be responsible for the excess charges. Medicare Part A covers the first 60 days in the hospital and there is a 20 percent co-payment.
These holes can leave expensive gaps in coverage. Most people use either a Medigap or Advantage plan to control out-of-pocket costs. Medigap policies are standardized options for supplemental coverage. You still have Medicare Parts A and B plus the Medigap policy. You will still pay the approximate $104 per month for Part B. Choose the Medigap policy that best fits your needs. Different plan levels cover different things, but all Plan F covers the same services. Usually, you can visit any doctor with this type of coverage. The cost of plans can vary between insurance options. No Medigap plans cover prescriptions or long-term care. You could still use a Part D plan to cover prescriptions.
Medicare Advantage plans are a little different. When you select one, Medicare pays the insurance company to manage your health care. You may be more restricted as to what doctors are covered by you plan. Some plans include prescriptions but none of them cover long-term care. Some plans have premiums as low as zero, although this is not always the best choice for you.
There are several enrollment periods for Medicare. The initial enrollment period is the three months before you turn 65, your birthday month and the three months after your birthday. There will be no late enrollment fee charged to you or concerns about pre-existing conditions. Affordable Care Act regulations on pre-existing conditions do not apply to Medicare, so you could be denied coverage. If you sign up in the three months before your birthday, coverage will begin on the first day of the month you turn 65. If you sign up in the other four months, there will be a delay in starting your coverage and you may experience a gap.
Special enrollment periods are for people who are exempt from signing up at 65 because they are covered by employer coverage for a group of 20 or more. You can sign up any time before coverage ends or up to eight months after your coverage ends. Waiting could expose you to an expensive gap. If you have prescription coverage at your job, you have 63 days to sign up for Part D.
The general enrollment period is January, February and March of each year.
This is for people who have not signed up on time. Coverage does not start until July 1. You will pay a penalty for the rest of your life and could be subject to medical underwriting. If someone advises to not sign up at 65 because you are healthy, this could be dangerous advice. If you got sick in April, you could not sign up until the following year and your coverage would not start until July (15 months away.) You would have no medical insurance for all of this time.
If your employer plan is a high-deductible plan with a HAS (health savings accounts), you should probably elect Medicare at 65 since you cannot continue to contribute to the plan after filing for Medicare. All of this discussion is about first starting Medicare and has nothing to do with the annual renewal for people already receiving the benefits. During this annual period, you should do a review to make sure you still have the best option for your family. Plans change yearly and so does your health situation. Often there are new choices that you did not have last year.
To help you get more information, we offer a free 24-page guide, “Retirement & Medicare.” There is in-depth information on many of the subjects that we discussed the last two weeks. To get your copy email your name and address to email@example.com.
Gary Boatman is a certified financial planner and local businessman who is president of the Monessen Chamber of Commerce.