Every day, around 10,000 members of the Baby Boomer Generation turn age 651, which is generally the age they become eligible for Medicare. Often, this is the first time that many Baby Boomers realize that decisions around Medicare are not just medical decisions; Medicare decisions also have significant financial implications. Once individuals come to this realization, they will turn to the financial professionals on whom they depend to help make sense of Medicare and in turn help them make financially informed Medicare decisions.
It is in this scenario where you can show your value to your clients by helping them understand Medicare and then incorporate Medicare costs into their comprehensive financial plan. The Nationwide Retirement Institute® is here to help you in this endeavor by sharing with you some of the most common Medicare frequently asked questions by clients, so that you will be prepared with an informed response that demonstrates your value and distinguishes you from your peers.
When do I enroll in Medicare?
For everyone who turns 65 and is eligible for Medicare, there is a seven-month “initial enrollment period,” or IEP. The IEP spans from the start of the third month before the month of your 65th birthday through the end of the third month following the month of your 65th birthday. This IEP is available regardless of whether you continue to work past age 65.
If you choose to work past age 65 and remain eligible for group health coverage provided by your employer (or your spouse’s employer), then you may choose not to enroll in Medicare during your IEP. If this is the case, you will have a second chance to enroll during a “special enrollment period,” or SEP. The SEP generally lasts 8 months, beginning from the month after your employment or group health coverage ends, whichever occurs first. If you do not enroll in Medicare during your IEP or SEP, then you may be subject to lifelong penalties in the form of increased premiums once you do enroll.
How do I enroll in Medicare?
If you are already receiving Social Security when you turn 65, you will automatically be enrolled in Original Medicare, which means Medicare Parts A & B. Your eligibility will be effective the first day of the month you turn 65. You will not even need to sign up. You should simply receive a red, white, and blue Medicare card in the mail around three months before your 65th birthday.
If you choose to stay on Original Medicare, you will likely want to proactively enroll in a Medicare Part D plan as well, to get prescription drug coverage. In the alternative, you may choose to enroll in a Medicare Advantage Plan, which is known as Medicare Part C. Medicare Advantage plans replace Original Medicare and Medicare Part D, but you must proactively enroll in Medicare Advantage plans as well. You can enroll in a Medicare Advantage Plan or a Medicare Part D plan during your IEP. Visit Medicare.gov/plan-compare to get specific Medicare drug plan and Medicare Advantage plan costs, and call the plans you’re interested in to get more details. For help comparing plan costs, contact your State Health Insurance Assistance Program (SHIP).
If you are not already receiving Social Security at least 4 months before turning 65, you will need to sign up by:
- Applying online at Social Security. (If you start your online application and receive a re-entry number, you can go back to Social Security to finish your application at a later time.);
- Visit your local Social Security office; or
- Call Social Security at 1-800-772-1213 (TTY: 1-800-325-0778).
Nationwide teamed up with the National Council on Aging (NCOA) to create an unbiased tool to help you sort through your Medicare options. It’s called the NCOA My Medicare Matters® tool brought to you by Nationwide (link). The tool allows you to work with financial professionals so that they can assist in the Medicare decision-making process before the completion of the enrollment process.
How much does Medicare cost?
That also depends. The first and most important thing to understand in the context of cost is that it will not be free! There are still premiums, copays, coinsurance, and deductibles to plan for.
If you sign up for Original Medicare, Part A will be free to those who have paid at least 10 years of Medicare taxes. Part B will require a monthly premium of $148.50 in 20212. That amount may be more if your income is high enough to cross certain thresholds.
Medicare Part D (for prescription drugs) and Medicare Advantage plans (Part C, an alternative to Original Medicare and Medicare Part D) will also have monthly premiums. The costs of those premiums will vary plan by plan and be impacted by other factors, like age at enrollment and geographic location.
What does Medicare cover?
Not everything! That may be the simplest yet most important fact you need to understand. Medicare will not cover all medical care. In particular, Medicare does not cover long-term care (LTC), nor vision or dental care. Also, Medicare does not cover care received outside of the USA. This means that supplemental insurance for LTC, dental and vision, and travel insurance, will be important to look into.
That being said, Medicare does cover most medical treatments and procedures. Original Medicare Parts A and B cover most basic medical services. In general, Medicare Part A covers hospitalizations (i.e., inpatient care) and Medicare Part B covers outpatient care. In addition to inpatient care, Part A also covers home healthcare in limited circumstances, as well as hospice care. Medicare Part B covers outpatient clinical services like doctor’s visits and emergency room visits, including observation. In addition to outpatient care, Part B also covers medical supplies (think splints and casts, or crutches or a wheelchair), X-rays and other radiology services, and preventive care and screening services. One important fact about this last category, is that many of the preventive care and screening services covered under Part B are free; there is no coinsurance or other cost-sharing. Screenings for many cancers (including breast, cervical and vaginal, colorectal, and lung) are free, as are screenings for depression and diabetes. Many Medicare beneficiaries do not understand that these screenings, as well as many other preventive services (like flu shots), are free; consequently, they fail to seek out those services. Failing to be aware of and take advantage of these free preventive and screening services can delay diagnosis and treatment of many different health conditions, ultimately impacting longevity and quality of life, not to mention increasing the eventual cost of treatment when an ailment’s symptoms appear later in a more advanced stage. As the adage goes, an ounce of prevention is worth a pound of cure!
Which Medicare coverage option is right for me?
For the third time in this blog, I must say it again: it depends. Decisions around Medicare are incredibly complex and depend on both medical and financial factors that are individual to each person. Many folks end up talking to their friends or neighbors for advice, but what works best for them may not work best for you! I encourage you to do some independent research and consult with your primary care physician or other medical professionals with whom you have an existing relationship so that you can make the most informed choices about the coverage and cost of your healthcare in retirement.
Where can I find out more?
If you want or need to learn more about Medicare, please check out other resources from the Nationwide Retirement Institute. We are here for all your Medicare coverage questions.
Medicare questions to ask before enrolling
Preparing clients for healthcare expenses
Costs associated with Medicare coverage
Think ahead when choosing your Medicare plan
Medicare and its link to Social Security
Long-term care is not covered by Medicare
Medicare and Managing Chronic Conditions: Chris and Jerry’s Story
Podcast: Medicare and Chronic Conditions