What You Need to Know About Medicare – Part 3 of 8

Josh Mungavin, CFP® Principal, Wealth Manager

Josh Mungavin, CFP®
Principal, Wealth Manager

Unforeseen healthcare costs can be one of the most destructive forces to an individual’s financial and retirement plan.  With appropriate forethought, one may reduce the risk of the financial devastation that a large health care bill can cause.  This article discusses the steps one should take to compare Medicare plans and some of the basic plan details with which one will need to be familiar in order to make an informed decision.

Please send this article out to friends and family so that they can forward it to the people in their lives that need this information.  The following will be useful to anyone who is over 60, disabled, has kidney failure, or Lou Gehrig’s disease.

Medicare Part B

Medicare Part B is the “Medical Insurance” portion of Medicare.  Medicare Part B coverage is paid for by a monthly premium that is based on your Modified Adjusted Gross Income from two years before you enroll.   If you do not sign up for Medicare Part B when you are first eligible you may pay a late enrollment penalty of 10% per year that your application was delayed.  This penalty lasts for as long as you have Medicare. If you are late at all you are deemed late for the year.  The penalty does not apply if you or your spouse are still working and covered by medical insurance through work.   If you are receiving Social Security and do not want Part B you must opt out; otherwise you will be automatically enrolled and the premium will be deducted from your Social Security check. The premiums can be as low as $104.90 (as of 2014) for someone who earned under $85,000 and is filing single or $170,000 if filing joint and they can be as high as $335.70 (as of 2014) for someone who earned over $214,000 and is filing single or $428,000 if filing joint.  This means that each year of delayed filing can add up to $34 per month per person to the premiums for life.  While this amount may not sound like a lot, it adds up to $12,240 per person over a 30-year time span.  The open enrollment period for Part B is between January 1st and February 14th every year during which time you can change plans.  Any changes made during the open enrollment period will go into effect July 1st of the same calendar year as the changes are made.

Benefit Coverage

Medicare Part B helps pay for some of the products and services not covered by Part A.  After your monthly premium and a $147.00 deductible (as of 2014) Part B coverage generally requires a 20% co-payment of patient bills and can include:

X-rays Lab & Diagnostic Tests (some lab services do not require a co-pay)
Influenza & Pneumonia Vaccinations  Blood Transfusions
Renal Dialysis Outpatient Hospital Procedures
Outpatient Mental Health (may require a 45% co-pay) Limited Ambulance Transportation
Immunosuppressive Drugs (for organ transplant recipients) Chemotherapy
Medication (administered by a physician during and office visit) Canes
Walkers Wheelchairs
Mobility Scooters Prosthetic Devices
Oxygen One Pair of Eyeglasses (following cataract surgery)
In Some Cases, Occasional Home Health Care Services (0% co-payment)

Keep in mind that Medicare has decided what they will pay for specific services; if your doctor accepts what Medicare pays, it is said that they “accept assignment.” If the doctor chooses to charge more than Medicare pays, you will have to pay the difference.

Where to Go For Extra Information

The Medicare Handbook http://medicare.gov/publications/pubs/pdf/10050.pdf

New Enrollee Checklist http://www.medicare.gov/welcometomedicare/checklist.html

The State Health Insurance Assistance Program (SHIP) is funded through grants to help provide information, counseling, and assistance to Medicare beneficiaries and their families with questions related to Medicare, Medigap, Medicare Advantage, Medicare Savings programs, Medicaid, Long Term Care Insurance, and other health insurance issues.

Your State Department of Insurance can be a good source of information with regard to Medicare policies available in your area.

Medicare provides informational resources online at www.Medicare.gov or over the phone at (800) 633-4227.

National PACE Association www.npaonline.org.

The Social Security Administration provides information on Extra Help www.socialsecurity.gov/extrahelp or by phone at (800) 772-1213.

Check out our next blog post for more on Medicare. As always feel free to contact Josh Mungavin with any questions by phone 305.448.8882 or email: JMungavin@ek-ff.com