If you’re about to celebrate or recently celebrated your 65th birthday, there’s a lot of exciting things to look forward to, including health coverage from Medicare. If you’ve paid out of pocket for expensive individual health insurance or had coverage through your employer previously, you may be excited to join the Medicare market for a number of reasons, including a better and more expansive network of doctors, more affordable and stable monthly premiums year-over-year, and less out-of-pocket expenses.
If you still have a few questions about Medicare, here’s a brief summary of your options and the things you should consider when making these decisions.
First, you must get set up with your Medicare Part A and Part B policies as soon as you can. You are allowed to enroll in Part A and Part B, which are also called Original Medicare, starting three-months before your 65th birthday. The deadline to enroll is three-months after your 65th birthday. This means your Initial Enrollment Period to enroll in Original Medicare is only seven-months. You will enroll for Original Medicare through the Social Security Administration and if they don’t send you the documents you need to enroll in Medicare by your 65th birthday, you should go to your local Social Security Office to get signed up so you don’t miss the deadline.
If you choose to stick with Original Medicare to cover your medical bills, you will use Part A if you have hospital medical expenses and your Part B policy will kick in for doctors visits and tests.
If you paid Medicare taxes through your paycheck for ten years, your Part A coverage will be totally free. If not, you’ll have to pay a monthly premium. Part B is not free to seniors unless they are very low income. The Part B premium in 2018 is $134.00 for individuals who earn less than $85,000 a year. Individuals who earn more than that a year will pay more for their Part B premium.
Another option for Medicare coverage is something called Medicare Advantage, or Medicare Part C. This type of coverage is offered by private insurance carriers so you’ll enroll from a private carrier instead of through the Social Security Office like you would with Original Medicare. Medicare Advantage offers the same coverage as Part A and B and oftentimes covers other benefits too like dental or vision. If you want Medicare Advantage, you must pay your Part B premium in addition to the premium for your Medicare Advantage plan. There are $0 Medicare Advantage plans offered though so opting for this type of coverage does not necessarily mean that you’re paying more money.
In addition to your hospital and doctor Medicare coverage either through Original Medicare or Medicare Advantage, you should shop for a Part D plan, which covers prescription drugs. The deductible for a Part D plan is $405/year and the average monthly premium is $33.50. In 2018, your Part D plan will cover prescription drugs until you reach the initial coverage limit of $3,750.00, at which time you’ll reach the donut hole. Once in the donut hole, you will have to pay for your drugs out-of-pocket, but you’ll receive a discount on brand name drugs of 65%, meaning that you only pay 35% and for generic drugs you’ll only pay 44%. The amount that the insured is responsible for decreases every year under the requirements of Obamacare.
The last thing to consider and weigh when shopping for Medicare plans is whether you need a Medigap (also called a Medicare Supplement) plan to supplement your out-of-pocket costs. A Medicare Supplement/Medigap plan is only available to people with Original Medicare, but it’s a great way to help offset some of the costs associated with having a Part A and Part B plan instead of a Medicare Advantage plan. If you enroll in a Medigap plan as soon as you are first eligible for Medicare, the carrier can enroll you without any underwriting. If you pick up a Medigap plan later on, you may have to go through the underwriting process in order to be approved by the carrier.
