– Have you ever been confused by Medicare? Today, we’re going to figure out how to keep Medicare working for you.
In this episode, Jeremy Keil speaks with Ari Parker, Co-Founder of Chapter, and author of It’s Not That Complicated, about making medicare decisions to protect both your health and your money. Ari covers key topics, including when to sign up for Medicare, the three essential Medicare parts, strategies to manage the 20% of medical costs not covered by Medicare, the choice between Medicare supplement and Medicare Advantage plans, the significance of the Medicare open enrollment period, and forthcoming changes in Medicare for 2024. He reveals that enrolling in Medicare doesn’t necessitate taking Social Security, providing a comprehensive and actionable guide for those navigating the complexities of Medicare.
- When to sign up for Medicare
- The 3 key parts of Medicare
- Covering the 20% of medical costs that Medicare doesn’t
- Choosing between Medicare supplement and advantage
- What to review during the Medicare open enrolment period
- What’s changing in Medicare in 2024
- Why you don’t have to take Social Security when you enroll in Medicare
- And more
The 3 Essential Medicare Decisions to Protect Your Health and Money
When should you enroll in Medicare?
When should you enroll in Medicare? It’s a question many face as they approach their 65th birthday, and Ari Parker, one of the country’s leading Medicare experts and author of It’s Not That Complicated, offers a clear answer.
The biggest misconception is that Medicare enrollment is automatic, but this is only the case if you’re already taking Social Security. For those who are not, Ari emphasizes that you must proactively sign up, and the ideal time is three months before the month you turn 65.
However, if you or your spouse plan to work past age 65, you should sign up three months before the intended retirement date.
It’s important to note that Medicare coverage begins on the first day of your birth month, not your exact birthday. For example, if your birthday is in August, your Medicare eligibility begins on August 1st.
In cases where the birthday falls on the 1st of a month, the Medicare coverage starts a month earlier.
Delaying the sign-up can result in a coverage gap, and it’s always wise to ensure you have your Medicare benefits in place when needed. So, whether you’re nearing 65 or have a birthday approaching, early planning and timely enrollment are key to securing your Medicare benefits and avoiding potential coverage gaps.
What are the 3 key decisions with Medicare?
Understanding the three fundamental components of Medicare is essential for making informed decisions about your healthcare coverage.
The first key part revolves around when to sign up for Original Medicare. This critical step is best taken three months before the month you turn 65 or three months before your intended retirement date, or your spouse’s retirement date.
The second significant decision centers on how to address the 20 percent of out-of-pocket costs that Original Medicare doesn’t cover. Contrary to the common misconception that Original Medicare covers all medical expenses, it only covers 80 percent. The remaining 20 percent is your responsibility.
The third and final part involves choosing the right plan from among the vast array of health insurance companies and plans available nationwide. It’s easy to underestimate the sheer number of options, but Ari’s team at Chapter specializes in this extensive search. They use a platform to sift through all available insurance companies, and plan offerings, and tailor your selection to your unique needs.
Which Medicare plan should you choose?
Deciphering the various Medicare plans can be overwhelming, as many people often wonder whether they should opt for a plan from a particular company or base their decision on individual preferences and needs.
We emphasize the importance of prioritizing personal preferences and requirements when considering a Medicare plan. It’s not about choosing a well-known company like Humana or United Healthcare simply because it’s a recognized name in the field. What truly matters is aligning your specific needs and priorities with the right plan.
The choice of a Medicare plan goes beyond celebrity endorsements or television advertisements for flex cards and other benefits. High-profile spokespeople may draw attention, but they don’t know your doctors, medications, or unique healthcare priorities.
In reality, the effectiveness of a Medicare plan is highly individual, and it’s important to avoid selecting a plan based solely on what’s advertised. The success of your plan choice hinges on its suitability to your specific situation.
Medicare plans can vary significantly by location, making the selection process even more personal. The key takeaway is that the right plan and company are those that align with your healthcare and financial needs, offering stable and comprehensive coverage.
Should you go with Supplement or Advantage?
The decision between a Medicare Supplement (Medigap) or a Medicare Advantage plan is often a source of confusion and concern for many people. Ultimately, the decision should align with your healthcare priorities and individual needs.
If you value comprehensive coverage and flexibility, Medigap may be your ideal choice, provided you can afford the higher premiums compared to Medicare Advantage plans. Medigap offers a sense of peace and assurance, as it covers the 20 percent of out-of-pocket costs that Original Medicare does not.
Medicare Advantage can be an appealing option for those seeking a more cost-effective plan. If you don’t visit the doctor frequently and prioritize cost savings, it might suit your preferences. However, it’s crucial to remember that Medicare Advantage plans often come with network restrictions, similar to HMOs or PPOs, which means you’ll need to consider which doctors and healthcare facilities are in-network.
It’s also important to think through your three P’s: Providers, Prescriptions, and Priorities. Evaluating your healthcare providers, prescription needs, and personal priorities will help you tailor your choice to your unique circumstances.
Your choice between Medigap and Medicare Advantage should align with your healthcare preferences and financial considerations, ensuring that Medicare works best for you.
What should you look at annually during Medicare’s open enrollment?
Open enrollment is an important time to ensure your Medicare coverage aligns with your current needs.
Going back to our three P’s framework: Providers, Prescriptions, and Priorities, you should evaluate how changes in these three areas may impact your healthcare needs. Have your healthcare providers or preferences evolved over the past year? Are there new prescriptions or adjustments in your medication? Is your priority the same as the previous year, or have there been shifts in your preferences?
You should also review your existing plan to pinpoint what you appreciated and what didn’t align with your expectations.
By diligently assessing your coverage during the open enrollment period and considering the evolving factors in your healthcare needs, you can ensure that Medicare continues to serve you effectively.
What’s changing with Medicare in 2024?
In 2024, a significant transformation is set to take place in Medicare Part D, focusing on prescription drugs. There will be a maximum out-of-pocket limit for seniors’ prescription costs, marking a historic shift in Medicare.
Prior to this change, there was no cap on these expenses, meaning some seniors were paying substantial amounts for their medications, reaching as high as $6,000 or even more in 2023.
Beginning in January, this change will introduce a maximum out-of-pocket limit of approximately $3,300 on seniors’ prescription costs. This amount is set to decrease further to $2,000 starting in 2025.
Regardless of these changes, reviewing your prescription drug plan annually remains crucial, as this can lead to substantial savings. Ari’s advice is to ‘marry your Medigap date,’ renew your drug or advantage plan each year, and ensure that your healthcare coverage aligns with any changes in your health needs and priorities.
Why should you work with an independent advisor or broker?
Working with an independent advisor or broker offers valuable advantages when navigating the complex landscape of Medicare. Professional assistance doesn’t cost you anything, except perhaps a bit of your time. When you’re faced with choices, it’s beneficial to reach out to an independent Medicare advisor or broker.
The key advantage of working with a broker is their access to a wide range of different Medicare programs. Instead of sifting through numerous plans on your own, a broker helps you narrow down the options.
They take the approach of starting from the bottom-up by understanding your unique needs, which include your providers, prescriptions, and priorities.
By plugging this data into specialized software, they can then identify the most cost-effective or comprehensive plans that align with your requirements. This process saves you from conducting extensive research and allows you to benefit from an expert’s guidance.
The government’s Medicare website, medicare.gov, is a useful resource as well, especially for those who prefer a DIY approach. The site provides tools to help you input your information, compare plans, and estimate costs, all free of charge.
It’s important to avoid any sales pressure while making these decisions. Pressuring prospective clients and existing clients goes against Medicare’s rules, and you should feel comfortable throughout the process.
Can you enroll in Medicare Part A and B at different times?
You can start Medicare Part A and Part B at different times based on your specific circumstances. Here’s why you might do that:
1. If you’re still working and plan to continue working or have health insurance coverage through your spouse’s employer, you can take Medicare Part A and defer Medicare Part B. However, there is a critical condition: your or your spouse’s employer must have 20 or more employees for this option to be available.
2. Deferring Medicare Part A might make sense when you have a health savings account (HSA) and are actively contributing to it. You must defer Part A if you are contributing to an HSA. HSAs are advantageous because they offer triple tax benefits.
3. If you have an HSA, it also means you are on a high-deductible health insurance plan, which is necessary to contribute to an HSA. In this case, you should compare the high deductible (usually $6,000 to $10,000) with your current insurance and the $240 annual deductible under Medicare. Doing the math can help you decide what’s in your best interest.
It’s important to understand the rules regarding your specific situation. If you defer Part B while you’re still working and have health insurance through an employer, be sure to enroll in Part B within the specified timeframe when you retire or lose your employer coverage. The general rule is to enroll in Part B three months ahead of your retirement or when your employer coverage ends to avoid gaps in coverage. Don’t rely on hearsay; it’s crucial to do the math and consider your unique situation to make the best choice.
Do you need to take Social Security when you enroll in Medicare?
Social Security and Medicare are not exactly the same, but they are connected in some ways.
Both Social Security and Medicare are federal programs, and they serve a large portion of the U.S. population, mainly older Americans.
When you enroll in Medicare, you can do so through the Social Security Administration. The application form allows you to indicate if you want to start Social Security and Medicare at the same time. However, you don’t have to start both at the same time.
You can choose to delay taking Social Security even if you enroll in Medicare. Your decision to take Social Security can depend on factors like your full retirement age or financial considerations.
Similarly, you and your spouse can have different start times for Social Security and Medicare. You can choose the timing that best suits your financial goals and retirement plans.
You have flexibility in making decisions about when to start Social Security, Medicare Part A, and Medicare Part B. The decisions should be based on your individual financial circumstances and preferences, and they don’t have to align perfectly.
To learn more about Medicare, check out the resources below!
- It’s Not That Complicated by Ari Parker, J.D.
- Free Retirement Planning Video Course: 5stepretirementplan.com
- 3 Things You Should Know Before Choosing A Financial Advisor
- 7 Questions That Could Make or Break Your Retirement
- Subscribe to Retirement Revealed on Google Podcasts
- Subscribe to Retirement Revealed on Apple Podcasts
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Connect With Jeremy Keil:
- Keil Financial Partners
- LinkedIn: Jeremy Keil
- Facebook: Jeremy Keil
- LinkedIn: Keil Financial Partners
- YouTube: Retirement Revealed
- Book a call with Jeremy
About Our Guest:
Ari Parker is one of the country’s leading Medicare experts. He has helped thousands of Americans sign up for Medicare by breaking it down into simple, bite-sized pieces. A graduate of Stanford Law School, he trains and leads Chapter’s team of 30+ licensed Medicare advisors. He lives with his wife and two dogs in Phoenix, Arizona.
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