Paying bills may not be the first thing that people think of when they hear the word retirement, but it’s a reality that retirees, like anyone else, face. With October 15 marking the start of the annual enrollment period for Medicare, now is the perfect time to prepare. Whether you are enrolling for the first time, making changes to your existing coverage or keeping things the same, these tips will help you plan ahead and avoid surprises.
Know Your ABCs (and D)
Before you can determine what you need, it is important to understand what is offered. Part A (Hospital Insurance) and Part B (Medical Insurance) are offered through the government. As you might expect, hospital insurance covers most hospital care, as well as nursing facilities, home health, and hospice care. In addition to doctor visits, medical insurance covers imaging, laboratory services, medical equipment, mental health care and more. While most people enroll in Part A as soon as they are eligible, some people may delay Part B depending on their particular situation.
Part C, or Medicare Advantage, is another option some individuals may select because it provides the same coverage as Part A and Part B and may also include more vision and hearing benefits, as well as prescription coverage. You may even enjoy lower out-of-pocket fees. But it is worth noting that you may also be limited in terms of how and where you can obtain services. Part D offers prescription drug coverage for those who do not have Part C.
Understand What Is Included
For the majority of people, planning for the premiums for Part A and B will be relatively painless. If you or your spouse worked for 40 quarters and accrued Society Security work credits by paying payroll taxes, you will not have to pay any premium for Part A. You can also expect to have your Part B premiums automatically deducted from your monthly retirement benefit payments. That includes individuals who are receiving benefits from Social Security, as well as the Railroad Retirement Board.
Know What Isn’t Included
If you do not have Part A, it may be possible for you to buy it. As of 2017, the premiums costs for Part A ranged from $227-$413 per month, depending on how many quarters you worked. It is also worth noting that you may be required to purchase Part B coverage along with Part A, which would then create an additional $134 monthly premium.
Additionally, Medicare Advantage plans and Prescription Drug Insurance premiums come at additional costs paid to private insurers. While the amounts vary based on the insurance company selected, all subscribers will have to pay Part D premiums, which vary by income.
Make Educated Guesses
Budgeting for premiums is important, but it isn’t the only medical expense retirees face. In addition to considering premiums, there are also deductibles and coinsurance to consider. The Official US Government Site for Medicare offers a detailed chart to help retirees know what to expect.
The deductible for Part A is $1,316 for the benefit period and coinsurance costs range from $0 to $658 per day. After meeting the $183 yearly deductible for Part B, most individuals will be responsible for 20 percent of the services. Parts C and D vary greatly depending on the provider.
Add on If Needed
Medigap, or Medicare Supplement Insurance, can be useful in covering the cost of deductibles, copayments, and coinsurance. Paid to private companies, this coverage supplements the original Medicare benefits but does not cover everything, like eyeglasses or private nursing.
Be on Time
Late enrollment penalties can be steep. For instance, a late enrollment penalty for Part D coverage will amount to 1 percent of the premium for each month you were not covered. While it is possible to appeal the penalty, enrolling on time is a simple way to avoid the hassle and extra cost.
Pick a Way to Pay
For individuals who purchase premiums for Part A and/or Part B, you will be billed directly from Medicare or you have the option of setting up a Medicare Easy Pay account. Since Parts C and come from private providers, enrollees may have more payment options, including check, credit card, automatic deductions or bank transfers.
Review Your Enrollment
Even if you do not anticipate making any changes, it is always wise to review your enrollment. This tool from Medicare.gov will allow you to check future and current enrollments.
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