It is important to understand the details of this major program.
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Whether you’re nearing retirement or years away, you probably know a thing or two about Medicare. You probably know that it’s how millions of older Americans get health insurance today, a program that your paycheck funds, much like payroll taxes maintain Social Security.
But there are some aspects of Medicare that you may be less familiar with. Here are five things you may not be aware of that you should know.
1. It’s not free
Many people believe that joining Medicare is inexpensive. That’s far from the truth.
Most seniors do not pay premiums for Medicare Part A, which covers hospital care. However, Part B, which covers outpatient services, charges a monthly premium, which tends to change from year to year. Part D, which provides prescription drug coverage, also costs a premium (although there are some Part D plans with a $0 premium).
In addition to premiums, there are copays, coinsurance, and deductibles you may face as a Medicare enrollee. And they can be substantial.
To help cover these costs, we recommend purchasing supplemental insurance, known as Medigap, when you first enroll in Medicare. If you don’t, you could end up drawing down on your retirement savings more often than you’d like.
2. Original Medicare is not the only option
Original Medicare (Parts A and B) is not your only option for health insurance. Alternatively, you can enroll in a Medicare Advantage plan offered by a private insurance company.
Medicare Advantage plans have certain benefits, such as expanded benefits and annual out-of-pocket maximums. However, they do have certain drawbacks, such as being limited to a narrow provider network and often requiring prior approval for more complex or expensive treatments and services.
We recommend looking into your Medicare Advantage options to see if it’s worth enrolling in one of these plans. You can always drop Medicare Advantage if it doesn’t work out for you, but keep in mind that it may save you money.
3. Medicare offers some telehealth services
Some seniors find it harder to leave the house and go to medical appointments as they get older. The good news is that Medicare has expanded its telehealth options over the years. Enrollees can now participate in virtual visits to get the care they need without delay.
If you have Medicare, it’s helpful to find out what services you can access via telehealth. This is especially meaningful if you don’t have easy access to transportation or live in a remote part of the country.
4. You can enroll in Medicare if you’re still working
If you’re still employed, you may think you’re not eligible to sign up for Medicare. However, once you turn 65, you can register even if you are working full time.
Even if you have health insurance through your job, it may make sense to enroll in Medicare. You may find that Medicare is more comprehensive and less expensive than your workplace health insurance.
However, you should know that once you sign up for Medicare, you can no longer contribute funds to a Health Savings Account (HSA). If it’s an employer-provided benefit, you should opt out.
This doesn’t mean it can’t still be done use Once you enroll in Medicare, get an HSA. You cannot add more money.
5. Late registration can cost you a lifetime.
The initial Medicare enrollment period begins three months before the month of your 65th birthday and ends three months after that month. If you don’t have access to eligible group health insurance through your job, it doesn’t hurt to enroll during that time. Not only will this ensure you have health insurance, but you may also avoid costly fines.
If you delay enrolling in Medicare, you risk a 10% surcharge on your Part B premium for every 12 months you could have enrolled but didn’t. What’s worse, it’s usually a lifelong penalty that you can’t escape. Therefore, it is best to avoid it if possible.
Obviously, there’s a lot to know about Medicare. But don’t wait until right before you sign up to start learning. The more you understand before you retire, the better you can plan for your retirement.
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