The ABCs of Medicare benefits
By Kathryn Beach
Medicare open enrollment begins on October 15th this year. Whether you are already enrolled in Medicare or are preparing for when you become eligible, this is a good reminder to complete your annual review of benefits and determine which options are the most cost-efficient for you. The choices can get overwhelming, so here are some tips to help break down your decision making:
How to Qualify and When Benefits Begin
Most Americans qualify for Medicare coverage. However, some will pay different premiums based on the number of quarters they paid into the Medicare system (i.e. through Medicare taxes). Most individuals qualify for Medicare at age 65.
However, it is important to do your homework early because you want to be covered when any other insurance ends. Experts recommend starting your research at least by age 64 and a half - six months before your 65th birthday.
Medicare Benefits – The Basics
Medicare itself is comprised of two parts:
· Part A – Hospitalization: This includes inpatient care at a hospital, hospice care, home health care, and nursing home care (but does not include any custodial or long-term care expenses).
· Part A is typically free of charge, unless you did not pay into the Medicare system for a sufficient period of time during your working years.
· Part B – Medicare Insurance: This includes services or supplies that are needed to diagnose or treat a medical condition and preventative services. Examples include physician visits, ambulance services, inpatient and outpatient mental health, and durable medical equipment.
· Part B can cost as little as $144.60 per month and up to $491.60 per month, depending on income and tax filing status.
If you choose, you can rely on Plan A and Plan B only for your health insurance needs. However, most individuals purchase a Medicare Supplement policy and a Prescription Drug policy, or they choose the route of a Medicare Advantage plan.
Medicare Supplement Policies
Medicare Supplement policies are offered by private health insurance companies to supplement expenses that are not covered by Medicare Part A or Part B. These policies are often referred to as “Medigap” policies: they fill in the gaps that A and B don’t cover for the patient, including co-payments, co-insurance, and deductibles.
A few things to know about a Medicare Supplement policy:
· You are only eligible for a policy if you have Medicare Part A and Part B. You must show proof of this coverage when you apply for a supplement policy.
· Supplement plans are required to be standardized – they must offer the same basic benefits, but different insurance companies may charge different premiums.
· You pay a monthly premium for the policy in addition to the premium for Medicare Part B.
· Medicare Supplement policies only cover individuals, there is no option for family coverage.
· Policies range from option “A” to option “N,” depending on the amount of coverage preferred. Option G is the plan most individuals choose.
Prescription Drug Plans (Part D)
Individuals eligible for Medicare are also offered the optional benefit of prescription drug coverage. This is typically most useful for people who require expensive prescriptions.
If you decide not to get a prescription drug plan when you are first eligible for Medicare, you will likely pay a penalty if you eventually do sign up for one. This penalty could apply as long as you have Medicare prescription drug coverage.
When applying for Part D, you’ll need to give information about all the prescriptions you currently take, and a plan will be offered based on your specific medications.
A Medicare Advantage plan (Part C) is an option that provides Part A and Part B coverage and a supplemental policy -- as an “all in one” option. It is offered through private insurance companies that have been approved by Medicare.
Most include Medicare prescription drug coverage (Part D). In some cases these plans offer additional coverage for things like vision and dental care as well. With these plans, Medicare contributes a fixed amount towards the premium, and you pay the remainder, if any.
Out-of-pocket costs and rules for services can vary between plans and can change each year.
How Can I Learn More?
To learn more about Medicare and how the options apply to your situation specifically, we recommend reaching out to an expert. Here are some resources:
· Medicare.gov is a website that offers the basics of how Medicare works.
· If you prefer to work with someone local, here are a few resources in the Asheville area:
· Council on Aging of Buncombe County: www.coabc.org
§ Offers a Seniors’ Health Insurance Information Program that provides individual Medicare Counseling sessions, as well as group webinars.
· Land of Sky Regional Council: www.landofsky.org
Kathryn Beach, CFP® is an associate financial planner at Starks Financial Group (440 Montford Ave., Asheville, NC 28801 / 828-285-8777). Starks Financial Group is not a registered broker/dealer, nor is it affiliated with Raymond James Financial Services. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment Advisory services offered through Raymond James Financial Services Advisors, Inc. This article expresses the opinions of Kathryn Beach and not necessarily those of RJFS or Raymond James. Raymond James does not provide legal services.