Recently when I visited my parents, I noticed a large pile of papers in the kitchen, all with a similar message: “We can help you with Medicare.” My dad turns 65 this year and it appeared a bunch of strangers knew this. Like my dad, many Americans reaching elder status put off making decisions about Medicare because they’re not sure where to start. It can seem overwhelming and it’s tempting to be skeptical of those seeking to help. Here is some information that can help you or a family member get started making these decisions.
What is Medicare and do I even need it?
Medicare is a federal health insurance program for U.S. adults aged 65 or older. You may be eligible for Medicare sooner if you have a disability, end-stage renal disease, or ALS. While Medicare coverage isn’t mandatory, not making a timely decision to enroll when you become eligible could result in late enrollment penalties or gaps in your insurance coverage. A common reason for delaying Medicare past age 65 is if you will have health coverage through your or your spouse’s job.
What does Medicare cover?
Medicare is broken down into four parts.
- Part A, Hospital Insurance, covers inpatient care in a hospital, skilled nursing facility, hospice, and some in-home care.
- Part B, Medical Insurance, covers outpatient care, including many doctors' visits, home healthcare, mental healthcare, ambulance, medical equipment, and preventive screenings.
- Part C, also known as Medicare Advantage, is a plan approved by Medicare that is offered by a private company. It bundles together Parts A and B, and usually Part D, and could include additional coverage. Because private companies make them available, Medicare Advantage plans are marketed heavily.
- Part D, Prescription Drug Coverage, helps with the cost of prescription drugs.
Parts A and B, known as Original Medicare, are managed by the federal government, while Part D is secured separately through private insurers. Anyone who starts Social Security benefits is automatically enrolled in Parts A and B. You have to enroll yourself in Part D, which is optional.
Original Medicare covers 80% of the costs of approved healthcare services. To help pay your 20% share, you can purchase a Medicare Supplemental Insurance plan, also known as Medigap. Medigap plans are offered by private insurers, and you must enroll yourself. These plans charge a monthly premium.
How much do I pay for Medicare?
Medicare costs associated with each part are broken down into the insurance premium, deductible, coinsurance, and copays, if applicable. Here’s a brief look at how premium costs may look in 2023.
- Part A – $0 monthly premium for eligible persons. You are eligible if you worked for 10 years or more paying Medicare payroll taxes.
- Part B – $164.90 monthly premium. This may be higher depending on your income.
- Medicare Advantage (Part C) – In addition to your Part A and B premiums, costs for monthly Medicare Advantage premiums vary. However, some Medicare Advantage plans can be offered for little to no additional cost.
- Part D – Monthly premiums vary considerably per individual. The national average premium is approximately $33 monthly and adjusts higher based on income.
- Medigap – In addition to your Part A and B premiums, monthly Medigap premiums vary widely based on which policy you buy, where you live, and other factors. Generally, the more additional coverage provided, the more expensive your monthly premium will be.
In addition to premiums, you pay a deductible each year, plus copays and coinsurance. For information about these, visit the medicare.gov site. For those in need of financial assistance with Medicare-related costs, Medicare Savings Programs can offer significant help. Learn more here.
Who can help me discuss health insurance options and enrollment?
Start with Medicare.gov, then speak with someone over the phone or via live chat. They can assist you with all things Medicare-related. If you need additional, personalized counseling, most states offer assistance programs to discuss your situation with a neutral and unbiased third party.
Finally, insurance brokers and insurance agents may offer advice at no cost to you – but be wary of any limitations and conflicts of interest. Consider if those individuals have the requisite knowledge and experience to assist you, have any limitations in their plan selection, or receive compensation from insurance companies based on your selection.
OneEleven Director of Wealth Coaching
Jason is a Certified Financial Planner™ and earned a B.S. in Economics from Penn State University and a M.S. in Accounting-Tax from Southern New Hampshire University. Jason worked on Wall Street for over 15 years and has always been fascinated with the stock market. Throughout his career, he has enjoyed sharing that passion with his clients. He also loves helping people with their finances so that they can live the life they’ve always wanted to live. Outside of work, Jason enjoys spending time with his wife and three young kids. He is an avid distance runner, huge sports fan, and amateur hot sauce maker.