By Wendy Dessler
Medicare is a federally-funded program that helps make healthcare more affordable for those approaching their golden years. Medicare has been around for over 50 years, and it’s way for those 65 and older to receive affordable healthcare coverage. In 2014, there were over 49 million people receiving health coverage through medicare, and this number is only rising.
Even though Medicare is widespread, it’s still easy to misunderstand. Whether you or someone you love is approaching 65, take a minute to read through these 5 things you should know before you decide on a Medicare plan.
1. Start Educating Yourself Early
The first thing you need to know is that the early you start learning about Medicare, the better. You should start thinking about Medicare in your early 60s when you have time to figure the specifics out clearly. If you fail to enroll in Medicare during your enrollment window, you could face a fee or be left without coverage. Your enrollment window begins 3 months before your 65 birthday and ends 3 months after.
Start by asking what doctors are included under different plans, and consider your prescription drug coverage. Next, crunch the numbers to determine how much your premiums and deductibles will be.
2. You’ll Have Gaps in Coverage
Medicare doesn’t cover 100% of treatment. You’ll quickly discover that under traditional Medicare Parts A, B, and, C, you’ll have some things you’ll need to pay for out-of-pocket. For example, many of these plans don’t cover dental or vision insurance, something that could be incredibly expensive out-of-pocket. You’ll then need to either budget for these extra costs or purchase a Medigap Plan.
3. Consider Medicare Advantage
Medicare Advantage, also known as a Medicare Part C, is a way to avoid the gaps in coverage we mentioned above. Medicare Advantage is an all-in-one alternative to traditional Medicare. Instead of signing up for Parts A, B, and D, you’ll sign up through a private insurance provider.
In general, Advantage policies cost less or offer more flexibility with coverage. You might be able to visit more providers or have more treatments. Compare Medicare Advantage plans to see if there’s one that’s right for you.
4. Your Income Matters
Did you know your income matters when it comes to what you pay for Medicare? If you opt for traditional Medicare, you’ll actually end up paying more for Parts B and D if your income is over a specific threshold.
This is a surcharge that’s applied if your adjusted gross income is over $85,000 if you’re single or over $170,000 if you’re married and filing jointly. You could end paying more per month for similar coverage, so it might be a good idea to look into Medicare Advantage coverage if your income is over this threshold.
5. You Still Need to Save for Your Health
Finally, just because you have Medicare doesn’t mean you shouldn’t still save for your own health. As we mentioned before, Medicare leaves many gaps in coverage. Even in areas where Medicare does offer coverage, it only pays 80% of the cost. This leaves you needing to pay any additional expenses out-of-pocket.
How much should you save? This will depend on a number of factors like your health and lifestyle, but most experts agree you need around $285,000 in your retirement account saved specifically for health expenses. It’s always better to be overprepared.
Preparing for Medicare
Medicare is an amazing program that truly helps seniors get the healthcare they need without the inflated costs we usually see with health insurance. However, it’s not perfect. There are still many things you need to know before you decide on a Medicare plan.
As you can see from the tips above, it’s not always straightforward which path to take. The best plan of action is to talk to your doctor about how much coverage you’re expected to need as you age. They’ll be able to consider your specific health situation to determine how much coverage you should plan for as you enter your golden years.