PUBLISHED THU, MAY 2 2019 9:35 AM EDTUPDATED THU, MAY 2 2019 2:17
PM EDT
KEY POINTS
·
High earners pay more for certain premiums, and there’s no
out-of-pocket maximum.
·
If you don’t sign up when first eligible and don’t have
qualifying coverage elsewhere, you’ll pay life-long penalties for enrolling
late.
·
Medicare does not cover everything, which means you’ll need to
plan for extra expenses.
After paying into Medicare
through payroll withholdings at work for many years, some people approach their
eligibility age of 65 with a misconception that their coverage will be free.
In reality, Medicare comes
with a variety of expenses — including premiums, copays and deductibles. High
earners pay more for certain premiums, and there’s no out-of-pocket maximum.
“I’d say a full third of
people we talk to, who are just starting to do their research, are surprised —
some are appalled and flabbergasted — that they have to pay anything for
Medicare,” said Danielle Roberts, co-founder of insurance firm Boomer Benefits
in Fort Worth, Texas.
“The ‘Medicare for all’ conversation might
contribute to that, because consumers hear ‘free, free, free’ and assume
Medicare is already free,” she said.
While Congress begins
wading through various bills that aim to overhaul the nation’s health-care
system — including a “Medicare for All ” version in both the
House and Senate that would come with no premiums, copays or deductibles — it’s
important to know that the existing Medicare program begins costing you when
you enroll. And if you fail to sign up on time, you could pay a life-lasting
penalty.
Each day, about 10,000 baby
boomers turn 65. Fidelity Investments estimates that the average male-female
couple will spend a whopping $285,000 on health care from
that age on.
And, that’s just a starting
point. Things that are not covered by Medicare — dental, basic vision,
over-the-counter medicines, long-term care — would be on top of that.
This makes figuring out
your Medicare coverage a key part of managing your expenses. Here’s what you
need to know.
The
cost
As long as you have at
least a 10-year work history, you pay no premiums for Medicare Part A, which
covers hospital stays, skilled nursing, hospice and some home health services.
However, it has a deductible of $1,364 per benefit period, along with some caps
on benefits.
Part B — which covers
outpatient care and medical supplies — has a standard monthly premium of
$135.50 this year, although higher earners pay more (see chart below). It also
comes with a $185 deductible (for 2019). After it’s met, you typically pay 20
percent of covered services.
Cost of Medicare Part B
premiums
MEDICARE PART B PREMIUM COSTS 2019
|
INDIVIDUAL TAX FILERS*
|
MARRIED FILE TAXES JOINTLY*
|
MARRIED FILE TAXES SEPARATELY*
|
WHAT YOU PAY MONTHLY IN 2019
|
|
″$85,000 OR LESS”
|
″$170,000 or less”
|
″$85,000 or less”
|
$135.50
|
|
“ABOVE $85,000 UP TO
$107,000”
|
“Above $170,000 up to $214,000”
|
Not applicable
|
$189.60
|
|
“ABOVE $107,000 UP TO
$133,500”
|
“Above $214,000 up to $267,000”
|
Not applicable
|
$270.90
|
|
“ABOVE $133,500 UP TO
$160,000”
|
“Above $267,000 up to $320,000”
|
Not applicable
|
$352.20
|
|
“ABOVE $160,000 AND LESS
THAN $500,000”
|
“Above $320,000 and less than $750,000”
|
“Above $85,000 and less than $415,000”
|
$433.40
|
|
″$500,000 OR ABOVE”
|
″$750,000 and above”
|
″$415,000 and above”
|
$460.50
|
Source: Centers for Medicare and Medicaid
Services. *Part B premiums are based on modified adjusted gross income from two
years earlier. So for 2019 it’s based on your 2017 tax return.
Those parts of Medicare
don’t cover prescriptions. That’s where a Part D drug plan comes in.
You can get a standalone
plan to use alongside original Medicare. Or, you can sign up for an Advantage
Plan (Part C), which typically includes prescription drug coverage. If you go
this route, your Parts A and B benefits also will be delivered via the
insurance company offering the Advantage Plan.
The average cost for Part D
coverage in 2019 is $32.50 per month, according to the Centers for Medicare and
Medicaid Services, although high earners pay extra for their premiums (see
chart below). The deductible for 2019 is $415.
If you fail to sign up for
Medicare when you first qualify for coverage and you change your mind later,
you could face life-lasting penalties, which would make your monthly premiums
higher.
Some people with low
incomes qualify for programs that reduce their Medicare-related costs. There’s
extra help for prescription drug coverage, and some state-run savings programs
help with copays, coinsurance, deductibles and premiums.
Avoiding
life-lasting penalties
If you tapped your Social
Security benefits before age 65, you’ll automatically be signed up for original
Medicare (unless you live in Puerto Rico).
“About a month or two
before you turn 65, you’ll be automatically enrolled, and your card will just
show up in the mail,” Roberts said.
In this situation, you’ll
see your Social Security check reduced by the cost of the Part B premium.
If you haven’t yet tapped
Social Security, the burden is on you to sign up. In that case, you get a
seven-month enrollment period that starts three months before your birthday
month and ends three months after that.
Penalties
if you don’t enroll
If you fail to sign up for
Part B when you’re supposed to, you’ll face a 10 percent penalty for each year
that you should have been enrolled. The amount gets tacked on to your monthly
premium.
While Part D prescription
coverage is optional, the penalty for not enrolling when you were first
eligible is 1 percent for every month that you could have been signed up —
unless you have qualifying coverage through an employer’s plan.
“We advise people even if
they don’t take medicine right now, at least sign up for the cheapest drug plan
just so you don’t face a penalty,” Roberts said. “And if something bad happens,
you’re making sure you aren’t caught with no coverage.”
Coverage
gaps in Medicare
Be sure to think about how
you’ll pay for the things Medicare doesn’t cover. For instance, it generally
doesn’t cover dental work and routine vision or hearing care. Same goes for
long-term care, cosmetic procedures and — for the jet-setters — medical care
overseas.
Many people decide to pair
original Medicare with a supplemental policy — called Medigap — to help cover
out-of-pocket costs such as deductibles and coinsurance. You cannot, however,
pair a Medigap policy with an Advantage Plan.
If you end up choosing an
Advantage Plan, there’s a good chance limited coverage for dental and vision
will be included.
For long-term care
coverage, some people consider purchasing insurance specifically designed to
cover those expenses.
https://www.cnbc.com/2019/05/02/if-near-age-65-what-you-should-know-about-medicare-no-its-not-free.html?utm_campaign=Social%20Media&utm_content=91083701&utm_medium=social&utm_source=linkedin&hss_channel=lis-3Y7QQ-FCpa
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