Do You Have Questions About Your Medicare Plan?

Do You Have Questions About Your Medicare Plan?

By Oscar Casas, CFP®, CRPC®, MPAS®, ABFP℠ 

Medicare is a cornerstone of healthcare for many U.S. retirees, serving over 66 million people since its launch in 1965 and generating over $1 trillion in revenue in 2023. With nearly 96% of those aged 65 and older depending on it, Medicare’s impact on your financial future is undeniable.

However, it’s not always easy to understand the full range of options, and not knowing the ins and outs of your coverage can have serious financial consequences. If sifting through Medicare has left you feeling confused and overwhelmed, a Medicare assessment could be just what you need. Read on to get your Medicare questions answered and hear how we can help.

What Is Medicare?

Medicare is a health insurance program provided by the federal government for people over the age of 65 as well as disabled individuals. As mentioned, it plays a key role in covering healthcare costs in retirement, but it is not meant to cover everything. Understanding its coverage and its limitations is a crucial part of being prepared for retirement

Medicare is divided into four parts: Part A, Part B, Part C, and Part D. There are also supplemental coverages to consider to fill in any gaps not covered in the four main parts. Here is an overview of the different options to review as you approach retirement:

  • Part A covers hospital services. If you or your spouse paid Medicare payroll taxes during your working years for at least 10 years, Part A is free for you. If you didn’t, you can still get coverage by paying a monthly premium. 
  • Part B covers doctor visits and other outpatient services. Even if you or your spouse paid Medicare payroll taxes, Part B comes with a monthly premium. 
  • Part D is an optional add-on that includes drug coverage that also comes with a monthly premium.  
  • Original Medicare is a package that includes Part A and Part B, with the optional add-on of Part D. 
  • To help with Medicare costs such as copayments, coinsurance, and deductibles, many retirees will purchase Medigap insurance from private insurance companies to supplement their Original Medicare plan. Some Medigap plans also cover additional services not covered by Part A or Part B, but typically exclude services such as dental, vision, and hearing visits.
  • Medicare Advantage, also known as Part C, is an alternative to Original Medicare that is offered through Medicare-approved private companies. This plan bundles Part A and Part B and often includes Part D as well.  Medicare Advantage plans may cover additional services, including vision, hearing, and dental visits, but it is dependent on the terms of each plan and you will have to read the coverage details carefully. Medigap policies cannot be combined with Medicare Advantage. What’s more, if you switch from Medicare Advantage to Original Medicare, you may not automatically qualify for a Medigap policy and could face additional underwriting. 

Regardless of whether you have Original Medicare or Medicare Advantage, you may pay an extra charge added to your Part B premium called an Income Related Monthly Adjustment Amount (IRMAA). In short, if your modified adjusted gross income as reported on your IRS tax return from two years ago is above a certain amount, you’ll pay the standard premium amount plus an IRMAA charge. For 2024, the IRMAA additional premiums are:

MAGI – Single Taxpayers                  MAGI – Married Filing Jointly                       IRMAA Premium (Part B)                          
$103,000 or less $206,000 or less $174.70
Between $103,000 and $129,000 Between $206,000 and $258,000 $244.60
Between $129,000 and $161,000 Between $258,000 and $322,000 $349.40
Between $161,000 and $193,000 Between $322,000 and $386,000 $454.20
Between $193,000 and $500,000 Between $387,000 and $500,000 $559.00
Greater than or equal to $500,000 Greater than or equal to $750,000 $594.00

Keep in mind, no form of Medicare covers long-term care. If these expenses are not properly planned for, it can be costly and detrimental to your overall retirement plan.

What to Expect?

What to expect depends on which stage of the Medicare process you’re in.

If you’re a pre-retiree thinking about enrollment, you should expect to sign up in the six months surrounding your 65th birthday (three months before and three months after). If you’re receiving Social Security benefits at that time, you will be automatically enrolled in Medicare Part A and Part B. Additional coverages like Part D, Medigap, and Medicare Advantage will have to be enrolled separately. If you’re not receiving Social Security when you turn 65, you will have to apply for Medicare through the Social Security Administration website. 

If you’re retired and already enrolled in Medicare, you should expect to review your benefit options every year. This year, Medicare open enrollment began on October 15th and remains open through December 7th. The decisions you make during this period will affect your 2025 Medicare coverage. It’s a daunting task, but Medicare costs and coverage levels change annually so it’s important that you stay up to date. 

If you are already enrolled in Medicare, here is what you can do with your Medicare coverage during the enrollment period:

  • If you have Medicare Parts A & B, you can switch to Part C.
  • If you have Medicare Part C, you can switch back to Original Medicare or change to a different Medicare Advantage Plan. Beware! Once you are past your one-time Medigap open enrollment period and you want to switch back to Original Medicare, you may not be able to qualify for an affordably priced Medigap plan.
  • If you have Part D, you can switch to a different Part D plan or drop your prescription drug plan.

Don’t get this confused with the Medicare Advantage open enrollment period that occurs from January 1st to March 31st, where those with Part C can change to a different Part C plan or switch to Parts A and B. Any other changes need to happen in the October-December enrollment period. 

We’re Here to Help Make It Easy

Feeling a bit overwhelmed by Medicare? You’re not alone! Many of our clients feel the same way when they start thinking about it. That’s why we’re here to help. At Tranquility Path Investment Advisors, we guide Medicare recipients to feeling confident in their choices. Whether you have questions about your current plan or need help with the enrollment process, we’re here to support. Reach out to us at (732) 856-4324 to set up a complimentary appointment.

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