Health Care Costs & Medicare: What You Should Know

by on Jun 13, 2016 Categories: retirement planning

Over the past decade, spending on healthcare has continued to rise, and although costs are increasing at a slower pace, the average person is spending over $9,200 on healthcare each year. As of 2013, total health expenditures in the US, including spending by federal and local governments, private companies and individuals was $2.9 trillion.

With healthcare becoming an increasingly large percentage of household spending, many individuals approaching retirement are ready to rid themselves of their annual healthcare expenses and take advantage of Medicare offerings. Despite how critical it is to enroll in the appropriate Medicare coverage and prevent unexpected out-of-pocket expenses, it is often an uneasy system to navigate.

Because of the financial impact of healthcare, Medicare is often a topic of conversation with our clients as they approach retirement and are eligible for enrollment. To understand the basics of Medicare, we spoke with Nichelle Jones of Jones Health and Benefits, LLC. As an expert in this area, here are some of the most important things you should know about Medicare if you’re approaching eligibility:

My parents started getting advertisements and mailings randomly in the mail several months before they turned 65 and were surprised someone knew when their 65th birthday was approaching.  As a licensed agent, I explained to my parents that the great marketers of the Medicare insurance industry knew when most individuals in their age groups approach that special birthday in the lives.  The most important thing to remember is the government won’t send specific plan information, but possibly send their initial enrollment for Part A, if they are eligible for coverage.

What is Medicare?  Medicare is the federal health insurance program for people who are 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD).  Some people get Part A and Part B automatically (typically those already getting Social Security Benefits or Disabled) while others have to sign up (this may be the case if you are working past 65).

What are the parts of Medicare?  Medicare has four essentials parts:

  1. Part A – Hospital Insurance - Part A covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care
  2. Part B – Medical Insurance - Part B covers certain doctors' services, outpatient care, medical supplies,         and preventive services
  3. Part C – Medicare Advantage Plans - A type of Medicare health plan offered by a private company         that contracts with Medicare to provide you with all your Part A and Part B benefits.  Some of these         plans can include Part D – Drug benefits
  4. Part D – Prescription Drug Coverage - Part D adds prescription drug coverage to Original Medicare

What is a Medigap or Medicare Supplement?  A Medicare Supplement Insurance (Medigap) policy, sold by private companies, can help pay some of the health care costs that Original Medicare doesn't cover, like copayments, coinsurance, and deductibles.

When can I enroll?  When you're first eligible for Medicare, you have a 7-month Initial Enrollment Period to sign up for Part A and/or Part B including the month of your 65th birthday.  If you are still working and retire after 65, You also have an 8-month Special Enrollment Period to sign up for Part A and/or Part B that starts the month after the employment ends or the group health plan insurance based on current employment ends, whichever happens first.

How to get more information or direct help?  The governments offers some agencies, but for a more personalized service and direct contact with a licensed professional, contact someone like Jones Health and Benefits to help you through the enrollment and plan choice options available to you in the marketplace. Working with someone like Nichelle, gives you the advantage of an industry expert with no additional out of pocket expenses like fee for advisory services.