Turning 65 is like becoming a celebrity. Everyone sends you mail and calls you, even if you don’t know who they are. So what are you to do? Who are you to trust?? Both are important questions and can have life-altering financial consequences if you choose wrongly. I say that not to scare you, but to encourage you to think carefully about Medicare choices and seek information and advice from reputable insurance agents. Throughout this document, I have links to other helpful content. The links will open in a new tab so that you can easily make your way back here to this guide.
If you are turning 65, like the majority of people taking this step you’ll be eligible for Original Medicare Part A, and Part B. Original Medicare is for all people who are age 65 or older, and also for those under age 65 who have certain disabilities. So let’s start making Medicare clear right here from the beginning.
- Medicare Part A provides hospital and other inpatient coverage.
- Medicare Part B provides for some outpatient medical coverage, like doctor office visits.
- Both Parts A & B have gaps in their coverage. These gaps are what supplemental insurance covers. Supplemental policies are called Medigap policies and cover things like your deductibles, co-insurance, and charges from a doctor that are beyond what Medicare accepts.
Medicare Part A and Part B are standard for all subscribers. Medigap policies, that you purchase to cover the gaps, are multiple. Each Medigap policy covers slightly different pieces of the gaps and charges different fees for their coverage.
How Much Does Medicare Cost
The costs associated with Medicare change every year. They are determined by Congress based on what the Medicare Trustees Board recommends. Most of us don’t like that, but that’s how it works. Medicare Part A for most people is paid for in full if you worked 40 quarters (10 years) and paid into Medicare through payroll taxes or the self-employment tax. Most of Medicare Part B is paid the same way, typically covering 75% of the cost, leaving you with 25%. Easy peasy, right? Nope! This changes every year as it is based on your income: If you make more than their set standard, you will pay more.
I have a FREE ebook that I put out every year that describes the costs associated with Medicare. You can register to receive it or simply download it here.
Will I be Automatically Enrolled in Medicare
If you signed up to take Social Security earlier than age 65, Medicare already knows about you. They will automatically sign you up for both Parts A & B and send your Medicare card to you three months in advance of your 65th birthday. Included with your Medicare card will be a way to opt-out of Medicare Part B.
How do I know if I should opt-out of Part B (outpatient care)? You might want to opt-out if you plan to continue working and have health coverage through your or your spouse’s employer. There are some difficult consequences if you were opt-out without sufficient coverage. We would strongly advise consulting with us about your situation.
If you are automatically enrolled in Medicare, your effective date will be that of the 1st day of the month of your birthday. For example, if your birthday were August 21, your Medicare coverage would start on August 1st. However, to confuse you more, if your birthday happens to actually fall on the first of the month, then your Medicare coverage will start the prior month. For example, if your birthday is on August 1st, then your Medicare coverage will start on July 1st, the month before.
Manually Enrolling into Medicare
If you are not taking Social Security yet, then Medicare doesn’t know about you. I don’t know how not, but that’s a different question for another time. If you need to enroll in Medicare manually, it is a fairly easy process. I have had clients in my office go through the whole process in roughly 10 minutes. (Not too bad for a government process!) You can read about this process, if you would like, by clicking the following link: https://www.avenueinsuranceplanners.com/how-to-enroll-into-medicare/
Please make a note on your calendar. You will want to start this process three (3) months before your 65th birthday to ensure coverage is in place by your birth month.
Note: Start the Medicare enrollment process 3 months before you are 65
How to Fill in the Gaps of Medicare
Woowee! You’ve enrolled in Medicare! Some clients of mine have told me that this is the point where it becomes real that they are getting old. I don’t know about that, because the people who I’m around that are over 65 seem to be having a lot more fun. But I digress! You now get to choose whether you want to stay with Original Medicare and a Medigap plan (Medicare Supplement) or go with a Medicare Advantage plan (Part C). The diagram below put out by Medicare a couple of years ago, does a great job of walking you through this choice. Following the diagram, I give you some examples to make it all more understandable.
Original Medicare and Medigap
Clear as mud? Just read on and, hopefully, these examples will clarify for you. On the left side is Original Medicare. This allows you to go to any doctor or hospital in the USA, Guam, Puerto Rico, and the US Virgin Islands that takes Medicare. Original Medicare operates most closely to a PPO (Preferred Provider Organization) plan where you control who you want to see, and you don’t need a referral to go there. I like that last part: if you need to see a podiatrist for a foot issue, you can see a podiatrist. You don’t need to seek the approval of your primary care doctor or your insurance company. Your choice of supplemental coverage (Medigap plan) will determine what costs you want the insurance company to pick up, versus how much you are willing to pay out of your pocket.
By the way, if you decide to skip the country, Medicare has no coverage outside the United States. However, some of the Medigap plans do. Look at our travel page.
Medicare Part C (Medicare Advantage)
On the right side of the diagram above is Medicare Advantage or Part C. This is where you assign (give) your Medicare benefits to an insurance company. Medicare Advantage plans are typically HMO plans (Health Maintenance Organization), but some are PPO or PFFS (Private Fee For Service). If you choose this route, you will typically have a designated network of doctors and hospitals that you must use for services. You also, most likely, will have some sort of co-pay, or co-insurance, to pay when you receive the service. In addition, you will have an out-of-pocket maximum. All of these costs are in addition to the cost of the premiums you pay for the plan.
However, these plans do have to pay as good as Medicare, and so may offer some extra benefits. My opinion is that these plans are over-marketed due to the amount of money the insurance carrier and agent make by selling the plan.
Medicare marketing guidelines do not allow detailed discussion of these plans on public space such as this blog. However, if you call in or meet with us in person, I can and will definitely talk about the Medicare Advantage Plans in great detail.
You may also want to check out the difference between Medigap and Medicare Advantage
What about Medicare Part D
Medicare Part D is the prescription drug plan. Usually, if you choose a Medicare Advantage plan it will include Part D coverage. However, if you choose Original Medicare, you should also choose a Part D plan. A question I’m asked frequently is, “What if I don’t take any prescriptions? Do I need a Part D plan?” My answer is a resounding “Yes!”
We buy insurance for the future, not necessarily the present. Regarding a Plan D, what is important to know is that Medicare will ding you with a penalty if you don’t get a Part D plan when it is first available to you, but wait until later. This penalty is applied to your Part D premiums for the remainder of your life and is not a one-time charge.
Since these Part D plans are constantly changing, we work with our clients on an annual basis to help them choose what the best Medicare Part D plan is. We would love to work with you as well.
Why Choose Us
That is a fair question! Brian Gruss, the owner of Avenue Insurance Planners and www.Justmedigap.com, has been specializing in Medicare since he was licensed as an insurance agent by the State of Washington in March of 2007. He is now licensed in most states and works with clients all over the country. Brian operates as an independent broker, which means he doesn’t have to sell one insurance carrier but can find the best of many. Since Brian spends an average of 150 hours a year researching and studying Medicare, he is known to other insurance agents as an expert resource for Medicare. Brian receives referrals from current clients, CPA’s, doctors and financial planners. Learn more about Brian Gruss and Avenue Insurance Planners by clicking on the About Us page on the menu bar above.