Does Medicare feel confusing? To help you approach enrollment with clarity and confidence, Pure’s Senior Financial Advisor, Bill Hodapp, CFP®, CPA, AIF®, breaks down Medicare eligibility, coverage options, costs, and the steps to sign up.
Transcript
Are you wondering when Medicare starts, how it works, what it covers and the costs? Do you need a supplemental plan? What happens if you’re still covered under your employer’s healthcare plan? You’re not alone, we get these questions a lot. Let’s start with the basics.
Pretty much everyone knows, Medicare is health insurance for people age 65 or older. You may be eligible to get it earlier if you have a disability or in certain other situations. The Initial Enrollment Period begins three months before your 65th birthday, includes your birth month and three months after your birth month for a total of seven months. There are also annual enrollment periods for making changes.
There are four parts to Medicare – A, B, C and D.
Part A is hospital insurance. This covers room and board in a hospital, a skilled nursing facility, hospice care and some home health coverage.
Part B is medical insurance and covers doctors’ visits, outpatient care, some preventative services, certain medical equipment and mental health services.
Part D is drug coverage. This helps cover the costs of prescription drugs. You join a Medicare drug plan in addition to original Medicare (parts A and B) or get it by joining a Medicare Advantage Plan with drug coverage.
Part C, also known as Medicare Advantage plans are offered by private insurance companies. These are bundled plans which include Part A, Part B and usually Part D.
Medicare Costs
Just like in an employer healthcare plan you are responsible for deductibles, coinsurance and co-pays.
Part A is free to most people as long as you or your spouse have worked at least 10 years in the U.S.
The premiums for Part B depend on your income. The base rate for 2025 is $185 and increases based on your income so the higher your income the higher the premium. Your income is based on your tax return from two years ago. Part B premiums will be deducted from your Social Security income unless you’re not taking benefits yet in which case they will invoice you.
Part D costs can vary widely since there are various plans to choose from and participants might pay more based on their income
Part C/Medicare Advantage Plans. Premiums vary based on the plan that you select and you must continue to pay your Part B premium.
Here are some important planning items to consider when thinking about Medicare. First, be sure to periodically check your Social Security statement to make sure you are getting Medicare credits for years worked. You can go to ssa.gov to create an account and view your statement. Next, you should know that Medicare Part B and D premiums increase based on your income if you exceed certain amounts as determined from your tax return from two years ago. This is known as IRMAA (Income Related Medicare Adjustment Amount) important when considering strategies that result in additional income such as Roth conversions. And finally, if you or your spouse is still working, you may be able to wait to sign up for Medicare without paying a late enrollment penalty. But ask the employer that provides your health insurance if you need to sign up for Part A and Part B when you turn 65. If you don’t sign up your job-based insurance might not cover the costs for services you get.
As you can see there is a lot to consider when planning for Medicare. It’s important to start early, educate yourself and ask questions. If you would like more information, download our free Medicare checkup guide, it’s a helpful resource to have.
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CPA – Certified Public Accountant is a license set by the American Institute of Certified Public Accountants and administered by the National Association of State Boards of Accountancy. Eligibility to sit for the Uniform CPA Exam is determined by individual State Boards of Accountancy. Typically, the requirement is a U.S. bachelor’s degree which includes a minimum number of qualifying credit hours in accounting and business administration with an additional one-year study. All CPA candidates must pass the Uniform CPA Examination to qualify for a CPA certificate and license (i.e., permit to practice) to practice public accounting. CPAs are required to take continuing education courses to renew their license, and most states require CPAs to complete an ethics course during every renewal period.
