If you are at least age 65, Medicare applies to you.
Are you age 65?
Maybe you are not quite there, but getting close.
Either way, understanding Medicare is important, according to a recent Kiplinger post titled “FAQs About Medicare.”
What are some key points you should understand?
Did you sign up for Social Security before age 65?
You will receive your Medicare card three months before you turn 65.
You killed two birds with one stone.
Way to go.
What if you are waiting to sign up for Social Security?
You must enroll on your own at www.socialsecurity.gov.
The enrollment window is between the three months prior to three months after your birthday.
What if you do not?
You will get a lifetime late-enrollment penalty.
Are there exceptions for the penalty?
If you are still working and have employer coverage, yes.
Do you or your spouse work for a business with 20 or more employees?
Are you covered by this insurance?
If yes, Medicare would be your secondary insurance to help fill the gaps.
When would you have to sign up?
Within eight months of leaving work and losing the coverage from the employer.
If you work for a larger company and the coverage is good, you do not need to sign up for Part B until later.
What if you work for a company with fewer than 20 employees?
In general, you must sign up for Medicare and use it as your primary coverage at age 65.
You must have both Part A and Part B.
Part A and Part B
What is the difference between these two?
Part A is typically premium-free and covers hospitalization.
Part B will cost a minimum of $134 a month for those who enroll in 2017.
What does Part B cover?
Outpatient care like x-rays, tests and doctor visits.
Health savings accounts
You cannot contribute to a Health Savings Account if you have enrolled in Medicare.
If you are able to delay enrollment, how can you determine if you should?
Compare the premium-free part A coverage to the benefits of having to contribute to an HSA.
Retiree health insurance
Retiree health insurance coverage allows you to fill in gaps without using Part D policies, a Medicare Advantage plan or Medigap.
You still need Medicare after age 65.
Is there an exception?
Federal retiree coverage will allow you to avoid signing up for Medicare.
There is a catch though.
If you want to sign up for Part B coverage later, you will a late-enrollment penalty of 10% of the Part B premium for every year you should have had coverage but did not.
As long as you are receiving the Medicare benefits, you will be paying the penalty.
As the name suggests, Medigap helps to fill in gaps in coverage.
This could include co-payments and deductibles.
To get this, you would purchase a Medicare supplement policy.
An easy way to remember the purpose of Part D?
"D" is for drugs.
Medicare does not typically provide prescription drug coverage.
Part D does.
Medicare Advantage Plan
These are private plans from private insurers.
They cover both medical and drug expenses.
Are they completely customizable?
There are ten standardized versions.
Some include dental and vision care.
Medicare high-income surcharge.
How do you know if a high-income surcharge will apply to you?
Are you single?
Is your adjusted gross income plus tax-exempt interest income more than $85,000?
You will have the surcharge.
Are you married and filing jointly?
Is your adjusted gross income plus tax-exempt interest income more than $170,000?
You will also have the surcharge.
In short, you will pay more for Part B and for Part D coverage.
This brief overview is by no means comprehensive.
Do more research to make the best decisions for you.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: Kiplinger (May 2017) “FAQs About Medicare”