When you retire, having a predictable, long-term income source is critical. The last thing you want is unnecessary expenses eating away at your hard-earned money when you need it most. Healthcare is one such expense that can make a significant dent in your nest egg, as it is one of the top five expenses in retirement, and healthcare spending only increases with age. In fact, the average couple at age 65 will need approximately $280,000 to cover healthcare costs in retirement. That’s why it is critical to make the most informed Medicare decisions so you have the appropriate amount of healthcare during your golden years.
The problem with Medicare, a federal insurance program designed for people age 65 and older, is that it often seems complicated and confusing. Since there are multiple plans and various enrollment periods, how do you make sense of all the information to make the best choices for your situation? As we draw closer to 2018’s Medicare open enrollment period, let’s review what you need to know.
When Is Open Enrollment?
The Medicare open enrollment period happens at the same time every year due to the changes enacted in 2011. For coverage in 2019, open enrollment will run from October 15, 2018, to December 7, 2018. Once December 8th arrives, the enrollment period closes until the following October. During this time, current Medicare users can switch coverage or add or drop parts of their plan.
Open enrollment is not for those who have never signed up for Medicare, unless the open enrollment period also falls during your initial enrollment time, which begins three months before you turn 65 and ends three months after the month you turn 65. But if you only signed up for Medicare Parts A and B during your initial enrollment, open enrollment gives you the opportunity to make changes to your coverage.
What Are My Open Enrollment Options?
Here is a summary of the changes you can make to your Medicare plan during open enrollment:
- If you have Parts A and B, you can switch to Medicare Part C (or Medicare Advantage), which is often contracted by outside companies that have an agreement with Medicare. This service includes the coverage of both Plan A and Plan B (Original Medicare), as well as additional services, like prescription drug coverage and private fee-for-service plans.
- If you have Medicare Part C, you can switch back to Original Medicare (Parts A and B).
- You can reevaluate your Part C plan and switch to a different Medicare Advantage plan.
- If you already have Parts A and B, you can join or drop a Part D prescription drug plan. This part of Medicare adds the prescription drug coverage for Original Medicare, private fee-for-service plans, and some Medicare cost plans.
- You can switch your Part D prescription drug plan to a different Part D plan.
What Will I Pay For Medicare?
The amount you will pay for Medicare insurance depends on a variety of factors. While many people choose Plan A, the premium for Plan B is paid automatically and costs about $134 monthly on average. The cost may vary depending on your income, whether or not you’re still working, and when you originally enrolled. Review the factors to get the best coverage.
Here’s an example of how everyone’s cost differs: if you worked for more than ten years, your monthly cost for the Plan A premium is $0 because you paid it while you worked. But the costs get higher if you worked for fewer than ten years, climbing to $422 a month.
The Plan B premium also offers coinsurance after you’ve paid your deductible. This means that for some services, you’ll pay only 20% of the total cost.
How Can I Improve My Medicare Coverage?
Plan C and Plan D are known as the options with the most coverage. Financially speaking, they are the most comprehensive plans. If you have either the basic Plan A or Plan B, you can improve your coverage using Medigap. This will help you pay for some of the services that are not covered by the higher coverage plans. Part C is also a prudent choice because it provides for services like dental and hearing health, which are not covered by the basic insurance plans.
As you can see, Medicare is complicated and ever-evolving, so don’t try to handle the intricacies alone. At Live Oak Wealth Management, we focus on helping you get ready for every aspect of retirement, including healthcare. We can help you predict your potential needs and ensure you are adequately covered for any services you may require. If you need help evaluating your Medicare options, reviewing your insurance coverage, or just want to ask a couple of questions, we are here to help. Call our office at 770-552-5968, email [email protected], or schedule an appointment online for a complimentary consultation.
Matthew Gaude is an *investment advisor representative and the co-founder of Live Oak Wealth Management, a financial services firm in Roswell, Georgia. He serves the planning and investment needs of corporate employees, those approaching or in retirement, and 401(k) plan sponsors. Working first as a commodity broker and then as a Business Development Manager for a national broker-dealer in previous jobs, he has the insights and experience to help clients understand the complexities of the market and implement strategies to minimize risk. To learn more about Matthew, connect with him on LinkedIn or visit www.liveoakwm.com.
Shawn McGuire is a financial advisor and the co-founder of Live Oak Wealth Management, a financial services firm in Roswell, Georgia. He serves the planning and investment needs of corporate employees, those approaching or in retirement, and 401(k) plan sponsors. He has worked in financial services since 2002 in positions ranging from financial advisor to stock broker and portfolio manager. As a CERTIFIED FINANCIAL PLANNER™ professional, he is trained to help clients with virtually all their financial needs. To learn more about Shawn, connect with him on LinkedIn or visit www.liveoakwm.com.
Securities offered through American Portfolios Financial Services, Inc., member FINRA/SIPC. Investment advisory services offered through *American Portfolio Advisors, Inc., a SEC Registered Investment Advisor. Live Oak Wealth Management, LLC is independently owned and not affiliated with APFS or APA.
Any opinions expressed in this forum are not the opinion or view of American Portfolios Financial Services, Inc. (APFS) or American Portfolios Advisors, Inc. (APA) and have not been reviewed by the firm for completeness or accuracy. These opinions are subject to change at any time without notice. Any comments or postings are provided for informational purposes only and do not constitute an offer or a recommendation to buy or sell securities or other financial instruments. Readers should conduct their own review and exercise judgment prior to investing. Investments are not guaranteed, involve risk, and may result in a loss of principal. Past performance does not guarantee future results. Investments are not suitable for all types of investors.
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