When it comes to retirement, there seems to be a never-ending checklist of tasks to complete in order to prepare yourself for this major milestone. You need to save enough to maintain your lifestyle, invest wisely, create a withdrawal strategy, minimize your taxes, and claim your Social Security benefits. But there’s one other critical piece of retirement planning to keep in mind: signing up for Medicare. And with healthcare being one of the top five expenses in retirement, (1) your Medicare choices are some of the most important decisions you will make.
The challenge with Medicare, a federal insurance program designed for people age 65 and older, is that it often seems complicated and confusing. Since there are multiple plans and various enrollment periods, how do you make sense of all the information? Here’s a breakdown of Medicare’s Open Enrollment period and the options available to you.
WHEN IS MEDICARE OPEN ENROLLMENT?
The Medicare open enrollment period happens at the same time every year due to the changes in 2011. For coverage in 2019, open enrollment will run from October 15, 2018, to December 7, 2018. Once December 8th arrives, the enrollment period closes until the following October. During this time, current Medicare users can switch coverage or add or drop parts of their plan.
Open enrollment is not for those who have never signed up for Medicare, unless the open enrollment period also falls during your initial enrollment time, which begins three months before you turn 65 and ends three months after the month you turn 65. But if you only signed up for Medicare Parts A and B during your initial enrollment, open enrollment gives you the opportunity to make changes to your coverage.
WHAT CAN I DO DURING OPEN ENROLLMENT?
Here is an overview of the changes you can make to your Medicare plan during open enrollment:
- If you have Medicare Part A (hospital insurance) & Medicare Part B (medical insurance), you can switch to Medicare Part C (or Medicare Advantage), which is often contracted by companies that have an agreement with Medicare. This service includes the coverage of both Plan A and Plan B (Original Medicare), as well as additional services like prescription drug coverage and private fee-for-service plans.
- If you have Medicare Part C, you can switch it back to Original Medicare (Parts A & B).
- You can reevaluate your Part C plan and switch to a different Medicare Advantage plan.
- If you already have Parts A & B, you can join or drop a Part D prescription drug plan. This part of Medicare adds the prescription drug coverage for Original Medicare, private fee-for-service plans, and some Medicare cost plans.
- You can switch your Part D prescription drug plan to a different Part D plan.
HOW MUCH WILL I PAY FOR MEDICARE?
The cost of Medicare insurance depends on a variety of factors. While many people choose Plan A, the premium for Plan B is paid automatically and costs about $134 monthly on average. The cost may vary depending on your income, whether or not you’re still working, and when you originally enrolled. Review the factors to get the best coverage.
As an example to determine cost, if you worked for more than 10 years, your monthly cost for the Plan A premium is $0 because you paid it while you worked. But the costs get higher if you worked for fewer than 10 years, climbing to $422 a month.
The Plan B premium also offers coinsurance after you’ve paid your deductible. This means that for some services you’ll pay only 20% of the total cost.
HOW CAN I IMPROVE MY COVERAGE DURING MEDICARE OPEN ENROLLMENT?
Plan C and Plan D are known as the options with the most coverage. Financially speaking, they are the most comprehensive plans. If you have either the basic Plan A or Plan B, you can improve your coverage using Medigap. This will help you pay for some of the services that are not covered by the higher coverage plans. Part C is also a prudent choice because it provides for services like dental and hearing health, which are not covered by the basic insurance plans.
As you can see, Medicare is complicated and ever-evolving, so don’t try to handle the intricacies alone. At Archer Investment Management, we provide comprehensive financial strategies for a secure future through a highly tailored and hands-on approach. We answer your questions, educate you on your opportunities, and help you prepare for every aspect of your retirement, including healthcare. If you need help evaluating your Medicare options, reviewing your insurance coverage, or just want to ask a couple of questions, we are here to help. Schedule a 15-minute get-acquainted phone call today.
Richard Archer is a financial advisor and the President of Archer Investment Management with more than 20 years of industry experience. He specializes in providing comprehensive financial planning and investment guidance and personalized care and attention to executives with complex compensation and families pursuing financial freedom. Along with holding a Wharton Bachelor of Science in Economics and a Texas MBA, he is a CERTIFIED FINANCIAL PLANNER™ certificant and a Chartered Financial Analyst®. He combines his advanced industry education and knowledge with his genuine care for people to provide clients with an exceptional experience. To learn more about Richard, connect with him on LinkedIn or visit www.archerim.com.