Every day for the next two decades, roughly 10,000 individuals will turn 65. The biggest wakeup call for many of these individuals will be that when they retire, the company they thought would take care of them in retirement, doesn’t do that anymore. They will now be fully responsible for their healthcare choices.
That’s right: fully responsible.
Aside from small business owners and private contractors, most workers have enjoyed the privilege of being partially subsidized by their employers—usually to the tune of about 50%-75% of the total premium—regardless of age or health conditions. These large group policies have provided employees with a sense of comfort, stability, and consistency throughout their working lives, and many believe that this will continue after age 65, when Medicare steps in.
This is simply not the case.
Everyone approaching age 65 has a seven-month window to register for all benefits that Medicare has to offer. This period begins 3 months prior to the 65th birthday, the month of the 65th birthday and then 3 months after. It is basically free for most, but some may expect to pay premiums based on income. Medicare A is not an all-inclusive insurance. It covers most hospital care, including impatient care, skilled nursing facilities, and hospice care, but not all services.
Medicare Part B is supplementary, but everyone enrolled must pay (based on income). It covers most other necessary medical services, such as doctor visits, physical therapy, medical equipment, etc. Most people pay a monthly premium of a little more than $ 100 per month.
So far, we have two pieces of the pie that the retiree needs to be responsible for; neither and are free and only cover a portion of services. Confused?
We’re just getting started.
Let’s skip Medicare Part C for now and jump to D—for Drugs and Donut Hole. Part D covers prescription drugs. Sound simple? Have a calculator? In 2016, enrollees are responsible for 100% of their first $ 360 if the plan has a Deductible. After the Deductible, the enrollee pays the coypayments or coinsurance as dictated by the plan benefits. Once the total money spent by you and the insurance company reaches $3310, you enter the “donut hole” where you pay 58% of the plans negotiated cost of the medication for Generic drugs and 45% for Brand drugs. Once you reach $4850 in TrOOP money (True Out of Pocket) you enter catastrophic coverage and you will pay $2.95 for Generics and $7.40 or 5% for Brand drugs, whichever is greater . Got that? Lets go back to C.
Medicare Part C or Medicare Advantage health plans offer all of the benefits covered under Original Medicare and more. Many plans have NO additional premium beyond your Medicare Part “B” premium which you must pay. For plans with a monthly premium, rates are not based on age, gender or health condition. Also, most plans include Medicare Part D prescription drug coverage. Depending on where you live, you may have several Medicare Advantage plans to choose from. To enroll in a plan, you must be eligible for Medicare Part A and continue to pay your Medicare Part B premium, unless otherwise paid for under Medicaid or by another third party.
Another plan option is the Medicare Supplement. Medicare Supplement Insurance (also called a “Medigap Policy”) is private health insurance that is designed to supplement Original Medicare. This means it helps pay some of the health care costs (or “gaps”) that Original Medicare doesn’t cover (like copayments, coinsurance, and deductibles). If you have Original Medicare and a Medigap policy, Medicare will pay its share of the Medicare-approved amounts for covered health care costs. Then your Medigap policy pays its share.
Every Medicare Supplement policy must follow Federal and State laws designed to protect you, and the policy must be clearly identified as “Medicare Supplement Insurance.” Medicare Supplement policies are identified by letters “A” through “N” and are “standardized”. Each standardized Medicare Supplement policy must offer the same benefits, no matter which insurance company sells it. Plan “F” is Plan “F”. The plan premium is usually the only difference between policies with the same letter sold by different insurance companies.
When purchasing Medicare Insurance, you must live in the plans service area and there are some other rules you must follow.
You may enroll in:
Medicare + Part D
Medicare + Supplement + Part D
Medicare Advantage that includes part D
Medicare Advantage (MA Only PFFS) + Part D
You May NOT enroll in:
Medicare Advantage + Medicare Supplement
Medicare Advantage (MA Only HMO-PPO) + Part D
Sound overwhelming? It is.
Most American workers have enjoyed the luxury of participating in employer-subsidized healthcare plans that minimize the decision-making process. Unfortunately, there is an alarming misconception shared by the vast majority of the 10,000 Boomers celebrating their birthday today: that Medicare will pick up where their old plans left off.
Nothing could be further from the truth.
In fact, it can be argued that most people do not understand Health Insurance. Most people do not realize how many choices there are. This can be a daunting situation, as elderly citizens who do not understand Medicare can be vulnerable to purchasing coverage that they may not want or need.
Best advice: Find a knowledgeable Broker. If you prefer to do things without Professional help, check the Medicare website, become knowledgeable about the different coverage options, and make sure that you have enough savings to cover any unexpected out-of-pocket expenses.
Oh…and Happy Birthday.