Medicare Primer for the “New Boomers”, by Rosanne Roge, CFP®, CSA®, RFGSM
Well, the Baby Boomers are beginning to enter the Medicare program and the momentum will be building rapidly. This is the crowd born between 1946 and 1964. As of 2011, that would make us between 47 and 65 years old. Currently, there are approximately 75 million “boomers” in the U.S. The Brits refer to their own version of the boomers as “the bulge, ” but I prefer boomers … there are more than enough bulges elsewhere!
Here is a brief primer on the four elements of Medicare and how they work.
Medicare Part A Essentially, Part A is hospital insurance. Also called the Original Medicare Plan, it covers in-patient hospital stays, hospice care, home health care and stays at skilled nursing facilities. You’re eligible at age 65. Although most folks don’t pay a premium for Part A (because they already paid Medicare taxes during their working years), there are co-payments and a yearly deductible. Eligibility requirements are as follows:
- You are receiving retirement benefits from Social Security or the Railroad Retirement Board
- You are eligible to receive Social Security or Railroad benefits but you have not yet filed for them (i.e., if you are still working and your income exceeds the Social Security earnings limit, you’re better off waiting until full retirement age to collect your Social Security benefits, but DEFINITELY apply for Medicare)
- You or your spouse had Medicare-covered government employment
Medicare Part B This is the medical insurance component of Medicare. It covers doctors’ bills, outpatient care, physical and occupational therapies. It also helps cover some home health care and preventive services to help maintain a person’s health. It generally pays 80% of the Medicare-approved amount for covered services. Part B is optional and there is a monthly premium and an annual deductible. The monthly premium is based upon your modified adjusted gross income. (Please see my article “Important Figures for 2012,” which contains these premium figures).
The Part B premium is deducted from your Social Security, Railroad Retirement or Civil Service Retirement check. If you’re not collecting Social Security or other benefits, Medicare will send you a bill for the Part B premium every three months.
If you did not sign up for Part B when you became eligible, you may be able to enroll during the General Enrollment period, which runs the first 45 days of every year. You can sign up at your local Social Security office or online at www.ssa.gov.
Medicare Part C Starting in 1997, Medicare beneficiaries were offered the option of signing up for care provided by certain private insurers that are approved and under contract to Medicare. Best known as the Medicare Advantage Plan, Part C is designed to close some of the “gaps” in Medicare coverage. By combining parts A and B (and possibly D) under a private wrapper, it effectively becomes Part C. It can include HMO, PPO, fee-for-service and special needs plans. These policies provide extra benefits, helping to pay certain fees such as co-pays and deductibles and a portion of your doctor bills that Medicare may not cover. Premiums for Medicare Advantage plans can vary considerably.
Note that Medigap insurance policies, which are provided directly by private companies, are not compatible with Medicare Advantage. If you have a Medigap policy, it won’t pay benefits should you elect to move into a Medicare Advantage plan.
Medicare Part D This is the optional prescription coverage offered through private insurance companies approved by Medicare. There is a monthly premium, yearly deductible and a co-payment. As with Medicare Advantage, Part D plans can vary in cost and coverage so take the time to be sure that a specific plan meets your particular needs. To avoid paying a penalty cost later, individuals should enroll as soon as they become eligible.
Below is a list of the information you will need to gather before you get in touch with the Social Security Administration to apply for your Medicare benefits. Try to remember to file your application approximately three months before you turn 65. That’s important because, as noted previously, you run the risk of having to pay higher Medicare Part B and Part D premiums if you delay.
– Date of birth
– Social Security number
– Contact information, including emergency contacts
– List of prescription medications and dosages
– Contact information for your physicians and other care providers
– List of health conditions and treatments
– List of any medical equipment you may be using
– Key info: Details of the health care coverage you may have under your current or former employer, including policy, member and group ID numbers.
– Veterans information, if applicable
– Railroad retirement information, if applicable
– Bank account information, including bank routing number, if you would like to set up automatic Medicare payments from your bank if you are not collecting Social Security
This is just a brief outline of the Medicare program and its guidelines. Depending on your individual circumstances, you may be able to apply online. Additional information can be found on the Medicare website at www.medicare.gov.
Hope this information is helpful to the New Boomers!