By Larissa Mehlfelder
Even if you haven’t done any retirement planning yet, you’ve probably heard of Medicare, a federal insurance program designed for people older than 65, younger adults with disabilities, or those with end-stage renal disease that requires permanent dialysis or transplant. If you fall into any of these three categories, you may be a candidate to receive Medicare coverage.
What you might not know is that with Medicare, there are many options to consider and details to keep in mind. As we draw closer to 2018’s Medicare open enrollment period, let’s review what you need to know.
Medicare Open Enrollment Explained
Open enrollment is not for those who have never signed up for Medicare, unless the open enrollment period also falls during your initial enrollment time, which begins three months before you turn 65 and ends three months after the month you turn 65.
Medicare Part A is free and the majority of people should enroll as soon as they are eligible, even if they are covered by an employer plan. The only exceptions would be for people that work for a company with less than 20 people or are contributing to a health savings account (HSA). If you do not enroll during your initial enrollment window, you’ll likely face higher Part B premiums for the rest of your life. There is also a 10% increase in Part B premiums for every 12-month period that you go without coverage upon becoming eligible.
The Medicare open enrollment period happens at the same time every year due to the changes in 2011, starting on October 15th and ending December 7th. For coverage in 2019, open enrollment will run from October 15, 2018, to December 7, 2018. Once December 8th hits, the enrollment period closes until the following October. During this time, current Medicare users can switch coverage or add or drop parts of their plan.
Medicare Coverage Packs Available During Open Enrollment
Here is what you can do with your Medicare plan during open enrollment:
- If you have Parts A & B, you can switch to Medicare Part C (or Medicare Advantage), which is often contracted by companies that have an agreement with Medicare. This service includes the coverage of both Plan A and Plan B (Original Medicare), as well as additional services like prescription drug coverage and private fee-for-service plans.
- If you have Medicare Part C, you can switch it back to Original Medicare (Parts A & B)
- You can reevaluate your Part C plan and switch to a different Medicare Advantage plan.
- If you already have Parts A & B, you can join or drop a Part D prescription drug plan, This part of Medicare adds the prescription drug coverage for Original Medicare, private fee-for-service plans, and some Medicare cost plans.
- You can switch your Part D prescription drug plan to a different Part D plan.
Cost Of Medicare
The cost of Medicare insurance depends on a variety of factors. While many people choose Plan A, the premium for Plan B is paid automatically and costs about $134 monthly on average. The cost may vary depending on your income, whether or not you’re still working, and when you originally enrolled. Review the factors to get the best coverage.
As an example to determine cost, if you worked for more than 10 years, your monthly cost for the Plan A premium is $0 because you paid it while you worked. But the costs get higher if you worked for fewer than 10 years, climbing to $422 a month.
The Plan B premium also offers coinsurance after you’ve paid your deductible. This means that for some services you’ll pay only 20% of the total cost.
Improving Coverage During Medicare Open Enrollment
Medicare Part C & D offer the most coverage. Financially speaking, they’re some of the safest plans. If you have either the basic Plan A or Plan B, you can improve your coverage using Medigap. This will help you cover some of the services that are not covered by the higher coverage plans. Part C is also a good choice because it covers services like dental and hearing health that are not covered by the basic insurance packs.
As you can see, Medicare is complicated and ever-evolving. If you feel overwhelmed by this information, you are not alone. We want to ensure that you have the tools to decide on a plan to cover all aspects of your retirement. If you need help evaluating your Medicare options, reviewing your insurance coverage, or just want to ask a couple of questions, we’re here to help. Call us at 973-525-1000 or email Info@mqsadvisors.com to connect with us.
Larissa Mehlfelder is a client advisor at Massey Quick Simon, specializing in working with clients to develop and implement their financial planning objectives. Larissa earned her bachelor’s degree in business administration and finance with a minor in mathematics from The College of New Jersey where she maintained Dean’s List status. She completed Fairleigh Dickinson University's Program for Financial Planners in 2011 and became a CERTIFIED FINANCIAL PLANNER™ practitioner in 2012. She earned her CAIA Charter in March of 2014 and is a member of the Chartered Alternative Investment Analyst Association. Larissa is also the head of Massey Quick Simon’s Next Gen Committee and is spearheading a next generation effort for the New Jersey Chapter of the Financial Planning Association. Larissa is part of our Massey Quick Simon Women’s Network and has played a key role in recruitment and managing the intern program in past years. Learn more about Larissa by connecting with her on LinkedIn.