Medicare is a program provided by the federal government that offers health care insurance for those aged 65 or greater and to a few other groups such as those with certain disabilities or with kidney problems. Many of my clients retirement planning is heavily dependent on Medicare being there for them and helping ease the cost of their medical expenses.

The Medicare program involves four specific parts that provide various benefits which include:

1. Part A-Hopital Insurance
2. Part B-Coverage of doctors’ services
3. Part C-Medicare Advantage managed care plans
4. Part D-prescription drug coverage

These four parts allow for you to tailor a program that best suits your needs.

Medicare Part B is an option for medical insurance for those who qualify for Medicare. Medicare Part B covers medical services that are separate from the hospital such as doctor’s visits, laboratory tests, durable medical equipment and outpatient surgery. It will also provide for some preventative care such as chiropractic visits, flu shots and pap smear tests.

Medicare Enrollment

If Medicare Part B is something you are interested in, you will want to sign up for it when you are first eligible because if wait to sign up for it at a later date, you will permanently have to pay a higher premium. Your Medicare card can tell you if you have the Part B coverage. If you do not have it, you can still sign up for it. To enroll, call your local Social Security Office. Medicare Part B requires that you must sign up for the program and charges a monthly premium and yearly deductible.

Part B Fees

Part B is not free to applicants. The fees are determined by whether you are enrolled in the original Medicare program or are involved in a Medicare health plan. The fees are also based on your income. The amount is deducted from your retirement benefits or your monthly Social Security payment. The yearly deductible will also apply. You will be required to meet the deductible before your benefits will begin. Once the benefits begin, you will only owe a 20% co-pay on any services rendered. You will also want to be mindful of choosing doctors who accept Medicare assignments, as that will save you costs also.

Coverage

• Doctor’s services. Medicare Part B will cover most doctors’ services, durable medical equipment and outpatient treatment. You will pay 20% while Medicare covers the other 80%.
• Radiology and Laboratory Tests. This will provide for x-rays, blood tests and other diagnostic testing.
• Outpatient services. Medicare Part B will cover some outpatient hospital services. The coverage varies based on which service is being provided.
• Preventative measures. This offers services such as flu shots, screenings and some types of testing. It also provides for a one-time physical.
• Home Health Care Services. Part B will give you services such as an in-home nursing service or an in-home therapist on a part-time basis as long as the provider participates with Medicare.
• Blood transfusions. The first three pints are provided for you and then you will owe your 20% deductible for any blood costs needed on an outpatient basis.

When deciding whether or not to include the Medicare Part B in your plan, you may want to speak with a benefits administrator. Remember there will be additional fees for singing up for Part B at a later time.

photo credit: Leo Reynolds

Medicare is our countries government administered health care program.  At the ripe age of 33, I have many years before I have to worry about signing up.   I do, however, have several clients that depending when they qualify for Medicare is big determent on when they retire.   It’s huge for many retirees.

There are essentially two groups of people who qualify for Medicare health insurance coverage – those who have reached age 65 and those with disabilities.

Adults Over 65

Most adults in the United States are eligible for Medicare when they turn 65. Individuals must be US citizens or permanent residents and enroll in the Medicare program to qualify.

Individuals who are already receiving Social Security benefits will be automatically enrolled in the Medicare program. Approximately three months before their 65th birthday, an enrollment package will be sent and must be completed to activate coverage. Medicare part A, which covers hospitalizations, requires no payment. However, adding part B – which is for doctors visits and outpatient procedures – or additional coverages, such as prescription drug coverage does cost money. The premium is determined based on income level. So individuals must decide what plan is best for them when enrolling and what they can afford to have..

Who Does NOT Qualify for Medicare

People who are not already receiving Social Security benefits will need to contact their local social security office to apply for Medicare coverage. This should be done three months before the individuals 65th birthday. The enrollment period begins in the three months before the month of the 65th birthday and ends three months after. If one enrolls during this time frame there is no cost for enrollment and coverage should begin at the start of the 65th birthday month or shortly thereafter (if one applies after their birth date). If, however, one does not apply during that enrollment period then fees apply. So it is important to apply on time, and as close to the three month prior date as possible. This will ensure everything is done correctly and coverage starts at the beginning of the individuals birth month.

Individuals with Disabilities

Medicare coverage is also available to individuals with disabilities regardless of their age. Once an individual has been collecting social security disability payments for twenty four months, they become eligible for Medicare during the 25th month. An enrollment package will be sent a few months before a person becomes eligible for Medicare coverage. If a person with social security disability does not receive the enrollment package, they should contact their local social security office to request a packet.

Like an individual who is over age 65, disabled persons who have been getting SSI disability payments are automatically eligible for Medicare. There is no reason to decline coverage as Medicare part A costs nothing and covers hospital care and nursing facility care. However, if a disabled individual would like, they can decline Medicare Part B coverage which would require premium payments. There is a card that comes with the enrollment package that the individual can mail back declining part B coverage.

With the high costs of health care it makes sense for those eligible for Medicare to take advantage of this government administered health care program.

photo credit: anolobb

Retirement.  It’s so close you can taste it.  You’re crossing days off your calendar waiting for that magical day to get here.  The only thing holding you back is your health insurance.  Eeek! You get sick just thinking about how much your premiums are going to be when you retire.  Your backup plan is holding out for Medicare, but you don’t know if you’ll make it at your job until 65.  What to do?

This is a common dilemma that many of my clients are going through.   They’re ill from the outrageous amount that will be exiting their checking account each month just to pay for their health insurance; and that’s not including the rest of their monthly bills.  They know they do have a backup plan in Medicare.

For those that can postpone till 65 to retire, they are in luck since they will immediately qualify for Medicare.  For those that qualify, here’s what you’ll need know about signing up to receive your Medicare benefits.

Are You Eligible More Medicare?

First things first, you may be wondering if you’re eligible to receive Medicare benefits.  In addition, you may be wondering what benefits that you’ll be entitled to.  If you’re confused – don’t worry, you’re not the only one - a quick and easy resource is to visit Medicare.gov.  From there you can click on an Initial Enrollment Package link that will walk you through a series of questions.  You can see a screen shot of the first page below.  You will be asked approximately 10 questions, some of which are listed here:

Medicare Benefits Eligibility Tool (CLICK HERE TO BEGIN)

After you’re done answering the questions, it will compute a “Results” page informing you on what you are covered for including: General Enrollment, Medicare Part A, Medicare Part B, Medicare Part C, and Medicare Part D.  I highly suggest you start here if you want your answers to your specific situation.

Automatic Enrollment in Medicare For Some

Anyone who has received a Social Security check or 24 months worth of Social Security Disability Insurance (SSDI) is automatically enrolled in Medicare Part A and Part B. Part A is hospital insurance; Part B is medical insurance.  For example, if your 65th birthday is February 20, 2011, your Medicare effective date would be February 1, 2011.

If you’re getting Social Security checks and approaching age 65, you’ll get a Medicare card in the mail three months before your 65th birthday.  Consider that your birthday card from them

Medicare benefits begin on the first day of the month in which you turn 65. If you are getting SSDI (regardless of your age), the card will arrive coincidental with your 22nd monthly payment and you are entitled to Medicare coverage with your 25th monthly payment.

Please note:  you must be a U.S. citizen or a legal resident of this country for five years or longer to be eligible for Medicare.

Social Security and Medicare

Enroll In Medicare

If you’re coming up on 65 and not receiving Social Security benefits, SSDI or benefits from the Railroad Retirement Board, you can still apply for Medicare coverage. You can visit your local Social Security Administration office or dial (800) 772-1213 or go to www.ssa.gov to determine your eligibility.

In this case, if you are eligible you have the choice of accepting or rejecting Part B coverage. If you want Medicare Part A and Medicare Part B, then you should sign your Medicare card and keep it in your wallet. If you don’t want Part B, you put an “X” in the refusal box on the back of the Medicare card form, and send the form to the address shown right below where your signature goes. About four weeks later, you will get a new Medicare card indicating that you only have Part A coverage.

When can you change your Medicare coverage?

There are different enrollment periods that Medicare offers to the public to change (add or decrease) their benefits.  Please take note of these periods for there are typically no exceptions.

What if You Can’t Afford Medicare Payments?

Each state has different programs for helping those out that can’t afford to pay for their Medicare benefits.  The programs may pay some or all of Medicare’s premiums and also may pay Medicare deductibles and coinsurance. To qualify, you must have Part A (hospital insurance), a limited income, and, in most states, your resources, such as bank accounts, stocks and bonds, must not be more than $4,000 for a single person or $6,000 for a couple. You’ll need to contact your state Medicare office for more details.

Special Medical Conditions and Medicare

Individuals with end-stage kidney failure who need dialysis or a transplant may qualify for Medicare regardless of age. Upon diagnosis, they can contact the Social Security Administration. Medicare coverage usually takes effect three months after a patient begins dialysis. People with Lou Gehrig’s Disease (ALS) are automatically enrolled in Medicare as soon as they begin receiving SSDI payments.

Questions On When You Need To Sign Up For Medicare?

The Centers for Medicare & Medicaid Services (CMS) is a branch of the U.S. Department of Health and Human Services. CMS is the federal agency that administers the Medicare program and monitors the Medicaid programs offered by each state. English and Spanish-speaking Customer Service Representatives (CSRs) at 1-800-MEDICARE can answer your questions. 1-800-MEDICARE CSRs can give you information about Medicare coverage and costs, health plan options, and your Medicare claims.

photo credit: Paul Schreiber

Are you a retiree or soon to be retiree and are you concerned about the rising costs of medical care?  If you’re not, you should be.  When meeting with clients that are either in retirement or approaching retirement, one of the most unexciting things to talk about is the rising cost of medical care.  But for obvious reasons, this is a discussion that must be brought up; otherwise we will not have planned for what could potentially be the demise of our retirement portfolio.

Health Care Costs During Working Years

In your working years, the cost of health care is usually an afterthought.  If you’ve got a good employer with decent insurance, routine visits to the doctor are taken care of just by paying simple co-pay.  In fact, when either my wife or I go to the doctor, we are only required to pay a $15 co-pay for what is called a wellness visit.  But upon retirement, things change.  

Medical Care For Retirees, Let’s Look at the Numbers

Although despite retirees do have access to Medicare at the age of 65, the cost of health care retirees is getting higher and higher each and every year.  In the report that was done by the Employee Benefit Research Institute, they have projected that people retiring in the year 2018 that are retiring at age 65 would need approximately $325,000 just to handle the gap between Medicare part A and Medicare part B.  The institute also had projected that a man currently age 55 will need to accumulate $132,000 by the year 2018 to help pay for the Medigap policy.

The scary thing about these numbers is that these are just the average.  Studies show that more than half the population lives longer than the average life expectancy.  If prescription drug consumption was assumed to be average but a couple lived to be in the top 25% percentile, the necessary amount needed at age 65 would balloon to be $424,000.  If you happen to live in the top 10%, then now your costs have skyrocketed to $511,000.  Remember, these costs do not include basic visits to your dentist or any other out of pocket medical equipment such as wheelchairs or canes or anything else that may be needed.

How To Plan For These Costs

Based on these numbers, what is one to do?  Do you plan for the average of $325,000 or do you assume you will be in the top 10% that will require over $500,000 just to get by on medical care costs?  Obviously, it always makes sense to plan for the worst, but in some cases, it is almost impossible. Especially if retirement is just around the corner.  All in all, it pays to understand your Medicare coverage and to know what you are eligible by.  Medicare coverage is definitely something you do not want to underestimate, and don’t opt for a different policy in retirement just because they offer a cheaper premium.

References:

Medicare.go