Our last article discussed what Medicare will cost you. It also said that Medicare could be the best health insurance you’ve ever owned, at the lowest overall cost. That’s great news.
What’s Missing from Medicare?
No health insurance plan is perfect, of course, and Medicare does not cover some things that you will very likely need. Some of those things are big. They can cost you a lot out of pocket and completely ruin your finances. What are they?
The Huge Expenses that Medicare Will NOT Cover
If you set up your Medicare right, it will do a great job paying for your doctor, hospital and prescription bills. So that worry is over.
But many people are aware of another worry. And it’s an expensive one too. It can:
Ruin your finances and leave you poor
Leave your spouse poor after you die
Destroy your family’s wellbeing, happiness and peace of mind
It is short-term care and long-term care. Rather than avoid the subject and hoping that it doesn’t happen to you (the chances are 50% that it will happen) let’s face the problem head on.
Why You Need Short-Term or Long-Term Care Insurance
Here are two examples of common Medicare exclusions:
Home Care After Accidents
Charlie was a senior in great physical condition. One day he was up on a ladder cleaning his gutters, fell off, and broke his hip. Multiple hospital stays, complications, and infections after surgery left him laid up at home for six months.
His spouse, Jennifer, could not pick Charlie up to bathe him, clothe him and move him to and from his wheelchair. So, she hired someone to come in and bathe, dress and move Charlie around, and to cook, clean and shop for them. For the six months that lasted, Charlie and Jennifer paid for that care out of their own pocket.
Medicare does not cover ‘custodial’ home health care. The most Medicare will do is send a nurse out, perhaps once per week, to monitor medications, give injections and the like. The nurse will not do housework, shopping or things like that.
Two years after Charlie recovered, Jennifer was diagnosed with dementia, and then later with Alzheimer’s disease. Physically very healthy, Jennifer still could not be left alone.
Charlie drained his investment accounts to pay for many months of home health care. Then he used more money from savings to move them into an assisted living facility. Eventually Jennifer had to be put into a nursing home, and that expense completely wrecked the rest of Charlie’s life savings and investments. Now there is no inheritance to leave their children and grandchildren.
Medicare does not pay for assisted living or for nursing home stays.
The Solution is Easy to Discuss
Let’s talk over an insurance plan that makes sense for you. A short-term care policy, or perhaps a long-term care policy, will protect your life savings; and your family’s well-being. Don’t become a burden to those you love.
On a Budget?
Adding a long-term care option to a life insurance policy could only cost you pennies a day. Let’s find out now, before it’s too late.
A more realistic question is “How much money is Medicare going to save me?” That’s true because many people say that Medicare is the best health insurance they’ve ever had, and at the lowest overall cost they ever paid, all things considered. With that good news in mind, let’s see exactly what Medicare costs, and what you get for the price.
Are You Nearing Age 65?
If you are nearing age 65, you are certainly aware of Medicare, and that it’s run by the government. You have also started receiving a river of advertising material on Medicare from insurance companies, all vying for a part of your ‘Medicare business.’ What does it all mean?
When you enroll in Medicare it will pay (part of) your hospital, doctor and prescription bills. But you will have to make some decisions on how to set up your Medicare insurance. This article will help clear up the issue.
Health Care Expenses Are Bigger in Later Years
Health care becomes more important the older we are. Make a good choice when choosing your health insurance and you will reap the rewards. Get it wrong, though, and you can waste a lot of money or pay way too much for your prescriptions. Those are both common mistakes people make when choosing their Medicare coverages.
But Medicare is Simple – It Has Only 4 Parts
Medicare has only four parts. They are called Parts A, B, C and D. You get parts A and B from the federal government, and Parts C and D from insurance companies.
Part A Will Probably Cost You Nothing
Most people receive Part A at no cost when they turn age 65. You already paid for it during your working years, through payroll taxes. Sign up for Medicare at your local Social Security office, or online at the Social Security website, which is: www.ssa.gov. It’s easy.
Note: Be advised that you do NOT have to start receiving your Social Security benefits to enroll in Medicare. Everybody seems to ask that question.
What is Part A?
It pays part of your hospital bills. There are large portions of your hospital bills that Part A does not pay, and those are called ‘gaps.’ You buy insurance to cover those gaps.
Part B Costs Most People About $135 Per Month
Part B is not free, no matter how much you paid in taxes. Sorry.
If your income is below about $85,000 yearly, or $170,000 for people who file joint tax returns, you will pay the government $134.90 per month for your Part B benefits. What if your income is higher? Than you will pay more. It goes by a sliding scale. See the details on Part B premiums at the Medicare website, which is: www.Medicare.gov
That monthly premium goes up each year, by act of Congress. Sorry again. Sign up for Part B the same way you signed up for Part A.
The part B premium will be deducted from your monthly Social Security check. What happens if you are not receiving Social Security yet? In that case the government will mail you a bill, quarterly, for the Part B premium.
If you don’t enroll in Part B when you first become eligible, and you do NOT have other suitable (creditable is the official Medicare term) health insurance in its place, you will pay a penalty later in life when you do enroll in Part B. It’s a big penalty, too, and you will pay it every month for the rest of your life. Be careful.
What Does Part B Give You?
Part B is officially called “Medical,” and it simply pays a part of your doctor bills. That means your regular physician, any specialists you see, surgeons and the like. Many people think (erroneously) that Medicare pays a flat 80% of their doctor bills. That’s not accurate. Here’s what you will pay:
First, you must pay an annual Part B deductible. That deductible is called, you guessed it, another ‘gap.’ But it’s only $183 right now. The deductible does increase a little each year, again by act of Congress.
After you’ve paid your deductible for the calendar year (January 1st through December 31st is a standard Medicare year), then Medicare starts paying the 80% of your doctor bills. The 20% co-pay that you pay yourself is another ‘gap.’
What if a doctor is not satisfied with the payment he receives from Medicare for treating you? He is allowed (depending on circumstances) to charge you another 15% on top of the total bill. Another gap. That is officially called the Part B Excess Charge. Read about it at: www.Medicare.gov
You pay the extra 15% out of your own pocket, of if you have a certain type of Medigap insurance policy, the insurance company will pay it for you. We’ll get back to this 15% charge later.
You Need Prescription Coverage Too
So far, we’ve seen that Parts A & B cover portions of your hospital and doctor bills, minus a lot of gaps. You still need prescription insurance.
That is called Part D. Enrolling in Part D simply means that you purchase a prescription drug plan, one of the many Rx plans that are approved by Medicare, from an insurance company.
Here is another pitfall to be aware of. If you don’t enroll in a Part D prescription plan when you first become eligible, and you do NOT have other suitable (creditable is the official Medicare term) prescription insurance in its place, you will pay a penalty later in life when you do enroll in Part D. It’s a big penalty, too, and you will pay it every month for the rest of your life. Again, be careful.
Don’t Overpay for Your Prescriptions (Many People Do)
In major metropolitan areas there are always about two dozen different Part D plans for sale each year. They are vastly different from each other.
Each one covers a different list of medicines, with a lot of exceptions.
Each one has a different schedule of co-pays. The price you would pay for any particular drug varies widely among plans.
The plans all sell for different prices.
On average, though, most people pay between $20 to $60 monthly (that’s a rough estimate) for their prescription policy. Some people pay less, and others pay more.
Two dozen plans to choose from? Which one is best for you? Choose a plan that’s not a good fit for your circumstances, and you will overpay for your prescriptions by hundreds of dollars, or even more, each year. That’s a common mistake.
Choosing the Best Part D Plan for Yourself Depends On:
The county and Zip Code in which you live
The specific prescriptions you take
Which pharmacy you patronize
Whether or not you want to buy prescriptions by mail
Get Help Deciding
Of course, you don’t want to waste money. So, to get help choosing the best Rx plan for yourself, you have three good options:
Call Medicare for help at 1-800 MED-ICAR. Determining which plan is best for you is one thing they do very well. Have your complete list of prescriptions with you when you call. You will be on the phone with them about an hour.
You can use the Part D plan selection tool at www.Medicare.gov.
You can talk to a qualified, experienced Medicare insurance agent.
What About Insurance to Pay Those ‘Gaps?’
The gaps are too costly for most people. That’s why they buy Medigap insurance, again sold by insurance companies. Now you see why you receive so much advertising about Medicare policies from insurance companies.
There are several types of Medigap plans for sale. Prices vary widely by:
The insurance company you buy from. Shop around.
The type of plan you choose (Co-pays vary a lot among plans)
Whether or not you have a history of tobacco use
Where you live
Whether or not you want a plan that will pay that 15% Part B Excess Charge that we discussed earlier.
And if you are older than 65, the price you pay could also depend on:
This article is not intended to sell insurance, so we don’t want to quote prices. But let’s say that if you are 65 years old, expect to pay (for the most popular Medigap plans) from $120 to $190 per month. Again, that’s just a ballpark estimate because the overall question we are answering is “What is Medicare going to cost me?”
Also, be advised that Medigap insurance also goes under the name ‘Medicare Supplement.’ You will see that term a lot.
Add It All Up
For most people, their costs will be (monthly):
Part A $ 0
Part D 40(estimated)
Incidentally, having your Medicare benefits set up like that is called enrolling in ‘original Medicare.’
Is That Too Much to Pay? You Have One More Option
Many people find that they are happier (meaning that they potentially save some money) with a Medicare plan that lets them ‘pay as they go’ for their health care services. That is called Medicare Part C.
How Much Does Part C Cost?
Part C takes you off ‘original Medicare,’ so you don’t have to buy the Medigap policy. It also means that Medicare will no longer pay your doctor and hospital bills. All that will be paid (less co-pays) by the insurance company you choose. A lot of the advertising you receive is about Part C plans.
Prices for Part C plans vary widely, by insurance company, by location and by plan type. Monthly premiums vary widely, but the majority sell for $0 (Zero) to about $60 per month.
Many Part C plans also include your Part D prescription insurance, at no extra charge. It’s easy to see why these plans are so popular.
Part C Plans Are Also Called ‘Advantage Plans’
Be advised that the term ‘Advantage Plan’ is commonly used for Part C plans.
How Do Advantage Plans Work?
You will have copays for almost every medical service you receive. To see which plans are available in your county and zip code:
Talk with a qualified Medicare insurance agent
There are two ways to set up your Medicare benefits:
Stay on ‘Original Medicare,’ and purchase a Medigap policy and a Part D prescription policy
Enroll in a Part C advantage plan, and ‘pay as you go’ for your health services.
Which option is best for you? It depends on several factors, too many to discuss in this article. It’s best to talk with a qualified Medicare insurance agent.
Almost everyone is covered under a variety of health insurance plans these days. This means that the health insurance company will cover the costs of your medical needs such as surgery, procedures and hospitalization. There are legions of private and government run insurance plans. Today, we will discuss Medicare and the costs involved in being covered under this insurance plan.
What is Medicare? Medicare is the federal health insurance program created in 1965 and administered by CMS, a division of the U.S. Department of Health & Human Services (HHS). It covers the country’s senior citizen population; that is all people over the age of 65. It also covers certain young people with disabilities who are receiving SSDI (Social security disability Insurance) and people who have end stage renal disorders and amyotrophic lateral sclerosis also known as ALS. Medicare is further split into four coverage categories to help cover specific services.
Medicare Part A: Hospital Coverage. Part A covers inpatient medical care, hospice care, nursing homestay services and other non ambulatory procedures.
Medicare Part B: Covers certain OPD services, Physician fees, preventative healthcare treatment and the purchase of medical supplies.
Medicare Part C: Advantage Plans. Medicare Advantage Plans provide all of your Part A and Part B benefits. This plan is offered by a private company that contracts with Medicare.
Medicare Part D: Covers Prescription Drugs and controlled substances.
It is important to pick the coverage that suits you best in order to minimize your co-pay costs and reap maximum benefits from the federal insurance program. For instance, the Original Medicare program is widely accepted by physicians and other caregivers in the country, as opposed to Medicare Advantage Plans that cover limited hospital networks under their wing.
On the other hand, the Medicare Advantage plan covers procedures that involve routine dental care and visits to the ophthalmologist.
Out of pocket costs: Medicare will not pay for all of the beneficiary’s medical costs irrespective of which part you are enrolled under. It also excludes certain services and procedures from the coverage plan. For this, the beneficiary has to pay out of pocket.
Premiums: Most Americans do not have to pay monthly premiums for Medicare Part A because they have had over forty quarters in which they paid FICA (Federal Insurance Contributions Act) taxes. For the unlucky few who do not meet this criteria, CMS offers Part A enrollment for an annual adjusted monthly premium of $232.00 per month for those with 30–39 quarters of Medicare-covered employment, or $422.00 per month for those with fewer than 30 quarters of Medicare-covered employment. Here is how much you pay for Part A hospital inpatient deductible and coinsurance. $1,340 deductible for each benefit period. Day 1 to 60: $0 coinsurance. Day 61 – 90 $335 coinsurance per day. Day 91 and beyond $670 per day coinsurance for each lifetime reserve day.
Medicare part B is a paid for insurance and comes at a premium of $104.90 – $335.70 per month. The premium increased to over $120 a month in 2016 but only for those who were not on Social Security in 2015. An income-based premium surtax schema demands that individuals with incomes exceeding $85,000 and married couples with incomes exceeding $170,000 pay higher premiums for Part B enrollments. The higher the income, the higher the premium. These Part B premiums are $139.90, $199.80, $259.70, or $319.70 with the highest premium paid by individuals earning more than $214,000, or married couples earning more than $428,000. One factor that may raise your Medicare Part B premium is the late enrollment penalty. Medicare Part B requires you to pay a yearly deductible of $183.
Part C may or may not charge a premium as deemed suitable by CMS. Part D premiums are based upon the benefits included under ones enrollment and varies by plan. The annual deductible for a standard Medicare Part D Prescription Drug Plan is a maximum of $405 as of 2018.
Seeing as there are so many options to pick from, choosing the right plan for yourself can be a tough decision to make. Research. Look around and study all of the available options you can enroll under before you sign the deal. If you need professional help and advise, you can contact our experts at Flagship Financial and book a consultation.