We're Getting Our Financial Acts Together — Step 2: Applying for Medicare
My husband and I are nearing 65; here's how we began going down the Medicare enrollment road
In January, my husband Darnay and I started looking at all the things we needed to do financially to get ready for turning 65 later this year. Back in March, I wrote for Next Avenue about Step 1: cutting expenses. This month, I started wading into the minefield that is Medicare, our Step 2.
Darnay turns 65 in November and I follow in December. So, I began doing my Medicare homework back in April because, according to the Medicare rules, we can enroll as early as three months before our 65th birthdays, but no later than three months after or we'll face financial penalties for delaying.
Since Darnay and I turned 64, we've been getting at least four pieces of Medicare-related mail a day dedicated to selling us on all the different plans we could consider from private health insurers. There are so many twists, turns and Medicare myths that it's been almost paralyzing teasing through all the information to decide what was best for us.
My Husband's Employer's Coverage and Medicare
As a self-employed writer for over 30 years, I have I always relied on health insurance coverage under Darnay's employer plan through his public-school teaching job. Fortunately, because in April he decided to continue teaching beyond his 65 birthday, we'll still have access to his employer coverage throughout the coming year. But he won't have the coverage once he retires, so neither will I.
There are so many twists, turns and Medicare myths that it's been almost paralyzing teasing through all the information to decide what was best for us.
To start the Medicare enrollment process, we first looked at our health goals and financial reality and how they might figure into our retirement lifestyle and income. I feel like every day has the potential to present a new ache, pain or diagnosis. We knew that we didn't want to gamble on having less health coverage than we have now.
I made a list of all the health issues we have going on and our families' health histories to get a glimpse into what could be in store for us.
I have high blood pressure that I manage through monitoring, prescription medication and lifestyle tweaks. My husband has no diagnosed chronic conditions, but as a soon-to-be 65-year-old man, he'll need to stay on top of his preventative health screenings.
Overall, we're in pretty good shape, aside from the looming dance with back and knee issues that often come with aging. Our goal is to remain as mobile as long as possible, so we want to make sure we'll have coverage for physical therapy, should we need it.
But we've both seen some costly medical needs that our late parents and grandparents had to deal with — such as breast, ovarian and prostate cancer; Alzheimer's; diabetes; glaucoma and cataracts — that could be predictors for what's ahead. We already both wear glasses.
The Coverage We Would Need
Between the two of us, I'm the only one with a prescription, and it's, thankfully, low-cost. But that could change. We have all heard the horror stories of the choices that some older people on fixed incomes must make between high-cost meds and food.
Once I had an inventory of what I knew we needed medically, I looked at the kind of Medicare coverage it was going to take to get there.
After drowning in flyers, articles and advice from friends who've enrolled in Medicare, I was still overwhelmed. So, I decided to call the federal government's Medicare toll-free hotline (800-633-4227; that's also 800-MEDICAR). It was the best decision I made in this process.
I worked with a Medicare specialist, Edward McFarland, who spent time on the phone answering all my questions. Getting through to a real person took me just two minutes, I'm happy to say.
How Medicare Works
Before I explain what I heard and decided, let me offer a brief explanation of how Medicare works.
As you may know, Medicare has two basic components known as Part A (Hospital Insurance) and Part B (Medical Insurance), which are sometimes called Original Medicare. Part A is the premium-free coverage the government requires once you turn 65. It covers inpatient and hospitalization costs and short-term care in a skilled nursing facility, usually at 80% of your expenses, after a deductible of around $1,400 for the first day of care, according to McFarland.
The key is to sign up for your Part A coverage as soon as you are allowed to, so you'll avoid any late-enrollment penalties. In our case, since we are keeping Darnay's employer-sponsored coverage, for inpatient and hospitalization costs, McFarland told us, the Part A Medicare coverage will kick in as secondary coverage should we need it.
"Part B addresses doctor visits and preventative care, including screenings and treatment, as well as medical equipment. The standard premium starts at approximately a hundred and forty-eight dollars and fifty cents a month per person," McFarland said.
Getting through to a real person took me just two minutes, I'm happy to say.
Because we'll have health coverage as long as Darnay works at his job, we opted to wait on enrolling in Medicare's Part B. We'll make sure that coverage begins when Darnay's insurance coverage ends. General enrollment for Part B runs from January 1 through March 31 each year.
So, Darnay and I were ultimately going to be looking at premiums of a little under $300 a month for Part B. Those premiums will come directly out of our Social Security checks, McFarland explained, once we begin claiming Social Security retirement benefits. The U.S. government changes the premium amounts each year, but 2022's will likely be pretty close to those of 2021.
One thing that's important to know about Medicare Part B: it only pays for procedures deemed medically necessary and does not cover dental, vision or hearing care.
Medicare Advantage Plans
If you don't want to enroll in Original Medicare, you can sign up for a Medicare Advantage plan from a private health insurer, something that's becoming increasingly popular. Medicare Advantage is sometimes known as Medicare Part C and it's a one-stop shopping plan with Medicare Part A and Part B coverage, except hospice care.
Often, these plans include extra benefits that Original Medicare doesn't: dental care and eyeglasses, for instance. Most include prescription drug coverage (known as Medicare Part D), too.
Your precise coverage from a Medicare Advantage plan depends on the benefits you select and how much you can afford to pay. But here's the big caveat: most Medicare Advantage plans require you to go to doctors in their networks for the lowest cost; some won't cover services from providers outside their plan's network and service area at all.
So, for now, although we need to enroll in Medicare Part A soon, as long as we keep Darnay's coverage for another year — or as long as he works.
When doing my homework, I could see the benefits of a Medicare Advantage plan, which operates much like an HMO or PPO. But McFarland said that if you travel a lot and have Medicare Advantage, you could be hit with big medical bills should you need care and be out-of-network.
That's something Darnay and I need to think about.
As for prescription drug coverage, most Part D plans have an annual deductible, which is no more than $445 this year. There's a limit on how much a Part D plan will cover, though.
In 2021, once you and the plan have spent $4,130 on covered drugs, you're in what's known as the "donut hole" coverage gap. Then, you pay no more than 25% of the cost for your plan's covered brand-name prescription drugs and generics until the donut hole ends at $6,550 in out-of-pocket costs. (In 2022, the donut hole will start at $4,430 and end at $7,050.)
Prescription Drug Coverage and Rules
McFarland suggested that we do a comparison of our Part D options, looking at our medication needs. Through open enrollment each year, we can change our Part D options annually.
My blood pressure medication, Lisinopril, costs me $4 a month with our current insurance policy. We will revisit this next year when our employer-based coverage will end.
So, for now, although we need to enroll in Medicare Part A soon, as long as we keep Darnay's coverage for another year — or as long as he works — we don't have to make big decisions about Part B or Part D. Since Medicare Advantage plans and providers change each year, we'll start comparing them closer to the time we'd need to enroll.
Shortly before October 2022, when we expect Darnay's coverage will end, we'll take a deep breath and begin the Medicare hunt again. But if he keeps working, we'll hang on to the employer coverage and re-enroll in Part A for another year.
How to Make Smart Medicare Choices
Here's my advice on where to get the best information to make your Medicare choices:
Start with a call to Medicare ( 800-772-1213). You'll get a knowledgeable person on the phone who can walk you through your options based on your circumstances. This hotline takes calls 24 hours a day.
Visit the Medicare website, Medicare.gov. It does a good job laying out how the program works and what things cost.
Check out your state's free Health Insurance Assistance Program (SHIP). You can call or visit its website for information on Medicare and the Medicare Advantage plans available in your state. As with the Medicare hotline, a counselor at SHIP can walk you the process. You can find your state's website at the State Health Insurance Assistance Programs National Network site.
And if you really want to get into the weeds, you might buy the 2016 book "Get What's Yours for Medicare: Maximize Your Coverage, Minimize Your Costs." It's by Medicare maven Philip Moeller; Moeller's website, Get What's Yours, has the current figures for Medicare premiums and deductibles and his frequent blog posts.