Navigating the Confusion and Misinformation
Medicare and Social Security
As people approach age 65, many feel overwhelmed by the sudden flood of mailers, warnings, and decisions they’re expected to make regarding Medicare and Social Security. The reality, however, is far less intimidating if you know the facts. Keep in mind that Medicare and Social Security are two separate decisions, and not everyone needs to act immediately.
The Parts of Medicare
Parts A & B (Original Medicare)
The government offers Part A and Part B together and, as a pair, are sometimes called “Original Medicare”.
Medicare Part A covers inpatient care, skilled nursing services, hospice care, and some home care if you’ve been hospitalized or were at a skilled nursing facility.
Medicare Part B covers doctor services, outpatient care, and some home health care if you are homebound.
Part C
Medicare Part C is more commonly known as Medicare Advantage, and is private insurance offered by insurance companies. These plans bundle the coverage provided by Part A, Part B, and, most times, Part D, replacing them. Enrolling in Part C (Medicare Advantage/MAPD) means the insurance company is in control of your coverage, offering cheaper premiums and additional benefits not included in Original Medicare.
Part D
Insurance companies also offer Medicare Part D, which covers your prescription needs. You may not need a stand-alone Part D plan if you have an Advantage Plan that includes Part D coverage.
Medicare Supplement (Medigap)
Insurance companies offer Medigap plans (Medicare Supplement), which supplement the coverage provided by Original Medicare rather than replacing it. These plans are standardized and offer the same care, no matter the insurance company. The primary difference is how each company prices its plan and the quality of its customer service.
Medicare Enrollment: Clarifying the Rules Around
Timing and Coverage, and Penalties
Let’s address the elephant in the room: Medicare penalties. Contrary to many of the messages people receive, not everyone needs to enroll in Medicare at 65. Suppose you’re still working and covered by an employer group health plan with 20 or more employees. In that case, you can delay enrolling in Medicare without penalty. Once you retire or lose coverage, you’ll have an eight-month window to enroll.
However, suppose you have an individual health insurance plan, like those from Covered California, Obamacare, or a private insurer. In that case, you must enroll in Medicare at age 65. Most people don’t realize that while you’re under 65, the government is subsidizing part of your plan.
Suppose you decide to stay on an individual health insurance plan after 65. In that case, the government subsidy will be eliminated, leaving you to pay the full premium, which typically ranges from $1,000 to $2,000 per month. Failing to enroll in creditable A, B, or D coverage when required can also result in extended or lifelong penalties. The circumstances can be very complex, depending on your employment, so please consult with a licensed agent about your specific situation.
Medigap vs. Medicare Advantage: Understanding
Coverage and Cost Differences
Once you determine that you need to enroll in Medicare, the next step is understanding what it does and doesn’t cover. Medicare Part B covers 80% of approved healthcare expenses, meaning you’re responsible for the remaining 20%. Although 20% may seem minimal, it can still add up, prompting many enrollees to offset these costs. The two main ways to cover this gap are Medigap (a supplemental insurance policy) and Medicare Advantage (a bundled plan that includes Medicare benefits, often with limited provider networks).
Both options have pros and cons, and you can [learn more about those in this playlist]. Please be aware that some Medicare plans have a one-time-only open enrollment window. In contrast, others allow you to change plans annually, making it crucial to know the rules before committing.
Be Informed, Not Pressured. Make Smart,
Personalized Decisions
While Medicare can be complex, they don’t have to be confusing. With accurate information, the right timing, and support from a knowledgeable advisor, you can avoid costly penalties and make informed decisions tailored to your specific needs. KCIIS encourages you to watch additional educational videos [on our YouTube Channel] that break down key Medicare topics and help eliminate stress during this critical transition.
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