An often overlooked aspect of financial planning is considering health insurance options. Health care costs continue to rise, and as you grow older the likelihood you’ll need those services increases. In households where both spouses are employed, it’s important to analyze the benefits of each spouse’s employer provided health insurance plans to make sure you’re not paying too much for health insurance. You should consider the monthly premiums, deductibles and maximum out-of-pockets while at the same time taking into consideration your current health and the likelihood you’ll need health care services in the next year. As retirement nears, it’s important to know your options for continued health care coverage, especially as your eligibility to participate in your former employer’s health insurance plan lapses as you leave employment.
One of your options is applying for Medicare, which is health insurance for people age 65 or older, people under age 65 with certain disabilities and people of any age with End-Stage Renal Disease. Medicare has four parts: (i) Part A – Hospital Insurance; (ii) Part B – Medical Insurance; (iii) Part C – Medicare Advantage; and (iv) Part D – Prescription Drug Coverage.
Part A helps cover inpatient care in hospitals, skilled nursing facility care, hospice care and home health care. Part B is an optional coverage that helps cover outpatient care, medically necessary doctor’s services and some home health services. While Part A and Part B are provided by Medicare, a Part C Medicare Advantage plan is offered by Medicare-approved private companies. You’ll receive Part A and Part B coverage from the Medicare Advantage Plan if you elect to go that route. Some Medicare Advantage plans include prescription drug coverage (Part D), while others do not. If you don’t have a Medicare Advantage Plan with Prescription drug coverage, or if you are enrolled in Part A and/or Part B through Medicare, it’s important to consider whether you will need to enroll in Part D.
Some people get Part A and Part B automatically:
- Those already receiving benefits from Social Security or the Railroad Retirement Board
- Those under age 65 and disabled
- Those with ALS (Amyotrophic Lateral Sclerosis, also called Lou Gehrig’s disease)
Some people must sign up for Part A and/or Part B:
- If you’re close to age 65, but not getting Social Security or RRB benefits
- If you have End-Stage Renal Disease and want Medicare
- If you live in Puerto Rico and want to sign up for Part B
You may enroll in Medicare during your initial enrollment period or annually during open enrollment. Your initial enrollment period is the seven-month period that begins three months before the month you turn 65, includes the month you turn 65 and ends three months after the month you turn 65. For example, if your birthday is October 15, 1952, you’d be able to sign up from July 2017 through January 2018.
You may also sign up for Medicare and/or make changes to your health and prescription drug coverage during Medicare’s open enrollment period, which is generally October 15 through December 7. Any changes you make during open enrollment will begin on January 1 of the following year. Knowing if you need to and when to sign up for Medicare is important, as a delay could cost you an enrollment penalty and/or your benefits may be delayed.
Medicare health and prescription drug plans can change each year, which is why it’s important to always review the materials your plan sends you. It’s also important to make sure your plan will still meet your needs for the following year as the approved providers, pharmacies, costs and coverage may change. The decisions you make regarding your health care coverage can play an important role in your overall financial plan. If you have general questions about Medicare enrollment and coverage options, contact your Wealth Advisor or a member of the Wealth Enhancement Group.