It’s Open Enrollment Season

With Medicare annual Open Enrollment beginning October 15th, many of us are being inundated with ads, mailings and phone calls seeking to provide advice to all seniors.   This a great time to revisit Medicare basics and options available to Medicare recipients.

All U.S. citizens and legal residents who have lived in the U.S. for the past 5 years are eligible for original Medicare at age 65, if they have a qualifying disability, or have been diagnosed with end-stage renal disease or ALS.  If you are receiving Social Security or Railroad Retirement Board benefits, you will receive your Medicare card in the mail.  If you are not receiving benefits, you will need to sign up for Medicare.  Go to SSA.gov/Medicare to enroll online or call or visit your local Social Security office.

Timing is important when you first enroll.  Your Initial Enrollment Period (IEP) is your first chance to enroll in Medicare and choose the coverage you want.  Your IEP is 7 months long, including the 3 months prior to your birth month, your birth month and the three months following your birth month.   Keep in mind that Medicare Part A, Part B and Part D may charge penalties if you sign up after your IEP ends, unless you qualify for a Special Enrollment Period (SEP).

Original Medicare consists of Part A (hospital and inpatient care) and Part B (doctor visits and outpatient care), which helps pay these costs, but doesn’t cover everything.  You may add coverage by enrolling in one or more private Medicare or Medicare-related plans.

Option 1 – Add one or more of these options to Original Medicare:

  • Medicare prescription drug plans (Part D) help cover prescription medications. 
  • Medicare Supplement insurance plans (Medigap) help pay some of the out-of-pocket costs that come with Original Medicare.

Option 2 – Choose a Medicare Advantage plan (Part C)

  • These plans are an alternative to Original Medicare, combining Part A and Part B coverage in one plan.  They often include prescription drug coverage and may offer additional benefits not provided by Original Medicare like coverage for routine vision and dental care.

Neither Original Medicare nor a Medicare Advantage plan will pay for everything.  You will be responsible for monthly premiums as well as out-of-pocket costs such as deductibles, copays and coinsurance.  These out-of-pocket costs can add up, and Original Medicare does not provide a cap for these costs.  Medicare Advantage plans to put a cap on your out-of-pocket costs for covered medical services.  It’s called the “annual out-of-pocket maximum” and it provides built-in financial protection.

The rules surrounding Medicare benefits can be confusing, but it is important to get it right.  We strongly encourage you to meet every year during the Open Enrollment period with a qualified Medicare insurance specialist who represents several plans to review your coverage options.  To help them understand your needs, consider how often you visit doctors or other medical facilities in a year, what medications do you taken, do you have a particular doctor, hospital or pharmacy that you want to use, etc.

The opinions expressed in this article are those of author and should not be construed as specific investment advice. All information is believed to be from reliable sources, however, no representation is made to its completeness or accuracy. All economic and performance information is historical and not indicative of future results. Any tax advice contained herein is of a general nature. Further, you should seek specific tax advice from your tax professional before pursuing any idea contemplated herein. 

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