What’s the Deal?
Many of your working clients have probably been contributing to Medicare for years. Before they turn 65, it’s time to see if they have thought about how their out-of-pocket healthcare costs could change as they enroll in Medicare. With Gallup polls showing more than half of people surveyed worried about unexpected medical costs, this is one of the most relevant wealth and health conversations you can have.
So What…Why It Matters
The Field Guide to Medicare series can help you explain the ins and outs of the federal program. It’s not designed to sell anything of any kind. It’s just meant to help you show your value to clients by helping them make informed decisions about health care at age 65 and beyond.
Knowing a little about Medicare could put you in a better position to help clients manage health expenses as they get older.
Medicare Costs in 2018
Medicare’s website lists costs at a glance, with a detailed look at what beneficiaries can expect to pay in 2018. Here’s a simplified look at some of the basic costs.
Terms to Know
Coverage managed by the federal government. Your clients can choose this option or buy a plan from a private insurer instead.
Medicare coverage offered by a private insurer.
Someone who chooses Original Medicare might also buy a Medigap policy (known as Medicare Supplement Insurance) from a private company to help cover copayments, coinsurance, or deductibles that aren’t covered by Original Medicare. No one has to buy this if they don’t want it.
The amount of costs your clients will cover on their own before coverage kicks in.
A patient’s share of costs on an individual medical bill.
Coverage for qualifying individuals, including those with lower incomes.
A periodic payment made to Medicare, an insurance company, or a health care plan for health or prescription drug coverage.
Health Savings Account (HSA)
A tax-advantaged medical savings account available to taxpayers who are enrolled in a high-deductible health plan. The funds contributed to an account are not subject to federal income tax at the time of deposit.
Modified Adjusted Gross Income (MAGI)
The adjusted gross income reported on the most recent federal income tax return filed, plus any tax-exempt Social Security, interest, or foreign income that might have been deducted.
The part of Medicare that covers care in hospitals (and other medical facilities)
The part of Medicare that covers doctor services, outpatient care, medical supplies, preventive care
This refers to a Medicare Advantage plan, which includes Part A and Part B but is provided by a private insurer instead of the government.
Medicare vs. Medicaid
While Medicare and Medicaid are two distinct programs, there seems to be lingering confusion around the differences of each program, how eligibility is determined, and how the costs differ.
The ABCs of Parts A, B, C, and D
Care in hospitals (and other medical facilities)
Most people don’t owe a monthly premium for Part A because they’ve already paid Medicare taxes on their paychecks or their spouse’s paychecks for at least 10 years.
Otherwise, monthly premiums can be up to $422 per month in 2018, depending on whether any Medicare taxes were paid.
Doctor services, outpatient care, medical supplies, preventive care.
Part B premiums vary by income. Monthly premiums are typically deducted from the monthly Social Security benefits payments your clients receive.
For 2018, monthly Part B premiums for people who enroll in Medicare for the first time range from $134-$428.60. Existing enrollees who did not see increases in prior years because Social Security did not significantly increase benefits will see an increase in their Part B premium this year. The average premium will be about $130 for those already enrolled. Premiums can increase beyond the standard premium based on income levels. The Part B deductible is $183 in 2018.
Part C lets people choose coverage through private health plans — known as Medicare Advantage Plans — instead of getting Original Medicare.
Medicare Advantage Plans may or may not include prescription drug coverage.