When I'm 64

It wasn’t listening to Paul McCartney sing “When I’m 64” at his recent concert that inspired this week’s blog, but the fact that in 2011, another baby boomer turns 65 about every 10 seconds. Although age 66 is when you will reach Full Retirement Age for Social Security benefits, there are several decisions that need to be made regarding your Medicare coverage when you are 64.

• If you are already receiving Social Security, you do not need to apply for Medicare and will be automatically enrolled in Part A (hospital or inpatient care) and Part B (doctor’s visits or outpatient care). You will receive your Medicare card about three months before you turn 65. 
• If you are not collecting Social Security, you can apply for Medicare at age 64 and 8 months. The easiest way to do this is to apply online.
• If you have Part B coverage through an employer plan, your Medicare card will instruct you how to proceed. You should check with your former employer to see if your retiree coverage reverts to a Medicare supplement at age 65.

If your employer does not provide any coverage when you turn 65, you will need to decide whether to purchase a Medicare supplement (also known as Medigap) policy plus Part D (drug coverage) or whether a Medicare Advantage (Part C) policy makes more sense. This choice will be driven by your current health and the prescriptions you take.

When I helped my mother-in-law apply, it made more sense for her to buy a Medigap policy combined with Part D for her prescription coverage. The monthly cost was higher than Medicare Advantage, but her out- of-pocket exposure was significantly less. She had some health issues such as osteoporosis and high blood pressure and takes several medications on an on-going basis. When she had to have a Pacemaker put in the following year, she didn’t have any additional expenses associated with her operation.

It is very important to choose the proper plan because you can only change your Medicare coverage once a year. We can refer you to a specialist to help you decide what type of coverage is most appropriate for your situation.

The costs associated with Medicare coverage continue to change. Part A is subsidized through payroll taxes, but Part B and Part D premiums are based on your Modified Adjusted Gross Income from your tax return. The basic monthly premium for Part B starts at $115.40 and can be as high as $369.10. The Part D premium is $0 for couples making under $170,000 but increases to $69.10 for couples earning over $428,000.

Just like any other aspect of your financial plan, we are here to help you determine the most effective way to cover your healthcare costs in retirement.

Christine L. Carleton, CFP®
clcarleton@taaginc.com
http://www.taaginc.com/

Changes Are Coming to Medicare Supplements

If you have a Medicare supplement (Medigap) policy or are turning 65 this year, you need to be aware of the changes that are occurring this month. These changes have nothing to do with health care reform and were suggested by the National Association of Insurance Commissioners in order to better protect consumers. Effective June 1, 2010, these changes were and designed to close coverage gaps in the existing plans. Here are the highlights from Medicare’s web site.

• Basic Benefits – Starting with policies effective on or after June 1, 2010, Hospice Part A coinsurance (outpatient prescription drug and inpatient respite care coinsurance) will be covered. Plan K will cover 50% of the costs and Plan L will cover 75% of these costs.

• Part B Coinsurance – Plans K, L, and N will require you to pay a portion of Part B coinsurance and copayments, which may result in lower premiums for these plans. All other Medigap policies pay them at 100%.

• New Plans Offered – Plans M and N are new choices.

• Plans D and G – Plans D and G effective on or after June 1, 2010 have different benefits than D or G Plans bought before June 1, 2010.

• Plans No Longer for Sale – Plans E, H, I, and J will no longer be sold after May 31, 2010. But, if you already have or you buy Plan E, H, I, or J before June 1, 2010, you can keep that plan.

Another plus is that companies will be able to reset their premiums because of the added hospice benefit. This means that there will be more competition in the marketplace, possibly leading to lower cost coverage.

Medicare has published a guide to help you when selecting the plan that will be most beneficial for your individual circumstance.
http://www.medicare.gov/publications/pubs/pdf/02110.pdf

If all of this seems overwhelming, don’t worry. There are insurance specialists who receive continuing education on plan availability. We will be hosting a Lunch and Learn in June to help you decide if your current plan remains your best coverage option or whether one of the new plans would better suit your situation.

Chris Carleton, CFP®

clcarleton@taaginc.com

http://www.taaginc.com/