Enrolling in Medicare
Unlike Social Security, the age for Medicare eligibility is the same for everyone: 65 years old, no matter what year you were born. If you have already filed for Social Security benefits by age 65, you will be automatically enrolled for Medicare. If not, your initial enrollment window begins three months before your 65th birthday month and extends for another three months — for a total of seven months. If you are receiving Social Security Disability Insurance or have end-stage renal disease, you may also be eligible for Medicare, even if you are under age 65.
Medicare Part A covers hospital care, post-discharge skilled nursing facility care and some home health and hospice care. If you (or your spouse) paid Medicare taxes for at least 10 years, Medicare Part A is free. You may purchase it if you do not meet this eligibility requirement.
Medicare Part B covers physician and specialist care, some preventive services, outpatient care and medical equipment. It is optional and can be purchased for a fee. In 2018, most retirees will pay $134 a month — the standard premium amount — if they enroll during their initial window. This amount can change every year. Part B can purchased after the initial enrollment period, but it will permanently cost more, and the extra fee will be based on how long you wait past initial eligibility. If you are automatically enrolled at age 65 because of your Social Security benefits, you can opt out of Part B if you don’t want to pay for it.1
Medigap is a colloquial term that describes another optional policy you can buy to cover copays, deductibles and coinsurance expenses associated with your Medicare plan. If you sign up for a Medigap policy within the first six months of turning age 65, your coverage is guaranteed. After that, you may have to meet medical underwriting requirements, and you might be denied coverage or charged higher premiums.2 Also, it is important to evaluate your options carefully during your first enrollment period. If you decide to switch to a different Medigap policy after this open enrollment period, you may be subject to medical underwriting.
Alternatively, you can choose to purchase Part A and B coverage through a private Medicare Advantage (MA) plan. It’s still Medicare, but the plan is administered through a private insurer and may have a limited network of providers. If you plan to spend part of the year out of state, you’ll want to check out the MA plan’s out-of-network coverage.3
1 Josh Weller. Journal-Advocate. March 11, 2018. “Facts you should know about enrolling in Medicare parts A & B.” http://www.journal-advocate.com/sterling-community/ci_31727651/facts-you-should-know-about-enrolling-medicare-parts. Accessed March 11, 2018.
2 Sarah O’Brien. CNBC. Feb. 21, 2018. “Don’t ignore this gap when signing up for Medicare.” https://www.cnbc.com/2018/02/21/dont-ignore-this-gap-when-signing-up-for-medicare.html. Accessed March 11, 2018.
3 Amy Rubino. Capital Gazette. Feb. 25, 2018. “Covering the Bases: Check nationwide coverage of your Medicare Part D drug plan.” http://www.capitalgazette.com/lifestyle/health/ac-cm-covering-20180225-story.html. Accessed March 11, 2018.
Money Saving Tips
Retirement and Health Care Budgeting
When you estimate a budget for retirement income, remember that health care expenses are likely to be higher in the future than they are before you retire. According to recent analysis by the Henry J. Kaiser Family Foundation, Medicare beneficiaries must devote a substantial portion of their household income to cover expenses not covered by Medicare, such as premiums, copays, medical supplies, expensive prescription drugs and gaps in coverage.1
In 2016, the average health care spending by Medicare beneficiaries was $5,355 (not including nursing homes and other long-term care facilities). In most households, this amount represented about 14 percent of total household spending, which is more than twice what the average non-Medicare household spent on health care.2
The following are some factors to remember when budgeting for health care expenses during retirement:3
- 20% allocation – Nearly 3 in 10 Medicare households spend 20 percent or more of their household budget on health-related expenses.
- Middle-income Medicare households spend a higher percentage of their budget on health-related expenses than the lowest- or highest-income Medicare households.
- While higher-income households may spend a lower percentage of their income on health care, that spend is generally higher ($8,247 vs. $5,355 total average per year).
- Increase allocation as you age – Older Medicare households (75 and older) spend a larger share of their budget (16%) on health care than younger Medicare households (age 65 to 74 — 13%).
- In retirement, you can allocate less money toward other items such as education, entertainment and clothes, so it may be a matter of reallocating those line-item expenses toward health care.
1 Juliette Cubanski, Kendal Orgera, Anthony Damico and Tricia Neuman. Kaiser Family Foundation. March 1, 2018. “The Financial Burden of Health Care Spending: Larger for Medicare Households than for Non-Medicare Households.” https://www.kff.org/medicare/issue-brief/the-financial-burden-of-health-care-spending-larger-for-medicare-households-than-for-non-medicare-households/. Accessed March 11, 2018.
Medicare and Nursing Home Benefits
Medicare Part A covers only acute care in a skilled nursing facility (up to 100 days per benefit period). Entry must follow three days in a hospital and be medically necessary — not simply assistance with daily tasks such as dressing and bathing. The following services are covered by Medicare during a stay at a skilled nursing facility:1
- Semi-private room
- Meals and dietary counseling
- Skilled nursing care
- Physical therapy, occupational therapy and speech-language pathology
- Medications, medical supplies and equipment used
- If medically necessary, ambulance transport to the nearest center for needed services not provided at the facility
We are able to provide you with information but not guidance or advice related to Medicare. Our firm is not affiliated with the U.S. government or any governmental agency.
1 eHealth. “Medicare and Nursing Home Care.” https://www.medicareconsumerguide.com/medicare-nursing-homes. Accessed March 11, 2018.