My Comments: Today is Tuesday and I normally post something about Social Security. But health issues in retirement are a major concern for many of us. So paying for timely and necessary medical help becomes another critical issue. While it might be necessary to tweak the system from time to time, the headlines coming out of Washington DC these days suggests chaos is right around the corner. Let’s hope it doesn’t apply to Medicare.
By Maurie Backman | Published January 12, 2017
Medicare provides countless Americans with the healthcare services they need. But as is the case with many government-run programs, there’s a fair amount of confusion surrounding Medicare and how it works. Here are three common myths you may have heard about Medicare — and the truth behind them.
1. It’s free
Though Medicare Part A, which covers hospital stays, is free for most enrollees, this isn’t always the case. Some people have to pay for Medicare Part A, and if you’re one of them, it could cost you up to $413 a month. Parts B, C, and D, meanwhile, are never free.
Medicare Part B, which covers doctor visits and preventative care, has a standard premium of $134 for the entire year of 2017, but it could be higher — or lower –depending on your income. However, if your premiums are deducted from your Social Security benefits, you’ll actually pay a little less ($109 on average).
The costs for Medicare Part C and D will depend on the plan you choose. Part C, Medicare Advantage, offers a number of services that surpass the benefits of Parts A and B, but there are costs and restrictions to consider as well. Part D, meanwhile, covers prescription drugs, and the amount you pay will depend on your earnings. If your income is $85,000 or less as a single filer, or $170,000 or less as a couple filing jointly, you’ll pay only your plan premium. But if your income exceeds these thresholds, you’ll pay more.
The following table shows what you can expect to pay for Medicare Part D based on your income:
But it’s not just premiums you’ll pay; you’ll also be responsible for deductibles plus a portion of your healthcare costs. With Part A, for instance, you’ll pay a $1,316 deductible per benefit period, which starts the day you enter a hospital or skilled nursing facility and ends the day you haven’t received care for 60 days in a row. Part B, meanwhile, comes with a $183 deductible per year. Once that deductible is met, you’ll typically pay 20% of the Medicare-approved amount for most services. Understanding what Medicare costs you’ll be responsible for can help you budget accordingly, which is especially crucial for anyone living on a fixed income.
2. It doesn’t matter when you enroll
Medicare eligibility kicks in once you turn 65, but you can enroll during the three-month period before the month of your 65th birthday. In fact, your initial enrollment window lasts seven months in total, ending three months after the month you turn 65. And while you technically don’t have to sign up during your initial enrollment period, it’s in your best interest to do so. If you’re late signing up for Medicare, you can expect your Part B premiums to rise 10% for every year you were eligible for coverage but failed to enroll.
Now if you’re already getting Social Security by the time you reach 65, you’ll probably be enrolled in Medicare automatically, but make sure to confirm that you’re all set to avoid a penalty later on. Additionally, if you’re still working at age 65 and therefore get health insurance through your employer, worry not — you can hold off on signing up for Medicare without incurring a late enrollment penalty.
3. It’s for seniors only
While most Medicare enrollees are 65 and older, younger Americans with certain medical conditions are also eligible. If you’re disabled to the point where you qualify for SSDI (Social Security Disability Insurance), you’ll qualify for Medicare once you’ve received benefits for two years. However, because you need to wait five months before receiving SSDI, your effective waiting period for Medicare is essentially 29 months from the time you become disabled. As of 2014, an estimated 8.9 million disabled Americans were enrolled in Medicare. Those with ALS (Lou Gehrig’s disease) and end-stage renal disease are also eligible for Medicare regardless of age.
Understanding how Medicare works can help you make the most of your benefits. Whether you’re a current enrollee or expect to sign up in the near future, it pays to learn more about Medicare’s many nuances.