Denise Kelly-Dohse, CFP®
Vice President, Wealth Advisor, Vice President, Wealth Advisor, Canandaigua National Bank & Trust
[email protected]Medicare is the federal health insurance program that was signed
into law in 1965. It was created for people over age 65 and certain
young people with disabilities. Open enrollment for Medicare runs
annually from October 15th to December 7th. During the enrollment
period you have the opportunity to select your health care plans
that will take effect on January 1st for the next calendar year.
Medicare begins the month you turn 65 or after being on disability
for 2 years. Some people who are working can delay Medicare. If you
are turning 65, Medicare becomes effective the first day of your birth
month; if you turn 65 on the 1st of the month, it starts the month
prior. If you are collecting Social Security, you will be automatically
enrolled. If not, you have 7 months to apply: 3 months before your
birthday, your birthday month or the 3 months following.
Medicare is made up of various parts.
- A and B are considered original, or government, Medicare. They
come from Social Security Administration.
- Part A covers hospital services and is free for anyone who has
worked ten years or more or whose spouse has worked ten
years or more.
- Part B covers medical care and has a premium. Most people are
paying $148.50 a month in 2021, but this premium will go up in
2022. Singles who make more than $88,000 and married couples
who make more than $176,000 will pay more for their Part B,
based on a sliding scale.
- Part D helps cover prescription drugs and premiums,
copayments, and coinsurance costs vary by plan.
- Medigap plans, Part D, and Part C plans are offered by private
insurance companies, not by Medicare.
Medicare can get confusing if you’re still working and covered by
other plans.
- If you are still working and have employer group health
insurance, and your employer has more than 20 employees,
and the coverage is considered “creditable,” it is your choice
whether to take Medicare or not.
- If you have a qualified employer plan and would like to keep
contributing to your HSA, you should not take any part of
Medicare. You cannot contribute to an HSA on Medicare A or B.
- If you want to contribute to an HSA, you should also delay
applying for Social Security benefits because once you do, you
are automatically enrolled in Part A.
So now that you have applied for Medicare and received your
red, white, and blue card, what’s next? At this point, you want to
understand your coverage and what deductibles and coinsurance
you have, and if you need additional coverage. There are a few
options that may be of interest to you.
Medigap plans do just as the name implies. They fill in all, or some,
of the gaps left by Medicare. There are 10 different plans, each
one covering different gaps in Medicare, labeled with letters A-N.
Premiums vary between companies but plans are standardized and
benefits remain the same.
Medigap plans do not have drug coverage, so you must also
purchase a standalone prescription drug plan to avoid a penalty for
not having drug coverage. It is important to note that the penalty
applies for the rest of your life, so it is important to avoid incurring.
Keep in mind that Medigap plans do not cover any expenses related
to vision, dental or hearing, and most do not have additional
benefits, such as fitness or transportation.
The second option is a Medicare Advantage Plan, called Part C.
They are more like a box of benefits instead of a “Part” as they
combine Parts A, B, and usually Part D into one plan. The premiums
for Medicare Advantage plans range from $0 per month to over $200
per month. These plans are subsidized by the government, so don’t
assume that a low-priced plan is a bad plan. When you are on an
Advantage Plan, you will have co-pays and co-insurance amounts
for any medical services and these will vary by plan. Medicare
Advantage plans may also give you extra perks, like vision, hearing,
dental, a fitness membership, acupuncture, and meals after a
hospital stay. Some plans have a Part B giveback, which means that
they give you some of your Part B premium back. Extra benefits
vary by plan and may cost a higher, or additional, premium.
Navigating supplemental plans can be challenging. They change
annually and during the open enrollment period, you have an
opportunity to revisit the plans. Any changes in your health,
prescription drugs, or lifestyle may mean you want to adjust the
type of plan you choose. Consulting with an expert
on our team can help ensure you are enrolled in
the plan that meets your needs.
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.