In today’s ever-changing health care environment, understanding Medicare and its complexities is becoming more and more difficult. It’s more important than ever to fully understand how it truly works. If you are nearing retirement, you most likely have questions regarding enrollment and coverage. Below are common questions and answers about Medicare that will hopefully help you understand your options and avoid costly errors or gaps in coverage.
1) What does Medicare cover? Medicare is a national health insurance program that helps with the cost of health care but does not cover all medical expenses or long-term care. Medicare may cover many of your health-related expenses in retirement but it is still very important to think ahead about whether you need to buy a Medicare supplement policy and/or Long-Term Care policy to help cover additional costs. Medicare consists of four parts:
Part A - hospital insurance that helps pay for inpatient care in a hospital or skilled nursing facility, certain home health care and hospice care.
Part B - medical insurance that helps pay for visits to doctors and other health care providers, outpatient care, some home health care, durable medical equipment and some preventive services.
Part C Medicare Advantage (MA) – approved third-party health plans that combine Part A and Part B coverage and may include prescription drug coverage as well. Premiums and benefits vary greatly, so it’s a good idea to compare plans and networks in your area.
Part D – helps pay for the cost of prescription drugs. Under current regulations, Medicare Part A and Part B do NOT pay for:
Long-term care
Most dental care
Dentures
Cosmetic Surgery
Eye exams for prescription lenses
Routine foot care
Hearing aids and fitting exams
Acupuncture
You can pay for these services out of pocket or sign up for a Medicare health plan that covers additional services.
2) Do I have to enroll in Medicare if I am still working? Not necessarily. If your employer has 20 or more employees eligible for health insurance coverage and the coverage is similar to Medicare, you can delay enrolling in Medicare Part B without penalty, even if you’re over the age of 65. You may also choose to enroll in Medicare to fill in any gaps in your employer’s health insurance plan.
3) Is Medicare enrollment automatic? Not always. If you’re already 65 or older, you are automatically enrolled in Medicare Part A and Part B if you claim Social Security benefits, even if you later suspend your benefits. Medicare rules require you to sign up for Medicare during the three months before your 65th birthday and the three months after, even if you are not retired (unless your employer plan qualifies).
Failing to enroll during that initial enrollment period can be costly, because your Medicare premium may go up. If you missed your window, you can sign up during the general enrollment period between January 1 and March 31 each year.
If you were eligible for coverage under a group health insurance plan, you are entitled to an eight-month special enrollment period starting the month after you stop working. COBRA and retiree health plans are not considered eligible coverage; you will not qualify for a special enrollment period once that coverage stops.
4) How much will I pay in Medicare premiums? Most do not have to pay premiums for Part A if they or their spouse worked and paid Medicare taxes. You’ll have to pay a premium for Part B; if your annual income is above a certain level, you may have to pay additional monthly charges. Premiums for Part C and Part D vary by plan.
5) Can I make contributions to an employer-sponsored Health Savings Account if I am on Medicare? No. The IRS prohibits contributions to an HSA once you’re enrolled in Medicare. You can draw down money that you’ve contributed to the account but you can’t make any additional contributions. You may be able to use HSA distributions to pay certain premiums and out-of-pocket expenses related to Medicare, although you should certainly check with a qualified tax advisor first.
Medicare is complex and can be very daunting. Knowing your options and having a strategy in place that fits your individual needs is of the utmost importance. This article by no means covers all of the ins and outs of Medicare; it simply touches on several common questions related to the subject.
Frederic “Ric” Schilling is a Florida native, born in Jacksonville. Ric is president of Senior Guardians of America, a local North Florida firm specializing in tax reduction, long-term illness planning, asset protection, probate avoidance and life income planning. Ric is a national speaker and advocate on senior issues and has been featured by the Florida Times Union and WJXT, TV-4 in Jacksonville as an authority on estate planning and retirement issues. Senior Guardians has an A+ rating with the Better Business Bureau and is a member in excellent standing with the National Ethics Association. Contact Frederic: 904-371-3302 or 888-891-3381 Please visit: www.seniorguardian.comThis article is not intended to give tax or legal advice. Securities offered through Center Street Securities, Inc. (CSS), a registered Broker-Dealer and Member of FINRA & SIPC. Senior Guardians is independent of CSS.
