While it’s exciting to think ahead to retirement after decades of hard work, the countless financial decisions you need to make may seem daunting. 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 problem 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 actions you can take.
When Is Medicare Open Enrollment?
The Medicare open enrollment period happens at the same time every year due to the changes enacted in 2011, starting on October 15th and ending December 7th. 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. Keep in mind, not everyone is required to enroll in Medicare. If you have health insurance through an employer group plan that covers twenty or more employees or are covered as a spouse under such a plan, you do not need to apply for Medicare when you turn 65.
But if you do not fall under that category and 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 Parts A and B, you can switch to Medicare Part C (or Medicare Advantage), which is often contracted by outside 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 back to Original Medicare (Parts A and B).
- You can reevaluate your Part C plan and switch to a different Medicare Advantage plan.
- If you already have Parts A and 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.
What Will Medicare Cost?
The amount you will pay for 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 demonstrate the differences in cost, if you worked for more than ten 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 ten 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 Medicare Coverage?
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 ClearVista Financial, our goal is to act as your financial quarterback, helping you manage all the pieces of your financial life so you can find balance. If you need help evaluating your Medicare options, reviewing your insurance coverage, or just want to ask a couple of questions, I’m here to help. Email me at email@example.com, call 800-491-4508, or book your free introductory meeting online today!
Mark Trice is an independent financial advisor with nearly a decade of experience in the industry. As the founder of ClearVista Financial, his mission is to help people find financial balance in their lives and to spend life well. Along with providing financial planning and retirement planning to pre-retirees and 401(k) plan participants, he is also an educator. He currently holds the designation of a Certified Financial Educator® through the Heartland Institute of Financial Education. Mark has offices in Austin, Brownwood, Temple, Houston, and Waco, Texas. Along with serving clients in Texas, he also works with individuals in California, Colorado, West Virginia, and Virginia. To learn more, visit www.clearvistafinancial.com or connect with Mark on LinkedIn.