Turning age 65 is a monumental time in life. For many it means years of hard work paying off in the form of retirement and entering the “golden years”. Age 65 is monumental in another way – Medicare eligibility. This is the time when most people will transfer from private health insurance to government insurance. This can be a daunting change and the below summary is designed to help make the decisions that come with enrolling in Medicare a little bit easier.
When preparing for enrollment at age 65, it is important to first understand the various aspects to Medicare:
- Part A (Hospital Insurance) is mandatory and covers inpatient care, skilled nursing, hospice and home health care. This coverage is “free” for those that have accumulated 40 quarters of eligibility work credit.
- Part B (Medical Insurance) is optional, requires additional premiums, and covers doctor services, outpatient care, medical equipment and many preventative services.
- Part C (Medicare Advantage) is operated by Medicare approved private insurance companies and combines Parts A & B services along with prescription coverage. Medicare Advantage can only be used within a local network of physicians who accept the plan.
- Part D (Prescription Drug Coverage) is optional and is operated by Medicare approved private insurance companies.
- Medigap is supplemental insurance that is available through private insurers and helps pay for costs that aren’t covered by Medicare A & B. Medigap can only be purchased by Medicare A & B participants and is available regardless of your medical history if you sign up for a plan during the 6 month period after turning age 65 and enrolling in Medicare Part B.
When leaving the world of private insurance and enrolling in Medicare, there are other important considerations. A few questions to ask are:
- Can you see the doctor you want to see and are the right specialists available if needed?
- What are the monthly premiums? Will your income exceed the thresholds that result in increased Part B premiums?
- Do you prefer predictable monthly premiums with little or no out of pocket costs or do you prefer reduced premiums with a risk of significant out of pocket costs?
- What medications do you take and how much will you have to pay for them?
- If you go off of private insurance, can your spouse stay on the plan or will your spouse be required to have personal insurance?
- Do you plan to spend significant amounts of time away from “home” that may result in the need to seek medical care elsewhere?
Although entering the golden years is an exciting time for most people, having to navigate the complexity and decisions surrounding health care can be stressful and time consuming. Unless exceptions apply, it is important to complete the enrollment process during the initial enrollment period, which starts 3 months prior to turning age 65 and extends 3 months after turning age 65. Allowing yourself enough time to do the research and talk to qualified professionals can make the process much easier and help assure you make the choices that are best for you.
If you have questions or need assistance with this, please contact your BDF wealth management team for guidance in helping you better understand the considerations that are unique to you and steer you in the direction of other qualified professionals that can help with the decision.
John D. Smith, CFP® is a Wealth Manager at BDF. A member of the Business Owner Team, he is adept at helping business owners integrate their unique business opportunities and risks into their personal wealth management plan, due to his 20+ years of experience. He finds that business owners, in particular, are often so focused on making sure that their business operations are running smoothly, they may overlook their personal financial well-being. John received his Bachelor of Science degree in Financial Counseling and Planning from Purdue University. He is a member of the Chicago Estate Planning Council and the National Association of Estate Planners and Councils and holds the ACCREDITED ESTATE PLANNER® designation. He is a member of the Financial Planning Association and a member of the University Club of Chicago and is Chairman of the club’s Wine Society.