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While most Americans pay into the Medicare system, many do not understand the benefits they will be eligible to receive at age 65.  There are eight important things to understand about the value of health insurance in retirement years.

  1. Tax Rates:  The majority of workers pay 1.45% of their wages toward Medicare, and employers match that contribution.  Those who are self-employed pay 3.8% of their income to the fund.  Under the Affordable Care Act, as of 2013, people who earn more than $200,000 and couples who earn more than $250,000 are required to pay an additional 0.9% in Medicare taxes.
  2. Enrollment Period:  People can sign up for Medicare three months before they turn 65, the month before they turn 65 and the three months following their 65th birthday; this is considered their Initial Enrollment Period.  However, it is also possible to enroll between October 15th and December 7th, which is the Annual Enrollment Period.  People who sign up after their Initial Enrollment Period may have to pay a penalty for late enrollment, so it is best to sign up as early as possible.  For each 12-month period a person is eligible but does not enroll, Part B premiums increase by 10%.  Individuals or spouses of individuals who are covered by group plans at work must sign up within two months of leaving the job to avoid the higher costs of a late enrollment.
  3. Upfront Expenses:  There are copay fees, coinsurance and deductibles with Medicare.  The deductible for Part B is $147 in 2015, and Medicare covers 80% of approved services after the copay is met.  There are no annual limits for what a person has to pay out of pocket.
  4. Premiums:  The majority of retirees do not have to pay premiums for Part A hospital insurance and the standard amount for Part B is $104.90 per month in 2015.  However, retirees who earn more than $85,000 or couples who earn more than $170,000 have to pay more.
  5. Free Physicals:  During the first 12 months of Part B coverage, a person is eligible for a free preventative care visit with a doctor.  This visit usually includes a medical history, review and recommendations for a preventative care plan.  After being enrolled for a year, members are also eligible for a free annual wellness visit to address further illness prevention measures.
  6. Supplemental Coverage:  It is difficult to calculate how much the upfront costs of medical care will be with regular Medicare.  That is why many retirees supplement their coverage with Medigap or Medicare Advantage plans.  There are extra premiums, but these plans often fill the gaps for other services that regular Medicare does not cover.  For those who have a large amount of medical expenses, the peace of mind provided by these policies is worth the investment of paying for them.  Medigap’s open enrollment period begins the month a person turns 65 and lasts for six months.  People who enroll during this time are guaranteed the right to purchase any policy sold in their state whether they have poor or good health.  However, there are no guarantees after the six-month period passes.
  7. Part D Plan Selection:  Retirees have the freedom to choose a new Part D prescription plan every year during open enrollment, from the middle of October through the first week of December.  Even those who are happy with their current plans should compare available options during this time to see if there are any new plans offering better coverage.  Unless a person changes plans, his or her coverage is automatically renewed each year.  Changes in Part D plans may only occur during Open Enrollment or through a Special Election.
  8. Free Preventative Care:  Many of the preventative services are provided without policyholders having to pay deductibles or copays.  Some of these include breast cancer screenings and bone mass measurements.  If problems are found, there could be additional costs.  For treatment of a problem found, a person may have to pay 20% of the bill.

For more information about plan options or questions or concerns about your current coverage, please call our agency.

 

-Provided by Jim Smathers

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