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As part of our continuing seminar series Allied Financial Partners spent the evening of February 4th discussing Medicare with our clients, their family and friends. We received tremendous feedback indicating that there were many items covered during the discussion that were not previously well understood. With that in mind we felt it would be helpful to capture some of the highlights that received the most attention during the evening. What follows is a brief synopsis of some of the material in the hope that it provides our clients and their loved ones with some basic direction; but more importantly we want to assure you that we have the resources to help you navigate this confusing yet integral part of your retirement planning.
Who is eligible for Medicare?
Most commonly Medicare (Parts A & B) is available to individuals who have reached age 65. You must also be a United States citizen and resident for at least 5 consecutive years. Additionally, there are special situations where people of any age may be qualified for Medicare due to specific health conditions, i.e. end state renal disease. You cannot be turned down for Medicare coverage due to any pre-existing medical conditions.
What does Medicare Cover?
Part A: Inpatient hospital care, inpatient mental health care, skilled nursing services, hospice care and some blood transfusions. Bear in mind that skilled nursing services are typically limited to only 100 days of care. You can obtain services at any hospital in the United States. MEDICARE DOES NOT SUPPORT LONG-TERM CARE COSTS FOR CUSTODIAL ARRANGEMENTS.
Part B: Physician Services, outpatient hospital services, ambulance, outpatient mental health, laboratory services, durable medical equipment (wheel chairs, oxygen, etc.), outpatient occupational therapy and some preventative care. Coverage is provided throughout the United States.
Are there costs for Medicare coverage?
Part A: Most people do not pay any Medicare premiums at the time of enrollment. This is because during your working years you had Medicare tax withheld from your earnings. Do bear in mind however that for hospital stays lasting less than 60 days you will be responsible for your deductible. If you have multiple hospital stays over a short period of time you may incur multiple deductibles.
Part B: There is a monthly premium based on your income and for new enrollees in 2016 the base premium is approximately $121 per month. Additionally, there is a co-insurance cost whereby you will pay 20% of the Medicare approved cost of your services.
What isn’t covered?
Medicare does not cover the costs of your deductibles, coinsurance and premiums. Additionally, in some cases your physician may bill at a level greater than the Medicare reimbursement rate. This excess cost is not covered by Medicare. Finally, Medicare parts A & B will not cover prescription drugs or the costs associated with additional benefits like hearing aids and dental procedures or dentures.
It seems like there are some significant gaps, how can we ensure we cover the shortfalls?
Supplemental coverage is provided under a variety of options (all have individual additional premiums):
Most Medicare plans do not provide coverage outside of the United States, so if you travel internationally you should be aware of this. Additionally, for individuals that transfer within the continental United States you will also need to be sure that your coverage is applicable where you are traveling to. Not all physicians will accept Medicare reimbursements and further, if you’re incorporating a supplement, advantage, or Part D coverage you will want to ensure that there are physicians at your destination that will accept your particular type of plan.
If you purchase a supplement or part D coverage you will still be required to pay your Part B premium. Advantage plans will typically incorporate a single premium payment for all coverage but you should investigate to be certain.
How do I enroll?
For individuals that are ALREADY receiving social security benefits at the time they turn 65 you will be automatically enrolled in part A & B and your premiums will be drawn from your social security check.
For individuals that ARE NOT receiving social security benefits at the time you turn 65 you will need to enroll directly. Your open enrollment period begins three months preceding your 65th birthday, the month you turn 65 and the three months following when you turn 65.
If you are still working, receive health insurance benefits directly from YOUR employer AND your employer has more than 20 employees then you will have a special enrollment period once you retire. However, excluding these circumstances you must enroll during the previously described enrollment period or you may be penalized for delayed enrollment in part B. The penalty is 10% of the premium for every 12 months that you go beyond your open enrollment period without coverage. This penalty is applied for your lifetime!
This brief discussion of Medicare’s main components and select planning notes cannot possibly cover the number of unique circumstances that our clients will face. Nor does it cover the importance of reviewing your health situation on an annual basis within the context of your existing coverage. Making the most of Medicare will require annual updates to account for changes in plan coverage, your prescriptions and health needs. An outstanding resource that is available to everyone is the website: www.medicare.gov
And as always, Allied Financial Partners have the resources to help you navigate this uniquely personal and potentially confusing topic. Contact us today to have a discussion regarding your Medicare options.
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