Medicare is the free health insurance I’ll get when I retire, right?
Not exactly. Medicare is the national health insurance program for Americans aged 65 and older and also for certain younger people with disabilities or special health conditions.
Medicare covers about half of the health care expenses of those enrolled.1 The remainder is covered by private insurance that individuals must purchase.
There are several components to Medicare. Part A covers hospital care. Part B covers doctor’s visits and outpatient care. Part D covers prescription drugs. Part A is free. For 2019, Part B costs are between $135.50 and $460.50 a month, depending on income. Part D has a surcharge for higher income households ranging from $12.40 a month to $77.40.
The year in which you turn age 65 is important for Medicare as that is the age when most people must sign up. The best time to enroll is up to three months before or four months after you turn 65. If you are still working and your employer has at 20 employees or more, you can still sign up for Part A but can defer enrolling in Part B until you retire.
However, if you work for a smaller employer, e.g., less than 20 employees, you must sign up for Parts A and B—even if you are still working—in order to avoid being assessed a penalty premium. Unfortunately, more and more older employees of small companies are missing the sign up deadline and having to pay a penalty premium. They also may have to wait until the next enrollment period to sign up causing a gap in their coverage.
So, it’s a good idea to plan ahead. If you are turning 65 in 2020, we recommend that you visit your local Social Security office to learn about your specific situation. Or, you can come to our Medicare seminar in March 2020. Visit our website, www.PlanWithFPS.com in February for details and to register.
Still have questions about Medicare? Give us a call. We’re here to help.
Lyman H. Jackson
1Medicare Trustees reports and research by the government’s MedPAC group via Wikipedia, https://en.wikipedia.org/wiki/Medicare_(United_States) 12/17/19.
Financial Planning Solutions, LLC (FPS) is a Registered Investment Advisor. FPS provides this blog for informational and educational purposes only. Nothing in this blog should be considered investment, tax, or legal advice. FPS only renders personalized advice to each client after entering into an advisory relationship. Information herein includes opinions and forward-looking statements that may not come to pass. Information is derived from sources believed to be reliable. Information is at a point in time and subject to change without notice. Such information may not be independently verified by FPS. Please see important disclosures link at the bottom of this page.