Medicare

If you have ever been puzzled about Medicare, you are not alone. This is a very important benefit that most working Americans have earned. If you are turning 65 soon, I implore you to read every section here. If you already have Medicare, I dare you to do the same. If you have a Part D prescription plan, you should get a prescription checkup each year. This will ensure that your plan is best for your set of prescriptions.

I will try to keep it as simple as possible. Numbers are updated below for Medicare 2024 rates.

The four parts of Medicare

A Hospital coverage - is usually free and comes from Medicare

B Doctors, labs, ER - costs $174.70 per month and comes from Medicare (see “extra cost” below)

C Advantage Plans - sold by private insurance, I will discuss below

D Prescriptions - costs vary from plan to plan, which is sold by private insurance

You are eligible for Medicare if:

A citizen or legal resident of the US age 65 or older and qualified for Social Security
65 or older and your spouse is 62 or older and qualified for Social Security, or
Younger then 65 but entitled to Social Security disability benefits.

Extra cost for Medicare

If you report a high income on your 2022 tax return, you will have to pay more in 2024 for Medicare parts B and D. Extra cost starts at $103,000 MAGI for singles and $206,000 for married filing jointly. There are 5 levels of extra cost for singles - starting at: $103,000; $129,000; $161,000; $193,000 and $500,000.

For married filing jointly the 5 levels start at - $206,000; $258,000; $322,000; $386,000 and $750,000.

Initial Enrollment Period

The month of your 65th birthday, plus 3 months prior and 3 months after. This is when you want to sign up because all options are available to you without any medical qualifications. This may be the last time you have this privilege. If you miss this enrollment (don't) you have another chance each Jan-Mar under the General Enrollment Period. However, with General Enrollment, coverage does not go into effect until the following July and you may have to qualify for the plan you want. Anyone who is covered by another medical plan at age 65 such as an employee group plan, will have a Special Enrollment Period when that coverage stops. Once again, choices may be somewhat limited.

You may enroll through Social Security or by calling Medicare at 1-800-633-4227.

What Medicare parts A and B alone will cover (It's easier to list the things it does not cover; i.e. you will pay the following out of your pocket)

Part A Hospital expense (per stay)

Days 01-60 $1632 deductible - may apply to each stay, Medicare pays the rest
Days 61-90 $408 per day, Medicare pays the rest
Days 91-150 $816 per day, Medicare pays the rest
Days 151+ you pay everything, Medicare pays nothing

Part B Doctors, labs, ER, etc.

$240 annual deductible
20% of all services after the deductible is met, Medicare pays the remaining 80%

If you believe (like me) that these costs could be a substantial financial burden, please read on

Supplement Plans (aka Medigap)

These are plans that cover some or all of the expenses left uncovered by Medicare A and B. They are organized by Medicare but sold by private insurance companies. They come in 11 different varieties (A - N), depending on the amount of coverage. Too much detail to explain all of these plans but I will mention two favorites. Plan F is considered the Cadillac. It offers the most coverage, but at the highest premium price. The F Plan is no longer available for beneficiaries starting Medicare in 2020 or later. It remains available to members who were enrolled in Medicare prior to 2020. Plan G covers everything except the annual deductible, at a better price. The premium price of these plans depends on age, gender, and smoking/non-smoking status. Contact me for specific prices. I can direct you to the best prices in our geographic area. Prices vary depending on the company you buy them from, but the coverage is exactly the same regardless of company. So why would you pay more to a company without the best price? If you already bought the wrong plan, you may still have the option to switch with no penalty.

They are a lifetime commitment from the insurance industry and Medicare.
- If you like your plan, you keep your plan. Does that sound familiar? Only this time, it’s actually true!
You can enroll in these plans within 6 months of your Medicare Part B enrollment (sooner the better).
- It is possible to switch between plans once enrolled or enroll later, but restrictions may apply.
- Call me for details on switching plans.
Follow this simple and critical rule: Get everything right during your Initial Medicare Enrollment Period!

Prescription Plans – Part D Medicare

This is very important. For some people, their Rx costs are the biggest on-going medical expense.

In our area, there are over 20 Medicare Rx plans available, each with a different deal. These “deals” are all different and include: premium cost, cost of Rx’s, and deductibles. They may also restrict where you have to buy your Rx’s - mail order or local pharmacy. Furthermore, these deals are only for one calendar year; they can change each year. So how can you possibly determine which plan is best for you? Easy! There is a computer tool which allows us to insert your complete Rx data, and it lists the best plans for you. This tool should be run each year for you to stay ahead of the game. If your agent is not doing this for you – you need to “upgrade” your agent! Hint: call me!

Next: the coverage gap, aka donut hole. This “feature” is setup by Medicare and exists with every Rx plan. It means that once you reach a specific yearly total for all Rx’s purchased, your Rx costs can substantially increase for the rest of the year. And that total includes what you pay plus what your insurance pays as well. That makes it even more important to have the best plan to begin with. My experience working in the pharmacy has taught me a couple of ways to avoid or delay going into the donut hole.

Advantage Plans – Part C Medicare

These plans are more difficult to understand. Television ads have been bombarding the networks, selling these plans. And— most of this TV nonsense is technically incorrect or misleading. I will try to keep it short and simple. You can choose an Advantage Plan when you first enroll in Medicare. You can also enroll each annual Open Enrollment period from Oct 15 - Dec 7. They contain everything: Part A, Part B, Supplement, and Part D (Rx) all rolled into one plan which is run by a private insurance company. Medicare pays these plans to “take you off of the regular Medicare rolls” and set up their own “Medicare business”. They come in 2 plan types: HMO’s which are very restrictive, and PPO’s which are more flexible and user friendly.

Advantages

They have lower premiums
no increase in premiums due to age, gender, medical condition, or smoking status
$0 hospital cost over day 150
Rx coverage usually included (no extra premium)
extras may be included such as vision, dental, hearing

Disadvantages

Coverage, price and availability is only guaranteed for one year
co-pays required for most services
billing is run through insurance company and therefore doctors and facilities can choose not to participate
They are regional – different plans in different areas. We have several companies with plans in our area. Some offer excellent services and are user friendly. Others are more “confrontational”. You will need help to understand which is which.

It is easy to change from one advantage plan to another each calendar year, or change back to regular Medicare with or without a Supplement. Understand that after one year (age 66) you may not switch to a Supplement Plan unless you medically qualify. This is very important, especially to members with chronic conditions.

I hope my tour of Medicare has been helpful to you.

If you need a more detailed explanation, reach out and I will do my best to help you. Everyone’s needs and risk tolerance is different. That’s why there are more choices than one!