If you’ve thought about retirement at all, you’re probably aware of Medicare, a federal insurance program designed for people age 65 and older. What you might not know is that with Medicare, there are many options to consider and details to keep in mind. Your Medicare decision is critical to your financial health in retirement, since healthcare is one of the top five expenses in retirement and healthcare spending only increases with age. (1) As we draw closer to 2018’s Medicare open enrollment period, let’s review what you need to know.
When Is Medicare Open Enrollment?
The Medicare open enrollment period happens at the same time every year due to the changes enacted in 2011. For coverage in 2019, open enrollment will run from October 15, 2018, to December 7, 2018. Once December 8th arrives, the enrollment period closes until the following October. During this time, current Medicare users can switch coverage or add or drop parts of their plan.
Open enrollment is not for those who have never signed up for Medicare, unless the open enrollment period also falls during your initial enrollment time, which begins three months before you turn 65 and ends three months after the month you turn 65. But if you only signed up for Medicare Parts A and B during your initial enrollment, open enrollment gives you the opportunity to make changes to your coverage.
What Are My Open Enrollment Options?
Here is an overview of the changes you can make to your Medicare plan during open enrollment:
- If you have Parts A and B, you can switch to Medicare Part C (or Medicare Advantage), which is often contracted by outside companies that have an agreement with Medicare. This service includes the coverage of both Plan A and Plan B (Original Medicare), as well as additional services, like prescription drug coverage and private fee-for-service plans.
- If you have Medicare Part C, you can switch back to Original Medicare (Parts A and B).
- You can reevaluate your Part C plan and switch to a different Medicare Advantage plan.
- If you already have Parts A and B, you can join or drop a Part D prescription drug plan. This part of Medicare adds the prescription drug coverage for Original Medicare, private fee-for-service plans, and some Medicare cost plans.
- You can switch your Part D prescription drug plan to a different Part D plan.
What Will Medicare Cost?
The amount you will pay for Medicare insurance depends on a variety of factors. While many people choose Plan A, the premium for Plan B is paid automatically and costs about $134 monthly on average. The cost may vary depending on your income, whether or not you’re still working, and when you originally enrolled. Review the factors to get the best coverage.
As an example to demonstrate the differences in cost, if you worked for more than 10 years, your monthly cost for the Plan A premium is $0 because you paid it while you worked. But the costs get higher if you worked for fewer than 10 years, climbing to $422 a month.
The Plan B premium also offers coinsurance after you’ve paid your deductible. This means that for some services you’ll pay only 20% of the total cost.
Improving Coverage During Medicare Open Enrollment
Plan C and Plan D are known as the options with the most coverage. Financially speaking, they are the most comprehensive plans. If you have either the basic Plan A or Plan B, you can improve your coverage using Medigap. This will help you pay for some of the services that are not covered by the higher coverage plans. Part C is also a prudent choice because it provides for services like dental and hearing health, which are not covered by the basic insurance plans.
As you can see, Medicare is complicated and ever-evolving, so don’t try to handle the intricacies alone. At Haydel, Biel & Associates, we want to ensure that you have a plan to cover all aspects of your retirement and are taking full advantage of all the retirement benefits available to you. We believe that you don’t have to be a financial expert to make the right decisions, you just need to know who to ask. If you need help evaluating your Medicare options, reviewing your insurance coverage, or just want to ask a couple of questions, we’re here to help. Contact me at (626) 529-8347 or email me directly at ricky@hbawealth.com.
About Haydel, Biel & Associates
Haydel, Biel & Associates is an independent financial advisory firm serving individuals and families near Pasadena, California. The firm was founded in 2004 by Chris Haydel and Ricky Biel with a desire to provide unbiased, client-centered, community-based financial advice. Together, they have built a practice that has grown into a family of caring, smart professionals committed to blending proven investment methodologies with creative financial technologies that make it easier than ever to accomplish your goals. They strive to keep things simple and fun to give their clients peace of mind and alleviate financial stress. HBA Wealth takes care of their clients’ needs first and foremost and goes the extra mile to make their clients’ finances grow. To meet and see how the HBA Wealth team may be able to help, contact them today at (626) 529-8347 or email Ricky directly at ricky@hbawealth.com.
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(1) https://www.bls.gov/opub/btn/volume-5/spending-patterns-of-older-americans.htm