Every day, around 10,000 members of the Baby Boomer Generation turn age 65,1 which is generally the age they become eligible for Medicare.2 Often, this is the first time that many Baby Boomers realize that decisions around Medicare aren’t 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 sound Medicare decisions.
It’s in this scenario where you can provide your clients additional value by helping them understand Medicare and then incorporating Medicare costs into their comprehensive financial plan. The Nationwide Retirement Institute® is here to help you in this endeavor by sharing some of the most common Medicare questions frequently asked by clients, so that you will be prepared with an informed response that demonstrates your knowledge and distinguishes you from your peers.
When do I enroll in Medicare?
For everyone who turns 65 and is eligible for Medicare, there’s a seven-month “initial enrollment period,” or IEP. The IEP spans from the start of the third month before the month of your client’s 65th birthday through the end of the third month following the month of their 65th birthday. This IEP is available regardless of whether they continue to work past age 65.
If your client chooses to work past age 65 and remain eligible for group health coverage provided by their employer (or their spouse’s employer), then they may choose not to enroll in Medicare during their IEP. If this is the case, they 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 their employment or group health coverage ends, whichever occurs first. If your client does not enroll in Medicare during their IEP or SEP, then they must wait to sign up during the General Enrollment Period between January 1st and March 31st of each year; but beware that in this circumstance, your client may be subject to lifelong penalties in the form of increased premiums once they do enroll.
How do I enroll in Medicare?
If your client is already receiving Social Security when they turn 65, they will automatically be enrolled in Original Medicare, which means Medicare Parts A & B. Their eligibility will be effective the first day of the month they turn 65. They will not even need to sign up. They should simply receive a red, white, and blue Medicare card in the mail around three months before their 65th birthday.
If they choose to stay on Original Medicare, they will likely want to proactively enroll in a Medicare Part D plan as well, to get prescription drug coverage. In the alternative, they 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 they must proactively enroll in Medicare Advantage plans as well. They can enroll in a Medicare Advantage Plan or a Medicare Part D plan during their IEP.
Medicare.gov/plan-compare shows specific Medicare drug plan and Medicare Advantage plan costs, and clients have the opportunity to call the plans they’re interested in to get more details. For help comparing plan costs, the State Health Insurance Assistance Program (SHIP) can also help.
If your client is not already receiving Social Security at least 4 months before turning 65, they will need to sign up by:
- Applying online at Social Security. (If they start their online application and receive a re-entry number, they can go back to Social Security to finish their application at a later time.);
- Visit their 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 sort through Medicare options. It’s called the NCOA My Medicare Matters® tool brought to you by Nationwide. The tool allows clients 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 your client signs 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 $170.10 in 2022.3 That amount may be more if their 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 your client! You should encourage clients to do some independent research and consult with their primary care physician or other medical professionals with whom they have an existing relationship so that they can make the most informed choices about the coverage and cost of their healthcare in retirement.
Where can I find out more?
If your clients want or need to learn more about Medicare, you can direct them to other resources from the Nationwide Retirement Institute. We are here to help answer all Medicare coverage questions.
Medicare Questions to Ask Before Enrolling
Costs Associated with Medicare Coverage
Think ahead when choosing your Medicare plan