What you need to know
Medicare can be overwhelming for a lot of people and this article is meant to highlight the first steps. If you or someone you know is needing assistance with where to start, you actually go to the Social Security website at ssa.gov and create a login. Yes, Social Security is indeed the place to go to sign up for Medicare. If you have already created a Social Security login to view your Social Security statements, it should be under the same login. To create an account, you will need to know some basic information such as Social Security Number, date of birth, address, etc. Once you are logged into the Social Security website, follow the instructions to sign up for Medicare Part A. Even if you are still working at age 65 or beyond, it is wise to activate Medicare Part A because it costs nothing to enroll and it creates your Medicare ID number. Additionally, if the unexpected happens and you need care from a hospital, Medicare Part A could potentially supplement your work coverage. Unlike some other programs, there is no advantage to delaying signing up for Medicare Part A after you become eligible, although at this time there is no penalty for not doing so.
Medicare Part A is considered hospital insurance and covers inpatient care at the hospital or skilled nursing facility and hospice. For the most part, it covers the room
fees but not necessarily the services themselves.
Medicare Part B (medical insurance) is often misunderstood. There can be lifelong penalties if people are eligible for Medicare B and do not enroll or have creditable overage through another source such as an employer because they are still working. There is a cost associated with signing up for Medicare Part B based on the participant’s income. The premium is typically deducted from their Social Security Income payments. If a participant is not currently receiving Social Security Income payments, they will pay Medicare directly for the part B premium. Medicare Part B covers 80% of a participant’s medical costs (not covered under Part A). The participant is responsible for the remaining 20% of the bill with no upper limit. If people are eligible for Part B and do not have creditable coverage and they procrastinate signing up for Medicare Part B, they will pay a penalty when/if they eventually enroll in Part B. Some people think that delaying signing up for Medicare Part B will save them money because they do not have the deduction taken out of their Social Security Income payments, but ultimately, they could end up paying more over the long run by delaying due to the penalty. Our recommendation for people is to sign up for Medicare Part B as soon as they are eligible unless they have creditable coverage already in place. If someone has creditable coverage, sign up for Medicare Part B when that coverage is no longer in
place. A good example of this would be if you are still working beyond the age of 65 and covered by your employer’s health plan, it would be advisable to talk to a Medicare specialist 90 days ahead of your retirement to make sure everything is in place prior to losing your current coverage. If you are unsure if your current coverage qualifies as creditable, talk to a Medicare specialist to find out. You can also talk to that specialist and compare your current plan to any Medicare options available and see what makes the most sense for you.
Medicare Part C, commonly known as Medicare Advantage, is administered through private insurance companies. The main reason why participants sign up for Medicare Advantage or Medicare Supplemental Insurance is to transfer the risk of the remaining 20% obligation they could face. With Medicare Part C, there is a maximum out of pocket limit for participants, this is commonly referred to as “MOOP”, and is in the ballpark of $5,000 to $7,500. Medicare Part C advertisements can be misleading with “no cost” premium plans, as you may still pay deductibles and copays for covered services, and you still must pay the Medicare Part B premium. There are pros and cons to Medicare Part C plans. Our recommendation is to speak with a knowledgeable independent insurance agent who is appointed with multiple insurance companies in order to learn about the best Medicare plans in the participant’s area, based on their primary zip code.
Medicare Part D pertains to prescription drug benefits. There can also be lifelong penalties to people if they are eligible for Medicare but do not have creditable prescription drug coverage. If someone retires at age 65 or older and they sign up for Medicare Part A & B but do not sign up for a prescription drug plan, they will most likely incur a penalty on the premium if/when they do enroll later on. That penalty increases for every month they did not have coverage. If a participant signs up for a Medicare Part C plan, generally it will include a prescription drug option built into the plan. Our recommendation is to sign up for a Medicare Part D plan when someone is eligible unless they have creditable prescription coverage through another source, typically the VA or an employer sponsored plan if they are still working.
Medigap Plans When staying with Original Medicare, there is an alphabet soup of other supplements known as Medigap plans. However the two most common ones are Parts G and N. Rather than replacing Medicare Parts A and B, these simply supplement coverage gaps and although similar to Medicare Advantage, there are some things supplement packages do not provide. It is best to talk to someone familiar with both types of plans to help determine the pros and cons of each and determine if Medicare Supplement or Medicare Advantage is the right fit for you.
Of particular note: Medicare does NOT pay for Long-Term Care. You may want to consider this in your planning as it would require separate private insurance unless you have the means to self-insure or become forced to spend down assets and go on state Medicaid, which could also severely limit your options and control in nearly every aspect of your life.
If you are interested in learning more about Medicare options, please reach out directly to our Vancouver, Washington office at 360-597-0400 or visit www.legacyaccountingfinancial.com. One of our knowledgeable insurance licensed agents will be happy to listen and guide you to helpful information. We are a proud affiliate of Pacific Insurance Group.