Friday, September 25, 2020

Medicare Myths

 

 

Ask The CFP® Practitioner

Darcie Guerin

“It is health that is real wealth, and not pieces of gold and silver.” ~ Mahatma Gandhi 

Question: The closer I get to age 65 the more questions I have about Medicare. Would you provide an overview of the enrollment process and the benefits?

Answer: That’s great that you’re asking questions before enrolling. Too many people wait and are unprepared. There are two components of original Medicare which are Part A and Part B.

Part A covers some inpatient overnight hospital stays, skilled nursing facilities, or psychiatric hospitals including charges for the hospital room, meals, and nursing services. Part A also covers hospice care and home health care in certain situations. There is not a cost associated with Part A coverage.

Part B covers physician care (inpatient or an outpatient), at a doctor’s office or other health-care facility. Laboratory tests, physical therapy or rehabilitation services, and ambulance service are also covered. Medicare Part B also covers 100 percent of the cost of many preventative services and an annual wellness visit. There is a premium cost associated with Part B coverage.

There are a number of myths surrounding Medicare. Exploring these myths may be the best way to understand what Medicare does offer to consumers.

Myth One: Medicare offers free healthcare.

False. Not quite. An annual wellness check is offered at no charge as are some recommended preventive screenings, such as mammograms and colonoscopies, and personalized prevention plans which don’t require a premium. But that’s it. You’re still responsible for copays, coinsurance and deductibles just like with any previous health insurance you’ve had in the past.

Currently, the lowest annual premium for Medicare Part B is $104.90, which applies to most Social Security recipients, or $121.80 a month for beneficiaries new to Medicare this year. You’ll pay more if you’re single and earn more than $85,000 or $170,000 for a married couple filing jointly.

Medicare Part D addresses prescription drug plans. High earners now face a   surcharge ranging from $12.70 to $72.90 per month, depending on income, for Medicare Part D prescription drug plans.

Because of deductibles, co-pays and non-covered items, many Medicare beneficiaries purchase a Medigap supplemental insurance plan to help cover out-of-pocket costs.

Myth Two: Medicare covers everything.

False. Nope. Dental, vision and hearing aren’t covered and prescription drug coverage is only offered through Part D and Medicare Advantage plans. You’re responsible for the premiums, deductibles and copayments associated with any supplemental coverage plans you choose to help cover out-of-pocket costs.

Myth Three: A Medicare Advantage plan or Part D coverage will fill gaps in my coverage.

False. Medicare Advantage plans – sometimes known as Part C, do offer optional coverage through private insurance companies. Many of these plans cover dental, vision, hearing and prescription drug costs, not covered by Original Medicare.

However, the plans may have limited networks to keep costs down. Do your research to choose which prescription drug plan and supplemental plans best fit your needs.

Myth Four: Medicare may not cover me.

False. You can’t be rejected for coverage or charged higher premiums due to pre-existing conditions. However, high earners will pay higher premiums for Medicare Part B and Part D.

Myth Five: I’ll be notified when it’s time to sign up for Medicare.

False. This is your responsibility. Unless you’re already receiving Social Security benefits, you must apply for Medicare. You won’t receive an official notification on when or how to enroll. To enroll in Medicare Part A and/or Part B visit www.SocialSecurity.gov online, call Social Security at 1-800-772-1213 or visit a local Social Security office.

If you’re over 65, still working and covered by employer healthcare, you may want to delay enrollment in part B to avoid paying for coverage you don’t need. Once you stop working, you must enroll within eight months – even if you’re receiving COBRA or retiree health benefits from your employer – to avoid permanent late penalties. Missing the deadline means paying 10% more in Part B premiums for every 12 months you delay. If you’re under 65 and retired, you should enroll before your 65th birthday to avoid these penalties.

The initial enrollment period starts three months before your birth month. If you

sign up during your birth month or later, your start date will be delayed by one to two months. There’s also an open enrollment period from October 15 to December 7 each year for Medicare Advantage and Medicare Part D. Medicare.gov recommends that you review your current coverage each fall to see if you need to make changes for the following year.

Since health care will likely be your biggest expense in retirement it’s important to know the facts and have a plan in place. According to a Consumer Expenditure Survey from the Bureau of Labor Statistics, a 65-year-old couple can expect to pay between $245,000 and $266,000 on Medicare Premiums alone, not including out-of-pocket expenses or long-term care costs. I’d be happy to run the numbers for you if you’re skeptical. I ran mine and was astonished!

My advice regarding Medicare coverage is the same as for your investments; stay focused and plan accordingly.

Information received from outside sources is believed to be credible. The opinions expressed are those of the writer, but not necessarily those of Raymond James and Associates, and subject to change at any time. 

“Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.” 

This article provided by Darcie Guerin, CFP®, Vice President, Investments & Branch Manager of Raymond James & Associates, Inc. Member New York Stock Exchange/SIPC, 606 Bald Eagle Drive, Suite 401, Marco Island, FL 34145. She may be reached at 239-389-1041, email darcie.guerin@raymondjames.com. Website: www.raymondjames.com/Darcie. 

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