It’s important to enroll in Medicare as soon as possible to avoid a gap in coverage or potential penalties for late enrollment. To begin receiving benefits the month you turn 65, you’ll want to make important decisions about your Medicare options three months prior to your 65th birthday.
Sorting through the Medicare alphabet can be challenging. How do you get started and what do you need to know before you enroll? The first step is to visit the government’s Medicare site at www.medicare.gov, which provides a step-by-step guide for choosing the options and coverage you need. Keep in mind that different parts of Medicare cover specific services.
Below is a quick summary:
Part A hospital insurance covers inpatient hospital care, skilled nursing facility, hospice, lab tests, surgery, and home health care.
Part B medical insurance covers doctor and other health care providers' services, outpatient care, durable medical equipment, home health care, and some preventive services.
Part C, a Medicare Advantage Plan, is a Medicare health plan offered by a private company that contracts with Medicare to provide you with all your Part A and Part B benefits. Most plans offer extra coverage, like vision, hearing, dental, and/or health and wellness programs, as well as prescription drug coverage (Part D). In addition to your Part B premium, you usually pay a monthly premium for the Medicare Advantage Plan.
Part D is prescription drug coverage, which can also be obtained through a Medicare Advantage Plan offering Medicare prescription drug coverage.
Medicare Supplement Insurance (Medigap) policies are sold by private companies and can help pay some of the health care costs that Medicare Parts A and B don’t cover, like copayments, coinsurance, and deductibles. If you have Medicare and you buy a Medigap policy, Medicare will pay its share of the Medicare-approved amount for covered health care costs first, then your Medigap policy will pays its share of the remaining costs. Some Medigap policies also offer coverage for services that Medicare Parts A and B don’t cover, like medical care when you travel outside the U.S.
Below are a few things to know before you purchase a Medigap policy:
You must be enrolled in Medicare Part A and Part B.
If you have a Medicare Advantage Plan (Part C), you can apply for a Medigap policy, but make sure you can leave the Medicare Advantage Plan before your Medigap policy begins.
You’ll pay a private insurance company a monthly premium for your Medigap policy in addition to the monthly Part B premium that you pay to Medicare.
A Medigap policy only covers one person. If you and your spouse both want Medigap coverage, you'll each have to buy separate policies.
You can buy a Medigap policy from any insurance company that's licensed in your state to sell one.
Like other Medicare options, Medigap does not cover long-term care costs such as extended in-home or nursing home care.
While many people are automatically enrolled in Medicare Parts A and B, others who meet certain criteria (for example, you’re not receiving Social Security benefits because you’re still working) must take steps to enroll in Part B. Medicare also offers Medicare Advantage Plans (Part C), Part D drug coverage, and optional Medigap supplemental insurance which you must select and pay for yourself. You can learn more about the different options by visiting www.medicare.gov.
Most people who are eligible to receive Medicare benefits pay no premium for Medicare Part A. However, upon enrolling in Medicare, you will need to factor premium costs into your budget for benefits available under Parts B, C, D and Medigap, based on your needs and preferences. Medicare Parts B and D premiums are determined by your modified adjusted gross income (MAGI), which is adjusted gross income plus tax-exempt municipal bond interest, calculated for two years prior. If your MAGI is even one dollar over a premium threshold, you’ll be subject to the higher premium.
That’s where a little planning can help. Many people can avoid entering a higher premium bracket just by managing their income. One way is to take a higher percentage of income in retirement from sources not subject to the MAGI calculation, such as qualified retirement plans, reverse mortgages, or the cash value from certain life insurance contracts. And once you reach age 70 ½, qualified charitable distributions (QCDs) offer another alternative for reducing MAGI.
Medicare preparedness varies by personal financial situation. If you have questions or concerns about your Medicare options and/or plan, please give the office a call at 407-351-3476 and dial extension 5 to schedule a time to meet.