Retirement Planning

Medicare

Similar to other government programs, Medicare is intended to help people, which it does, but is quite complicated and confusing. I’m going to attempt to simplify and condense Medicare as much as I can in the limited space of a newsletter. Most of this content comes from 65 Incorporated, a firm that provides Medicare guidance and answers. 

Medicare enrollment is a process of six steps.

  1. Check your timing – Is it best for you to enroll at age 65 or delay Medicare?
  2. Choose Your Medicare Path – which type of coverage is best for your needs?
  3. Select your specific plans – don’t pick your plans before Step 3. Be patient.
  4. Enroll in Medicare.
  5. Enroll in your specific plans.
  6. Review your coverage annually – each year, plans change. Review your coverage options.

Most resources today focus on Steps 3 to 6 but few help with Steps 1-2. According to Melinda A. Caughill, co-founder of 65 Incorporated, most Medicare mistakes are made in Steps 1 and 2. One mistake can cost thousands of dollars and be permanent. 

Some of the more prevalent factors that can impact timing are the following:

  1. Social Security benefits status
  2. Type and quality of health coverage
  3. Employer size
  4. Employment status
  5. HSA status

Consulting with a Medicare expert can help you to determine the best timing for your unique situation. 

Determining the right path for Medicare coverage can be confusing because so many parts and letters get thrown around that you can feel like you’re swimming in alphabet soup. The reality is Medicare has three parts and two paths. The first path is Original Medicare with a Medigap policy while the second path is Medicare Advantage. 

Original Medicare starts with Part A and Part B, which can then be supplemented by a Part D prescription drug plan and Medigap policy. By adding Part D and a Medigap plan, you create comprehensive coverage. If you opt for the original Medicare path, you have a $1,484 hospitalization deductible with Part A and 20% coinsurance on healthcare services with no out-of-pocket limit with Part B. In other words, you would have to pay 20% of all your medical bills outside of hospitalization. For this reason, you want a Medigap policy because it would provide coverage of the payment gaps in Parts A and B, all for a monthly premium determined by where you live. Original Medicare is administered by the U.S. Government and allows you to see any provider who accepts Medicare. There are no networks!

Medicare Advantage is the other Medicare path you can take. It is administered by private insurance companies. As a result, you are required to follow the rules of the insurance company which include seeing providers in a network that can change at any time, obtaining prior authorization for certain medical procedures and services, and paying deductibles, co-pays and coinsurances up to an out-of-pocket limit. It’s often referred to as the HMO version of Medicare. However, there are sub-options within Medicare Advantage that are relatively new and appealing to some such as Medical Savings Account plans. I plan to go into more detail on MSA plans in next month’s newsletter.  

What I’ve provided here is an overview and should not be relied upon to make any decision related to Medicare timing or choosing a Medicare path. This is for informational purposes only. I highly recommend you consult with a Medicare/insurance professional who can offer you more detail and counsel tailored to your specific situation.