We might be living active lifestyles … but while that softens the march of time, it doesn’t stop it: more baby boomers every day are turning the magical age of 65, which leads us to a primer we think is useful; it’s about sorting out Medicare, which starts at that magical age. Here’s Part 1. Parts 2 and 3 will appear in coming days.
At age 65 a lot of things start to happen or change for baby boomers: most of them social, some financial, and even a few medical.
You are officially of retirement age (forget that you may have retired early or do not really feel like retiring); you can officially get discounts on your food at restaurants if you order from the Senior’s Choice menu; you get the cool senior parking spots a whole three feet closer to the door; and you are required to start Medicare or face the financial penalties later (provided you have not started Medicare earlier which some need to do).
Nothing. You do nothing. It happens all on its own.
Simple, yes? Unless you don’t want Medicare, which is when the nightmare begins. Let’s agree you do want it and go from there.
It might be easy to assume that Uncle Sam will forget one of your most significant birthdays, but, no, he’ll be right there to help you blow out all 65 candles. In fact, right before you turn 65, Medicare costs will start to show up on your Social Security Check, all on its own. About three months before you turn 65 your Medicare card will find its way into your mail where it will present itself with a great deal of information to dissect. Mostly this boils down to whether or not you want to enroll in Part B of the plan or not.
Slices of the Medicare Pie, Part A and Part B
Yes, there are two main parts to this Medicare creature, an A and a B.
Part A deals with hospital care should you ever require hospitalization. This part is not free: you already paid for it or your spouse did through payroll taxes before you retired. You are not charged for it again, thankfully, though in some instances you might be. For example, if you did not pay enough into your taxes to cover it. Most people will not have to worry about that. In some cases Part A can even cover hospice care or home health care though some special conditions need to be met for that. It does not cover Nursing Home care.
Now, you still are responsible for a deductible every time you are admitted into a hospital. The fee is rising by 2.4% in 2013 to $1,184. Many who cannot afford this extra fee are enrolled in Medicare Advantage (Part C, we haven’t gotten there yet) or have a Medigap insurance policy to cover it so there is no out-of-pocket expense.
Part B is a little bit tricky and may not be the ideal option for most people. Why? Because Part B demands that you have to pay into it. This is the outpatient portion of the plan and it will cull a specific monthly amount from your Social Security check so technically you never see it and never miss it, but you do pay it. The premium is also rising in 2013 to $104.90, which means every month $104.90 will be taken from your SS check to cover this. Actually not too bad for insurance if you compare it to some other policies.
However – and you were ready for this – there is also a deductible. It will cost $143 in the year 2013 but the same stopgaps that cover this amount for Part A also cover the deductible for Part B, which is convenient. Part B is kind of important as it encompasses things like preventative services, medical supplies and doctor’s services. Which leaves us to wonder why anyone would refuse it or, if they did refuse it, could they get it later if the need arose?
Refusing Part B
If you do not desire to keep Part B intact, you either must speak directly to Medicare about it or pay the penalty later. According to the government site, the cost of enrolling in Part B after the fact will go up by 10% for each complete 12-month period that you could have been enrolled but did not sign up for it.
The only reason you might refuse this option is because you have something better or your spouse does and the employer providing it has assured you, in writing, that you can do without Part B of Medicare. Yes, speak to the employer first and make sure you disclose you are eligible for Medicare. Only refuse Part B if you are positive you will not need it or you have discussed the choice directly with Medicare, explained the situation and Medicare agrees and documents you will not be penalized. Make sure you keep a record of this somewhere for future proof of your agreement with your boss.
The Gift that Can Keep on Giving … to the Government
Now, understand that these fees can go up or down each year as the year renews itself. So every January things might change concerning your deductible and your premiums. If you have very low income you may qualify for some state aid, as through Medicaid, in paying the premium and deductible. Conversely, if you have a higher income – and in 2011 that was defined as over $80,000 a year for individuals and $170,000 for joint filing- you’ll be charged more for Part B. Depending on how much you make that can be anywhere from $40 to $231 a month.