If you are getting Social Security benefits, you are signed up for Medicare. If you are not taking Social Security, you should sign up for Medicare about 90 days before your 65th birthday. Do not skip it. There are late-enrollment penalties.
There are a few other things to know about Medicare:
1. Many are shocked at the expense. Today 55 percent of Americans get their health insurance at work. They don’t think about the plan or the cost. Most people pay only a portion of the monthly premiums and they pay through payroll deduction, so they don’t notice what it costs. When they pay Medicare insurance directly, it seems expensive.
- You will have out-of-pocket costs.
- You need to budget monthly premiums.
- You will likely have noncovered services like dental.
2. Medicare alone is not enough.
- Part A, hospital insurance, has very high deductibles.
- Part B, medical insurance, has 20 percent coinsurance.
- There are no out-of-pocket limits.
3. Supplemental insurance is from private companies.
- Medigap benefits are standardized but the prices are not.
- Part D plans are very specific. Check your medicines and get the plan for you.
- Medicare Advantage has a lot of variables.
- Shop for supplemental insurance about five months before you sign up for Medicare to give yourself time to consider options.
4. If you are working and covered by an employer healthcare insurance plan, you should still sign up for Medicare at age 65.
5. You should sign up for Medicare at age 65 if you some other insurance besides an employer plan, such as:
- Small employer plans, less than 20 employees
- Retiree plan provided by a former employer to retired workers.
- COBRA, a continuation of company insurance after the worker separates from service. The participant pays all the premiums for the insurance. COBRA coverage works for a maximum of 36 months.
- Individual health insurance policy.
6. Supplemental insurance is not automatic. You need to choose private insurance to cover:
- Prescription drugs through Part D.
- Different plans cover different drugs. Shop for what you need.
- Plans change most years. Review everything every year during open enrollment in the fall.
- Gaps left by other Medicare coverage.
- Medigap plans to cover coinsurance and deductibles have standard benefits but not standard prices. Shop around.
- Medicare Advantage plans can change each year. Be sure to review options during open enrollment.
7. Medicare does not cover everything. Things not covered in basic Medicare Part A and B include:
- Care delivered outside the USA.
- Dental care.
- Vision care.
- Hearing aids.
- Cosmetic surgery.
- Acupuncture and other alternative care.
- Amounts over Medicare-approved amount.
- Amounts not covered by deductibles and coinsurance
- Long-term healthcare needs. It’s important to make a plan for this.
8. Supplemental insurance helps, but it’s not perfect:
- It will limit out-of-pocket expense.
- Wide array of plans available can be confusing.
- Medigap plans have standard benefits but not standard prices. Shop around.
- Medicare drug plans and Medicare Advantage plans can change each year. Be sure to review options during open enrollment.
9. Medicare will cost more out of pocket, for most families, than health insurance before retirement. Employer coverage with a high subsidy has an average annual premium of $600 while Medicare with supplemental part F coverage has an average annual premium of $3,600.
10. Higher earners will pay extra for Medicare.
Medicare is just part of your game plan for a secure retirement. You may want to talk with an expert about the big picture. A great place to start looking for an expert is to look for a CERTIFIED FINANCIAL PLANNER™ professional.
To find a CFP® professional near you, start your search here.
As you visit with financial planners, I suggest a couple things to check:
- Is the advisor always the client’s advocate – a fiduciary advisor?
- Is the advisor only paid by clients, not any financial product manufacturer or distribution network? That would be a fee-only advisor.
These two points help assure that you are working with a professional who is committed to your best interest at all times. It seems sort of obvious to me that a professional would work in this way, but it’s not automatic.
A fiduciary, fee-only, CFP® professional can help you make great retirement income choices and develop a comprehensive financial plan that is driven by your goals and priorities and addresses all aspects of your financial life. With a big-picture approach, you will be better prepared to understand your options at every step along the way.
Yes, I am a CFP® professional. I’m always a fiduciary and I only work on a fee basis. And yes, I’m still taking on a few great families to be part of my financial planning practice.
If this article has you thinking about your own circumstances, contact my office at email@example.com. I am always happy to meet with people who are working on their retirement plans. Dunncreek Advisors does not provide legal or tax advice, nor is this article intended to do so.