The rising tide of retiring baby boomers means that more of our
clients are asking for advice on when and how to start
Social Security and Medicare benefits.
As we were reminded in a recent BenefitPro article:
In most cases, Medicare premiums are automatically deducted from Social Security benefits. Enrollment decisions often are made around the same time.
Here are the 9 most frequently asked questions:
- When should I start making Medicare decisions? ANSWER: In the third month before your 65th birthday is the first date you can sign up for Medicare Parts A and B. If you file your application at least 2 months before your 65th birthday, both parts should begin on the first day of the month in which you turn 65. Part A is free for qualifying individuals and Part B costs most people $104.90 per month in 2014.
- Why might my Part B premium be higher than $104.90 per month? If so, does it still pay to choose Part B? ANSWER: It might be higher if your “modified adjusted gross income (MAGI) you reported on your federal tax return two years earlier (i.e., in 2012 for 2014 Medicare purposes) is above $85,000 for an individual or $170,000 for joint filers…You should choose Part B when you turn age 65 for several reasons. First, even if you must pay higher premiums, it’s still not a bad deal. The highest monthly premium ($335.70) is designed to cover 100% of Part B’s actual cost. Second, you must have both parts (A & B) to qualify for Medigap coverage. Third, if you do not choose Part B by the third month after the month in which you turn age 65, your premiums will be permanently higher. Finally, you can always change your mind and cancel Part B later, if that’s what you really want.”
- Do I need a Medicare Supplement (“Medigap”) policy right away? ANSWER: “Yes, it’s a good idea. Otherwise, you are vulnerable to paying out-of-pocket for gaps in original Medicare.” See page 2 of the BenefitsPro article for a good, more in-depth answer.
- Which Medigap plan should I choose, and what should I expect to pay? ANSWER: As stated in the article, “Medigap programs fall into one of 14 standard designs identified by letters A through N…The basic Medigap policy (Plan A) usually is the least expensive – typically costing about $130 to $260 per person per month…Weiss Ratings offers a free Medicare Power Planner tool that you can use to see the range of Medigap prices in your zip code, for all plan designs” (or you can contact our office so one of our experts can help you decipher what may look like “mumbo jumbo.”)
- Should I choose a Medicare Prescription Drug Plan (Part D) immediately at age 65? ANSWER: “Yes, in most cases… If you don’t participate in Part D by the third month after the month you turn age 65, your premiums will go permanently higher (as in Part B)…If you make a mistake in choosing a Part D plan at age 65, you can shop around and switch plans each year during the Open Enrollment period from October 15 through December 7.” Again, our experts will be happy to help you lessen the chance of choosing the wrong plan.
- What is Medicare Advantage (Part C)? ANSWER: “It creates a choice that is now available to virtually all Medicare participants, allowing participants who have Parts A and B to receive treatment through private health insurance plans…Medicare Advantage plans must provide all benefits of Part A and Part B coverage, including emergency and urgent care…People who participate in Medicare Advantage do not need separate Medigap coverage, and by law Medigap can’t be sold to Medicare Advantage participants.” Our experts are available to help you sort through the applicable Medicare Advantage plans available to you.
- Are there any drawbacks to Medicare Advantage plans? ANSWER: “Yes. Medicare Advantage plans may have different deductibles and co-pay arrangements than original Medicare, and they may charge extra premiums.”
- Are Medicare and Medigap premiums deductible? ANSWER: It depends. The third page of the article provides a good, detailed answer.
- What’s a smart plan for starting Medicare at age 65? Here’s their excellent answer:
For most people it is: 1) Apply early, three months before the 65th birthday; 2) Participate in Parts B and D; 3) Choose affordable plans for Medigap and Part D; and 4) Keep shopping for better Medigap and Part D coverage and, if warranted, switch plans during the first Open Enrollment period. Expect to spend about $3,000 to $4,000 per person per year for the full package, and recognize that comparable private insurance would cost three to four times more (depending on your age). The Medicare trust fund is scheduled to run out of money in 2026, so it’s also smart to expect the total cost of a Medicare/Medigap package to increase gradually during retirement, as seniors are forced to pick up a larger share of the tab.
Is your question part of the above 9?
Do you have more questions than we addressed in this FAQ post?
If so, reach out in the comments section below, on our facebook page or by completing the confidential form below, or even calling us at 877.789.5831