Do You Have All the Facts You Need for Medicare Enrollment?
Filed under: Managing Medical Costs, Life Events
There are two big milestones for any new retiree. One is filing for Social Security and finally collecting benefits from all of the contributions you’ve made to the system over the course of your career. The other milestone is filing for Medicare, which you can do when you turn 65.
Medicare is an important resource for most retirees. It covers a wide range of medical expenses. That’s a critical need, as many retirees often face an increasing number of health issues as they get older.
Before you file for coverage, though, it’s important that you understand your potential options, the filing process and even some of the limits on Medicare benefits. If you are aware of those items, you can plan more effectively and ensure that you have all the protection you need for health care costs in retirement.
Below are a few critical pieces of information about Medicare and how it fits into your retirement. Review this information, as well as all your other Medicare and health care data, before filing for coverage.
You have a limited window to enroll.
You’re eligible for Medicare when you turn 65, but that doesn’t mean you can sign up anytime after that date. In fact, you have only a seven-month window to enroll in Medicare parts A and B. That window consists of the three months before you turn 65, the month in which you turn 65 and the three months after your 65th birthday.1
If you don’t file during this time, you could face a 10 percent premium increase for each 12-month period beyond the initial window.2 If you’re still working at 65 and have employer coverage, you may want to check with your employer’s plan administrator. You will likely need to file for Medicare and then coordinate the two plans. Depending on your employer plan, Medicare may either be your primary coverage or be in place simply as a backup, secondary coverage option.
You have several Medicare options.
Many retirees assume that Medicare provides one blanket set of coverages. That’s not correct, though. You actually have a few different options available, and your selection of those options will influence your coverage and your premiums.
These options are known as “parts,” and you can combine them to develop the coverage that is right for your needs and budget. There’s Part A, which covers hospitalization. Part A is free for anyone who qualifies for Medicare. There’s also Part B, which covers doctor visits, X-rays, lab work and other outpatient services. Part B has a monthly premium. Parts A and B are often combined and referred to as “Original Medicare.”
A newer option is Part D, which provides coverage for prescription drugs. This is an optional feature, and it comes with an additional premium. However, prescription drugs are often part of any treatment plan, so Part D may be a worthwhile option to consider.
Finally, there is Part C, also known as Medicare Advantage. Part C is an option in which you use a private insurer to provide your Medicare benefits. The Part C alternative may have a preferable cost structure, or it may offer added benefits like vision and dental. Medicare parts can be complicated, so be sure to consult with a professional as you analyze your options.
Medicare doesn’t cover everything.
Another common misconception is that Medicare covers all health care costs for retirees. It doesn’t. In fact, Fidelity estimates that the average 65-year-old couple will spend $245,000 out of pocket in retirement on health care costs not covered by Medicare.3 That includes things such as copays, premiums, deductibles and more
Also, that figure from Fidelity doesn’t include long-term care, which may be a need for many retirees. Medicare will cover some forms of care, but only in specific situations, and the coverage is often temporary and partial.
While Medicare is a helpful resource, you may need other assets and income to cover all your medical expenses. Be sure to evaluate your assets and develop a plan to pay for those costs.
Need help planning your health care budget and your Medicare options? Contact us at Ambrose Financial & Insurance Services in Walnut Creek, California. We can help you analyze your needs and develop an appropriate strategy. Let’s connect soon and start the conversation.
3https://www.fidelity.com/about-fidelity/employer-services/health-care-costs-for-couples-retirement-rise
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CA Insurance License No. 0F95178
16068 – 2016/8/31
