Medicare Revisited
Published On: August 30, 2023
Written by: Ben Atwater and Matt Malick
We wrote to you about Medicare in years past, but because various clients are always approaching Medicare eligibility, we thought it would be helpful to revisit the subject.
Medicare is vital for Americans after age 65. Knowing the basics of Medicare is important not only for seniors, but also for their children – and even their grandchildren – as relatives often need assistance navigating the system.
Whether you are approaching Medicare age, currently enrolled in Medicare, or simply looking for more information to help friends and family, we believe this information will be useful to you.
Americans qualify for Medicare at age 65. You must enroll in Medicare beginning in the three months before your 65th birthday, the month of your birthday or the three months following your birthday. If you do not sign up for Medicare during this window, you will face a lifetime penalty on your premium.
However, if you are still employed and your employer provides your insurance, then the lifetime penalty likely will not apply and you can probably wait to enroll in Medicare.
Medicare Part A:
- You are automatically enrolled in Medicare Part A if you are receiving Social Security. If you are not getting Social Security, then you will need to sign up for Medicare Part A.
- Most Americans who have worked for at least ten years will have accumulated enough credits to receive their Part A premium at no cost.
- Part A covers inpatient hospital care, skilled nursing facility and home health care (for up to l00 days per benefit period and only for temporary conditions), and hospice care.
Medicare Part B:
- Medicare bases Part B premiums on income levels. The below Medicare table outlines the 2023 income-based premiums, which are based on tax returns filed in the previous calendar year, in this case your 2021 return filed in 2022. (Please note that 2024 figures should be released in the coming weeks.)
- Part B covers portions of doctor’s services, outpatient hospital care, lab tests, outpatient physical and speech therapy, home health care, ambulance services, and medical equipment and supplies.
Medigap/Supplemental Plan:
- Recipients should pair a Medigap or Supplemental Plan with Part B.
- There are ten types of these plans (Plan A through Plan N) that each have slightly different coverage schemes. Please see the below Medicare table summarizing coverage.
* Plans F and G offer a high deductible plan in some states.
** Plans K and L show how much they’ll pay for approved services before you meet your out-of-pocket yearly limit and Part B deductible. After you meet them, the plan will pay 100% for approved services.
*** Plan N pays 100% of the costs of Part B services, except for copayments for some office visits and some emergency room visits.
- Private insurance companies offer these policies according to a diligent set of government mandated standards, but pricing and service can vary widely.
Medicare Part C:
- Part C is better known as a Medicare Advantage Plan.
- This is used as an alternative to Medicare Part A and Part B (and Medigap).
- Private insurance companies offer these plans.
- If you are in good health, need limited medical services and generally stay within one geographic area, these plans are worth a look as you can potentially save money on premiums.
- If you have a large Health Savings Account (HSA) balance, you may want to favor a Medicare Advantage Plan as you can pay premiums from an HSA as a qualified expense.
- Medicare regulates these plans, but the plans are not standardized and require careful shopping.
- Part C plans include a drug coverage component, effectively bundling Part D with Parts A and B (and Medigap).
Medicare Part D:
- Part D plans are independent of Part A and Part B plans.
- This is the prescription drug benefit.
- You can choose your plan from private insurance companies.
- There are a variety of Part D plans available, the more comprehensive the prescription coverage, the higher the premium. There is also a premium adjustment for higher income earners.
- You cannot enroll late without facing a lifetime penalty on your premiums.
Even for the wealthy, healthcare is an important aspect of retirement planning.
Under current law, clients over 65 years of age can rely on Medicare to cover most of their doctor and hospital expenses. Over one’s lifetime, the premiums, deductibles and co-pays for Medicare will add up, but Medicare offers relatively comprehensive coverage at affordable prices.
If you need assistance selecting your Medigap, Part D, or your Part C, we can offer you a trusted referral.
Additionally, the Medicare website is incredibly well organized and offers a great resource: http://www.medicare.gov/.
