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Premiums and health insurance coverage vary and you must understand the differences.
Medicare takes a little time to understand. At the age of 65, familiarize yourself with its coverage options, costs, and limitations.
Some features of Medicare can affect the costs and coverage of health care.
Some retirees may accept the original Medicare plan (Parts A and B), others may find it missing and decide to supplement original Medicare coverage with Part C, Part D or Medigap coverage . In some cases, this may mean paying more for health care per month than what you originally planned.
How much do Medicare Parts A and B cost and what do they cover?
Part A is usually free. Part B is not. Part A is hospitalization insurance and covers up to 100 days of hospital care, home care, home nursing and palliative care. Part B covers doctor visits, outpatient procedures and laboratory work. You pay Part B with monthly premiums and your Part B bonus is based on your income.
In 2018, the basic monthly premium for Part B is $ 134; Medicare beneficiaries with higher incomes pay more per month. In addition, you generally support 20% of the costs of Part B after paying the annual deductible, or $ 183 in 2018.
Copays and deductibles related to original Medicare can nibble retirement income. In addition, original Medicare does not cover dental care, vision care, hearing care, prescription drugs, or health care services outside the United States. It does not cover more than 100 consecutive days of care in a specialized retirement home.
These reimbursable expenses may lead you to seek additional Medicare coverage and other means of paying for long-term care.
Medigap's policies help Medicare beneficiaries with some of these copays and franchises.
Sold by private companies, these health insurance policies will pay a portion of certain medical bills borne by the user (that is, higher costs than Medicare covers to l & # 39; origin). You must have original Medicare coverage to purchase one.
The Medigap fonts sold today do not offer coverage for prescription drugs. A monthly premium on a Medigap policy for a 65-year-old man can range from $ 150 to $ 250. So keep this cost margin in mind if you plan to benefit from Medigap coverage.
By 2020, the two most popular types of Medigap plans – Medigap C and Medigap F – will disappear. These plans pay the Medicare Part B deductible and Medigap policies of this type are being discontinued due to the Medicare Access Act and the re-authorization of CHIP. In 2019 you will not be able to register.
Part D plans cover some (and certainly not all) expenses related to prescription drugs.
Monthly premiums averaged $ 33.50 this year for these stand-alone plans, offered by private insurers. Part D plans currently provide annual deductibles of less than $ 500.
Some people choose a Part C (Medicare Advantage) plan compared to the original Medicare.
These plans, offered by private insurers and approved by Medicare, combine coverages under parts A, B and usually D and often benefits to sight, dental care and hearing aids. You pay an additional minor monthly premium in addition to your standard Medicare premium for Part C coverage. Some Medicare Advantage plans are health maintenance organizations; others, preferred providers.
If you want a Part C plan, should you choose an HMO or PPO?
About two-thirds of Part C participants choose HMOs. There is a difference in cost. In 2017, HMO's average monthly premium was $ 29. The average monthly premium for a regional PPO was $ 35, while the average premium for a local PPO was $ 62.
HMO plans usually limit you to the network's doctors. If you are a snowbird who travels often, you risk staying out of the Part C network for weeks or months and risk paying off-grid medical expenses with your savings. With PPO plans, you can see providers outside the network and see specialists without the primary care physicians recommending them.
Now, what happens if you retire before age 65?
Outside of COBRA, you plan to either purchase private health insurance or stay uninsured until you become eligible for Medicare. You should also consider this potential cost in planning your retirement. The earliest possible date for which you can arrange health insurance coverage is the first day of the month of your birthday.
Medicare planning is an integral part of your retirement planning.
Should you try original Medicare for a while? Should you sign up for a Part C HMO to reduce your health expenses out of your pocket? There is also the issue of elder care and the eventual need for temporary coverage (which will not be cheap) if you retire before age 65. Discuss these questions with the finance professional you know and trust in your next conversation.
Securities and advisory services offered by LPL Financial, a registered investment advisor, member of FINRA / SIPC. The opinions expressed in this document are for general information only and are not intended to provide specific advice or recommendations to anyone. Bush Wealth Management and LPL Financial are separate entities.
Stacy Bush is at Bush Wealth Management.
Jason Smith is a reporter at the Valdosta Daily Times. He can be contacted at 229-244-3400, ext. 125.
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