Jun 01, 2018
By Tory Meiborg, President and Partner at World Trend Financial
Given the escalating costs of health insurance, Medicare has become an increasingly important component of a retirement plan.
To review, Medicare is comprised of four “parts”. Parts A & B are available through Medicare. A supplemental policy and Part D are available through private insurance carriers.
Part A – Hospital Insurance
After you pay an annual deductible, this insurance kicks in to pay for hospital stays, certain treatments and procedures performed in the hospital, care at a skilled nursing facility, and hospice care.
Part B – Medical Insurance
Designed to pay for many of the health care costs not covered by Part A, Part B includes doctor visits and services, outpatient hospital care, physical and speech therapy, lab tests, blood transfusions, medical equipment and supplies, and ambulance services. There is a standard monthly premium that each individual pays, and it increases for higher income households.
Supplement policies are offered by private insurance companies, and there are a variety of plans to choose from, and cover expenses not covered by Parts A & B.
Part D - Prescription
Prescription drug coverage is not included in the original Medicare (Parts A & B) or supplemental policies.
It is important that a participant enroll in these programs in a timely manner or they face the risk of coverage gaps and increased premiums.
The Initial Enrollment Period for Medicare is a 7-month period before and after the 65th birthday. For example, if a participant turns 65 in June, they can sign up starting in March and have until September. However, if they delay filing until the month of the 65th birthday (and the 3 months after), they may face a gap in their coverage.
In addition, if they miss the initial enrollment period and enroll outside of the initial eligibility period, they face higher premiums for as long as they participate in Part A and Part B. Obviously, this penalty needs to be avoided if at all possible.
The initial enrollment schedule changes for those who maintain their private health insurance coverage past age 65. This Supplemental Enrollment Period must be coordinated with private coverage, COBRA and potentially, Health Savings Account plans. An individual should consult a financial or insurance professional to determine their exact eligibility period. The financial professionals at World Trend Financial can be reached at 319-364-3041 in Cedar Rapids, or 319-339-4884 in Iowa City.