➤ Medicare

What is Medicare?

Late enrollment penalty: 

• If you don’t buy it when you’re first eligible, your monthly premium may go up 10%. (You’ll have to pay the higher premium for twice the number of years you could have had Part A, but didn’t sign up.)

Medicare Part A (Hospital Insurance)

Monthly premium:

• Most people don’t pay a monthly premium for Part A (sometimes called “premium-free Part A”). If you buy Part A, you’ll pay up to $422 each month in 2018. If you paid Medicare taxes for less than 30 quarters, the standard Part A premium is $422. If you paid Medicare taxes for 30-39 quarters, the standard Part A premium is $232.

Medicare Part B (Medical Insurance)

The standard Part B premium amount in 2018 will be $134 (or higher depending on your income). However, some people who get Social Security benefits pay less than this amount ($130 on average). You’ll pay the standard premium amount (or higher) if:

• You enroll in Part B for the first time in 2018.
• You don’t get Social Security benefits.
• You’re directly billed for your Part B premiums (meaning they aren’t taken out of your Social Security benefits).
• You have Medicare and Medicaid, and Medicaid pays your premiums. (Your state will pay the standard premium amount of $134.)
• Your modified adjusted gross income as reported on your IRS tax return from 2 years ago is above a certain amount. If so, you’ll pay the standard premium amount and an Income Related Monthly Adjustment Amount (IRMAA). IRMAA is an extra charge added to your premium.

Part B comes with a monthly premium you must pay; in 2018, the base premium is $134.00

Medicare Part C

Medicare Part C is known as Medicare Advantage. These are private plans run through Medicare that, by law, must at least be “equivalent” to regular Part A and B coverage.

If you join a Medicare  Advantage Plan, the plan will provide all of your Part A (Hospital Insurance)  and Part B (Medical Insurance) coverage. Medicare Advantage Plans may offer  extra coverage, such as vision, hearing, dental, and/or health and wellness  programs. Most include Medicare prescription drug coverage (Part D).

Medicare  pays a fixed amount for your care every month to the companies offering  Medicare Advantage Plans. These companies must follow rules set by Medicare.  However, each Medicare Advantage Plan can charge different out-of-pocket costs  and have different rules for how you get services (like whether you need a referral to  see a specialist or if you have to go to only doctors, facilities,  or suppliers that belong to the plan for non‑emergency or non-urgent  care). These rules can change each year.

Medicare Part D

Medicare Part D provides prescription drug coverage. This is actually a separate policy you buy from a private insurer.

Each private insurer has its own plan, but in general, it works like this: You pay a monthly premium for Part D coverage and may also have an annual deductible of no more than a few hundred dollars a year, if there is any deductible at all. Once you cover the deductible, your plan will then pay some – or all – of your drug costs, but only for the first $2, 960 in total drug costs for year 2015.

Most Medicare drug plans have a coverage gap  (also called the “donut hole”). This means there’s a temporary limit on what  the drug plan will cover for drugs. Not everyone will enter the coverage gap. The coverage gap begins after you and your drug plan have spent a certain amount  for covered drugs. Also, people with Medicare who get extra help paying Part D costs won’t enter the coverage gap.

Once you enter the coverage gap, you get a 45% manufacturer-paid discount on covered brand-name  drugs. Although you’ll only pay 65% of the price for that brand-name drug, the  entire price will count as out-of-pocket spending, which will help you get out  of the coverage gap.

Who Pays for Medicare?

Medicare is funded by the Social Security Administration, which means it’s funded by taxpayers.  Everyone pays 1.45% of their earnings into FICA  (the Federal Insurance Contributions Act) which go toward Medicare. Employers pay another 1.45%, bringing the total to 2.9%.

While the portion of our FICA taxes that cover payments into the Social Security system are levied only on a part of  your earnings, the Medicare tax is levied on everything you earn.

You will also pay some Medicare costs yourself when you start using the plan.

What is Supplement Insurance?

Medicare provides a good deal of coverage, but it doesn’t cover everything.  As a result, many people choose to buy a separate policy to provide coverage to fill in the gaps. This is known as Supplement insurance. Supplement is bought from private insurance companies.

You can also use your Supplement policy to cover expenses you have under Medicare, such as annual co-pays and deductibles.

Important note: If you opt for a Medicare Advantage Plan (Medicare Part C), any Supplement policy you have won’t pay. If you take a Medicare Advantage Plan and you already have a Supplement policy, you should eliminate the Supplement plan.

Which Supplement policy should I buy?

There are 12 standard Supplement policies to choose from, labeled plans A through L. Supplement A is the most basic or “core” policy.  As you move through the alphabet, the plans add more coverage. For example, Supplement E will offer something that is not included in Supplement D, but will lack a coverage provided in Medicare F.

There is no difference in plans offered by different insurers; plan details are all set by the government. (Note: If you live in Massachusetts, Minnesota or Wisconsin, check with your state insurance company or a private insurer who operates in your state. Supplement policies in these states offer coverage different than the plans followed by the 47 other states.)

If you and your spouse want Supplement coverage, you’ll need to buy separate policies; spouses aren’t covered together.

Contact our office to find out which plan best fits your needs. Phone: 800-763-1406