At some point, we will all need to learn about Medicare, its associated programs, and terminology. Take this opportunity to review your own knowledge, or forward to a friend or coworker.  We’re always pleased to hear from you, so reach out with any questions.

Medicare Defined

Medicare is a national health insurance program offered by the federal government to provide health care insurance to certain individuals. Those eligible include people aged 65 and older, younger individuals with a disability as defined by the Social Security Administration, and individuals of any age with end-stage renal disease (an advanced kidney disease).  United States citizens and legal residents who have worked and paid taxes in the U.S. for at least five years are eligible to apply when they meet one or more of the criteria.

Terminology

Medicare Part A covers inpatient hospital stays, care in a skilled nursing facility, hospice, and some home health care. Part A has a deductible and coinsurance, which means patients pay a portion of the bill.

Medicare Part B covers doctor visits and other medically necessary services and supplies. That includes preventive services or health care to prevent illness as well as ambulance services, durable medical equipment, mental health coverage, and a few types of outpatient prescription drugs. Part B requires a monthly premium and a deductible.

Medicare Part C or Medicare Advantage is offered by private insurance companies that provide the benefits of Parts A and B and often D as well. These bundled plans may have additional coverage, such as vision, hearing, and dental care. Unlike original Medicare these plans have an annual limit on out-of-pocket costs.

Medicare Part D adds prescription drug coverage. These plans are offered by insurance companies and other private companies approved by Medicare.

Medigap or Medicare supplement insurance is an additional health insurance policy you can buy from a private insurer to help pay some of the costs not covered by Parts A and B, including deductibles, coinsurance and health care if you travel outside the U.S. They do not cover long-term care, prescription drugs, dental, vision, hearing aids, or private nursing care. There are 10 types of Medigap plans available in most states. You must have Medicare Part A and B in order to purchase a Medigap policy. Medigap is not compatible with Medicare Advantage – you should purchase one or the other.

Enrollment

Initial Enrollment Period (IEP): If you are receiving Social Security benefits when you turn 65, you will be enrolled automatically in Medicare Part A and Part B. If you want Part D you’ll need to enroll yourself. If you are not receiving Social Security benefits, you’ll sign up through the Social Security Administration website. You typically should do so in the seven-month window around your 65th birthday (which includes the three months before the month you turn 65 and three months after your birthday month) to avoid permanent penalties. If you want supplemental coverage (Medigap or Medicare Advantage), you would sign up during the same seven month enrollment period. Private insurers are required to take you during this time, otherwise they can turn you down.

General Enrollment Period (GEP):Eligible participants who did not enroll during their IEP have another opportunity to enroll during the GEP, an annual window which begins on October 15th and runs through December 7th. Current Medicare participants may also make adjustments to their plan each year during the GEP. You will likely have to pay a late enrollment penalty if you haven’t signed up during the IEP.

Things to consider when selecting Medicare, Medigap, or Medicare Advantage

  • What is your health situation like at the time of enrollment?  Are you frequently meeting with doctors and care givers?
  • Would a local network plan work for you, or do you frequently travel and need a wider network?
  • Are you covered by a company sponsored plan at age 65? Can you delay Part B as a result of other coverage?
  • Is your company plan a low deductible or high deductible plan?  If it’s a low deductible plan, there is no need to enroll in Part B.
  • Once you begin Medicare, you can no longer fund a Health Savings account.  All Medicare premiums are qualified expenses that can be withdrawn from your existing HSA account tax free.
  • What types of medications are you currently taking? This may impact your decision on Medicare Part D coverage or Medicare Advantage Plan choice.
  • What is your family health history?

 

Disclosure: SYM Financial Corporation (“SYM”) is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about SYM, including our investment strategies, fees, and objectives can be found in our ADV Part 2, which is available upon request.