Medicare: The Good, The Bad, The Ugly

“Medicare is health insurance, which means we should expect it to be confusing.”

“Medicare is health insurance, which means we should expect it to be confusing.”

Attendees at Parsec’s Longevity Forum heard this and a few other humorous quips from John Wingerter from the Council on Aging of Buncombe County as he spoke about Medicare. Of course, mixed in with the light-hearted moments was a good dose (pun intended) of quality information about the government-sponsored health care program. Feel free to download his full presentation.

Here are a few highlights from John’s good, bad and ugly list:

The Good

  • Medicare covers more than 60 million older people and younger people with disabilities and it provides broad coverage for most services and supplies.
  • It’s available to EVERYONE over the age of 65 with no medical underwriting required. Provided that you meet eligibility requirements, Part A, which covers hospital visits, skilled nursing facilities care and home health and hospice care, is free.
  • Part B (which covers doctor’s visits, labs, medical supplies and outpatient services) comes at a small monthly premium which is $135.50 in 2019. Generally, the true cost of care received is 4 times that amount.
  • There is no annual dollar cap and you cannot be denied coverage.

The Bad

  • I will reiterate, Medicare is health insurance, which means it’s CONFUSING.
  • There is a set enrollment window, which opens three months before you turn age 65 and closes three months after you turn 65. However, if you’re still working at age 65 or covered under an employer’s group plan, your window will be different.
  • There is a Medicare Part C, or Medicare Advantage Plan, which combines Parts A and B and sometimes Part D which covers prescription drugs. Which should you choose? Well, that depends on a lot of things, which makes it confusing.
  • Your Part B premiums are subject to an IRMAA surcharge, or Income-Related Monthly Adjustment Amount, if your income is too high. That income can be wages, social security or it can come in the form of capital gains, dividends or taxable IRA distributions. This is something to be particularly aware of once required minimum distributions kick in at age 70½.

The Ugly

  • Say you’re not a big consumer of health care and you don’t want to pay the $135.50 per month for Part B [2019 rate], so you decide not to enroll. Well, there is a 10% premium penalty for each year you enroll late and that penalty continues for life.
  • Your network and formulary can change every year, so it’s important to review your drug plan on an annual basis and confirm that your doctors accept Medicare.
  • Enjoying some international travel in your golden years? Purchase travel insurance because Medicare only covers domestic medical expenses.
  • Last, and maybe the ugliest, are the Medicare scams. No one from Medicare will ever call you or ask for personal information over the phone. When in doubt, hang up and report the call to 1-800-MEDICARE and ftc.gov/complaint.

One last time, Medicare can be CONFUSING, but it doesn’t have to be. More questions? Reach out to your Parsec advisor, click on over to Medicare.gov or read our recent blog post, “Medicare: The Basics.”

Judson Meinhart, CFP®

Financial Advisor, Manager of Financial Planning

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