A new book titled “Medicare 101” by financial journalist Kimberly Lankford is a practical roadmap to help you make the best decisions about your coverage.
The alphabet of options ranges from Part A (hospital care and services) to Part B (medical care, including preventive services), Part C (Medicare Advantage), and Part D (prescription drug coverage). Plus Medicare Supplement (Medigap).
It’s bewildering and downright stressful to compare coverage options and select a plan. Lankford’s book serves as a guide in the process.
Here are edited excerpts from our recent conversation:
Kerry Hannon:What are some of the costly obstacles people face when it comes to enrolling in Medicare?
Kim Lankford: They don’t understand that they have to register. Unless you are already enrolled in Social Security, you are not automatically enrolled in Medicare.
It’s easy to sign up for Medicare. You visit the Social Security Administration website during your initial enrollment period, around age 65. It’s a seven-month period: three months before your 65th birthday, the month of your birthday, and three months after. Failure to comply can result in higher monthly premiums due to late payment penalties for Part B and Part D for the rest of your life.
Those who are still working should talk to their human resources department to confirm that their employer’s health plan covers them.
If you work for an employer that has fewer than 20 employees, you generally must enroll in Parts A and B. If you have health insurance coverage from a large employer, that may remain your primary coverage.
What many people do is sign up for Part A because they don’t have to pay premiums for it, but don’t sign up for Part B while they are working.
If you missed your initial period, you can enroll later if you were covered by an active group health plan from your employer (yours or your spouse’s).
Medicare 101 by Kimberly Lankford
If you work and contribute to a Health Savings Account (HSA), is it okay to enroll in Medicare?
You may not want to enroll in Part A yet. Once you enroll in Medicare, you will no longer be eligible to contribute to an HSA. But you can use your HSA funds tax-free for qualified medical expenses, including Medicare premiums, deductibles, copays and coinsurance.
What is the biggest misconception people have about Medicare in general?
They think it’s free. He has monthly premiums for Medicare Part B, which are now $202.90 per month.
Another misconception is that everyone pays the same for Medicare. It’s not like that.
If you have a higher income, not only is it higher income from a job, but it’s also higher income if you take tax-deferred withdrawals from retirement savings, which counts in your income calculations. If you do a Roth conversion from a traditional IRA, that money is taxable and included in the high-income penalty calculation.
Here’s how it works: If you earned more than $109,000 as a single taxpayer or $218,000 as a married filing jointly two years ago, you may be subject to what’s known as the Income-Related Medicare Monthly Adjustment Amount (IRMAA).
Can you decline that surcharge?
You can challenge the IRMAA by filing Form SSA-44 with the Social Security Administration. It has to be some kind of life-changing event that has caused your income to be below what it was two years ago. Qualifying events include retirement or reduction in income paid from a job, marriage, divorce/annulment, death of a spouse, loss of income-producing assets, or loss of a pension.
No one will make that request for you and you will need to provide documentation to reduce your premium.
Let’s talk about Medicare and long-term care costs. What do people need to know?
Neither Medicare nor Medicare Advantage cover long-term care expenses. Medicare covers some skilled nursing care after you have been in the hospital and received rehabilitation care. But that long-term care, custodial care that you may need, such as assistance with long-term activities of daily living, is not covered. That’s one of the biggest gaps in health care costs that people have after retirement.
What should retirees who travel internationally know about their Medicare coverage?
Generally, Medicare does not cover you when you travel out of the country. Most Medigap plans provide some foreign travel coverage. A Medicare Advantage plan may have some additional coverage.
If you travel abroad a lot, I recommend looking for a travel insurance policy that can cover medical evacuation and things like that. Also, if you live abroad, understand that your Medicare will not cover your medical care.
What are some tips for people looking for a Part D plan?
There is now a $2,100 limit on the amount you pay out-of-pocket for your Part D prescription drug plan. That’s a great thing. But that limit is only for drugs that are covered by your plan. And each plan has a different formulary, which is its list of covered medications. And those can change from year to year.
So each year during open enrollment season, which occurs in the fall, from October 15 to December 7 of each year, I recommend going to the online Medicare Plan Finder on the Medicare.gov site. Type in your zip code, then your medications and dosages, and it will tell you exactly how much each plan in your area will charge for your specific medications.
“You don’t have to be around 60 to know about Medicare,” according to author Kim Lankford. (Photo courtesy of Kim Lankford)
Many retirees move to another state after enrolling in Medicare. What should they be aware of?
If you have original Medicare, moving isn’t a big deal. It covers any doctor and hospital that participates in the Medicare program, which is most of them.
If you have a Medigap plan that fills Medicare gaps, you will generally need to tell your Medigap plan if you have moved.
If you need help, state health insurance assistance programs are great. The State Health Insurance Assistance Program (SHIP) network provides personalized advice in each state.
If you move to a new state with a Medicare Advantage plan, you will generally have to get a new plan. That means researching the doctors and hospitals you might need to receive care in your new city to make sure they are covered by a new plan.
Do you have any questions about retirement? Personal finances? Anything career related? Click here to send Kerry Hannon a note.
Any shared ideas?
You don’t have to be over 60 to learn about Medicare. Many of my friends are over 50 and are helping older parents. We are in the middle of this and we don’t know the basics about Medicare.
For two years now, I have had to make decisions about my parents’ Part D plan. Now, during open enrollment, I go to the Medicare Plan Finder, type in their medications, and decide if they will stay with the same plan or not.
Kerry Hannon is a senior columnist for Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including “Retirement Bites: A Generation X Guide to Securing Your Financial Future,” “In control at 50+: how to succeed in the new world of work,” and “You’re never too old to get rich.” Follow her on blue sky and unknown.
Subscribe to the newsletter Take care of your money
Click here for the latest personal finance news to help you invest, pay off debt, buy a home, retire, and more.
Read the latest financial and business news from Yahoo Finance
Your Trusted Source for Accurate and Timely Updates!
Our commitment to accuracy, impartiality, and delivering breaking news as it happens has earned us the trust of a vast audience. Stay ahead with real-time updates on the latest events, trends.
