Your Financial Future: Understanding Medicare – Uniontown Herald Standard
Medicare is the national health care program for most people in the country over age 65. Everyone reaching this age must go on Medicare unless they or their spouse are covered by a company plan with 20 or more employees. People, who do not sign up for Medicare when required, will have no health insurance because Medicare becomes their primary coverage.
If you are receiving Social Security when you turn 65, Medicare will automatically begin unless you notify them that you have employer coverage. You can do paperwork to opt in into Medicare three months before your birthday, the month of your birthday and three months after. Make sure you have this protection set to start the first day your other coverage ceases to cover you.
If you are covered by an employer plan when you are older than 65, you get a special enrollment period when your old coverage ends. We are currently entering the annual enrollment period. This runs every year between Oct. 15 and Dec. 7. This is why you are seeing so many commercials now. During annual enrollment everyone on Medicare makes their choices for the next calendar year.
Medicare does not cover all of your medical expenses. It is an 80/20 program with lots of deductibles. That is why 98 percent of all participants have some kind of supplemental insurance. There are two major types of supplements. Advantage or Part C is the first type. When you sign up for this type of coverage, you are choosing a network of providers. You will have some out of pockets expenses, but much less than original Medicare. Advantage plans also cover some things that Medicare does not usually provide. These may include vision care, hearing aids, gym memberships and other extras. The size of your network depends on the choices you make when selecting the plan.
Medigap plans are the other type of supplement. They fill in some of the gaps in coverage that Medicare does not provide. One of the advantages of Medigap plans is you can see any doctor who accepts Medicare and is accepting new patients. The two disadvantages are that you do not get the extra benefits like eye care and these plans are usually more expensive. Often they are used by people with more medical issues.
Medigap plans are issued with different plan letters. All companies A plans cover the same thing, but prices can differ. Plan F is usually considered the most complete coverage option. There is no pre-existing conditions considered if you are signing up when first eligible. Some medigap plans will consider pre-existing conditions later if you try to switch to them.
Another difference between the two types of plans is drug coverage. Most advantage plans include drug coverage while no Medigap plans do. If you have a Medigap plan you must buy separate Part D coverage to help cover your prescriptions. When deciding which types of coverage to purchase check the formulary to determine if the drugs you take are covered by the plan.
Review your options during annual enrollment and make the best choices for your family.
Your Financial Future is written by certified financial planner Gary W. Boatman, MBA and CFP, who also wrote the book, “Your Financial Compass: Safe Passage Through The Turbulent Waters of Taxes, Income Planning and Market Volatility.” If there is an area that you would like to see discussed in the column, send your suggestions to gary@BoatmanWealthManagement .com.