April 26, 2018
Whether you've been enrolled in Medicare previously, or are about to participate for the first time, we know, it can be confusing! With that in mind, today's blog tackles four common questions related to this valuable, but often complicated, benefit.
Question #1: I've heard that Medicare will be issuing new ID cards. Why is this happening and what is involved?
Some of our clients express great surprise and dismay, given the rate of identity theft, when they discover that presently, an assigned Medicare number is often your Social Security number with a designated letter after it.
In the future, as a way to protect against such an experience fraught with devastating implications, The Centers for Medicare & Medicaid Services (CMS) will be required to remove Social Security Numbers and replace these with new cards containing a unique, 11-Digit Medicare ID Number.
This must be completed no later than April of next year (2019). Beginning this month, CMS will begin mailing new cards in a series of waves, based on where you live and some other factors. (You can read more about the details here).
The good news is that no action is required on a Medicare participant's part to receive these new cards and there is no fee associated with them. As long as your mailing address is correct, your new card will arrive in the mail within the next year.
Question #2: I will be turning 65 in a few months. Do I need to sign up for Medicare and, if so, when?
As with many Medicare-related questions, the answer to this one is "it depends." In general, however, when you turn 65 we recommend enrolling in what's known as Medicare Part A. This is "hospital insurance," and covers inpatient care, care in a skilled nursing facility, and some home care. There is no cost/premium associated with Part A, except in rare circumstances.
Whether or not you enroll in Medicare Part B (health insurance) depends on whether you currently have health insurance through an employer-sponsored plan (either your own or that of your spouse). If you do, and whoever holds the policy plans to continue working, enrolling in Medicare Part B can be deferred.
Here's where it gets tricky, however. Depending on a number of factors, and even if you or your spouse has an employer-sponsored plan, it may be less expensive to enroll in Medicare and not avail yourself of your employer-sponsored coverage. Mitigating factors include the size of your employer; the amount you or your spouse contributes currently to the employer-sponsored plan; other family members involved in your current coverage; and your level of satisfaction with your current plan. (You can read more about what's involved here.)
Regarding the timing of initial enrollment, it covers a seven-month span: three months before your birthday month, the month in which you turn 65, and three months after your birthday month. Here as well, there are some exceptions depending on whether or not you are still working, so it's important to pay close attention to the dates involved.
Question #3: Why am I paying more for Medicare than my neighbor?
The good news is that it's because you've had some financial success. In 2018, the standard premium for Medicare Part B is $134 per month. However, people who report taxable incomes above $85,000 per year (or $170,000 if filing jointly) are responsible for paying an additional surcharge for their Part B (medical) and Part D (prescription drug) premiums. These additional charges are known as the Income Related Monthly Adjustment Amount (IRMAA).
The precise surcharge calculations can be quite complicated (of course!) and take into account Social Security retirement benefits and other factors. Again, you'll want to pay close attention to understand what's involved in your specific circumstances.
Question #4: What is the "Donut Hole?"
Most Medicare drug plans (Part D) have a coverage gap, also called the "donut hole." For 2018, this gap begins after you and your drug plan, combined, have spent $3,750 for covered drugs.
At that point, you're in the donut hole, during which time you pay 35% of the plan's cost for brand-name drugs and 44% of the plan's cost for generic drugs. The gap ends if and when your true out-of-pocket expenses have reached $5,000 (in 2018).
From that point on, your drug costs for the year will be reduced to the greater of 5% or $3.35 for generic and preferred medications and the greater of 5% or $8.35 for all other drugs.
Transitioning into Medicare can be complicated but it need not be overwhelming. Many people have done it before you and there is a wealth of good information online and through other resources. And, of course, we'd be happy to help you in any way we can as you move into this next season of life!
Dianne Savastano is a Massachusetts-based healthcare professional and frequent keynote speaker for CIBC Atlantic Trust events. Over the course of her 25-year career, Dianne has worked in both the clinical and administrative sides of the healthcare industry and is the founder and principal of Healthassist, a personal healthcare consulting service. This post first appeared on healthassistcorp.com and is reprinted here with her permission. Portions of this post have been edited for consistency with CIBC Atlantic Trust’s style and usage guidelines.
To subscribe to Dianne's free monthly newsletter, "Healthassist News, a monthly guide to navigating the complexities of healthcare," please visit here.
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