Every year, Medicare’s open enrollment period is from October 15 to December 7. Choosing the right Medicare plan can be overwhelming, but understanding the basics can help you make an informed decision. Pure’s Financial Planner, Matt Gray, CFP®, discusses the important Medicare parts to consider.
FREE GUIDE | Medicare Check-up Guide
Today we’ll cover Medicare plans and their requirements, options, and costs. Medicare is a federal health insurance program that provides medical coverage to Americans who are 65 years or older, people with disabilities or chronic conditions.
It has four parts: Part A; hospital insurance, Part B; medical insurance, Part C; Medicare Advantage, and Part D; prescription drug coverage.
There are two main types of Medicare plans: Original Medicare and Medicare Advantage. Original Medicare is the traditional fee-for-service plan offered by the government, while Medicare Advantage is a private insurance plan that provides additional benefits beyond what Original Medicare covers.
Original Medicare: Parts A & B cover hospital stays and medical services like doctors visits.
Medicare Advantage: Part C combines Parts A and B and often includes additional benefits such as prescription drug coverage, dental, vision, and fitness.
Prescription drug coverage: Part D is a separate component of Medicare.
Medicare Supplement: Medigap helps pay for out-of-pocket costs not covered by Original Medicare.
Medicare Initial Enrollment Period
If you receive Social Security when you turn 65, you don’t have to do anything. You’re automatically enrolled in the program, and the premiums are deducted from your monthly benefits. If you delay taking Social Security until a later age, you have to enroll for Medicare Part A and/or Part B on your own when you turn 65. It starts three months before the month you turn 65, includes the month you turn 65 Ends three months after the month you turn 65.
In general, you should enroll in Medicare Part A during this Initial Enrollment Period even if you have health insurance through an employer. That’s because most people pay Medicare taxes throughout their working years and, therefore, won’t have to pay for Medicare Part A.
Most people need to enroll in Medicare Part B during the Initial Enrollment Period. The only way to delay Medicare Part B is if you have health insurance from your (or your spouse’s) current employer.
Everyone pays a premium for Medicare Part B. How much you pay depends on your income and when you enroll If you don’t enroll in Part A and Part B during your Initial Enrollment Period, you must wait to sign up, which can cause a gap in your coverage. You may also owe a lifetime late enrollment penalty that increases the longer you wait to sign up.
Most people should probably get at least Part B so that they have coverage for doctor visits and outpatient care. The standard premium for Part B coverage is $164.90 for 2023, which is deducted from your monthly Social Security benefit. There’s also an annual deductible of $226 for 2023 for Part B coverage.
Medicare Part C is also called a Medicare Advantage Plan. Private companies that contract with Medicare offer these plans to provide all your Part A and Part B benefits. Most Medicare Advantage Plans include Part D (prescription drug) coverage, as well as extra benefits for vision, hearing, and dental. The average premium for this type of coverage will run $18 per month in 2023, a drop from the average monthly premium of $19.52 in 2022 If you’re considering a Part C plan, you should be careful to research the available policies to ensure you acquire the best Medicare Advantage Plan to suit your needs.
Medicare Part D
Every plan that offers prescription drug coverage through Medicare Part D must provide a minimum standard level of coverage set by Medicare. Since plans can vary the list of prescription drugs they cover and how they place drugs into different tiers, it’s essential to find a plan that covers the medications you normally take.
Choosing the right Medicare plan can be overwhelming, but understanding the basics can help you make an informed decision. Take advantage of Pure’s free financial assessment to see how Medicare plays a crucial role in your retirement planning.
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