A new book aptly titled “Medicare 101” by financial journalist Kimberly Lankford is a practical roadmap to help you make the best decisions about your coverage.
The alphabet of choices ranges from Part A (hospital care and services) to Part B (medical care, including preventive services), to Part C (Medicare Advantage), to Part D (prescription drug coverage). Plus Medicare Supplement (Medigap).
It’s head-spinning and frankly stressful to compare coverage options and select a plan. Lankford’s book works as a guide in the process.
Here are edited excerpts of our recent conversation:
Kerry Hannon:What are some of the costly pitfalls that folks have when it comes to signing up for Medicare?
Kim Lankford: They don’t understand that they have to sign up. Unless you’ve already enrolled in Social Security, you’re not automatically enrolled in Medicare.
It’s simple to enroll in Medicare. You go to the Social Security Administration website during your initial enrollment period, around age 65. It is a seven-month window: three months before your 65th birthday, the month of your birthday, and three months after. If you miss that, it can lead to higher monthly premiums due to late penalties for Part B and Part D for the rest of your life.
Those who are still working need to talk with their HR department to confirm their employer’s health plan covers them.
If you work for an employer that has fewer than 20 employees, you generally have to sign up for Parts A and B. If you have health insurance coverage from a large employer, that can continue to be your primary coverage.
What a lot of people do is sign up for Part A because they don’t have to pay premiums for that, but not sign up for Part B while they’re working.
If you missed your initial window, you can sign up later if you were covered by an active employer group health plan (yours or your spouse’s).
Medicare 101 by Kimberly Lankford
If you are working and contributing to a Health Savings Account (HSA), is it okay to sign up for Medicare?
You might not want to sign up for Part A yet. Once you enroll in Medicare, you’re no longer eligible to contribute to an HSA. But you can tap your HSA funds tax-free for qualified medical expenses, including Medicare premiums, deductibles, copays, and coinsurance.
What’s the biggest misconception people have about Medicare in general?
They think it’s free. You have monthly premiums for Medicare Part B, which are $202.90 per month now.
Another misconception is that everyone pays the same for Medicare. Not so.
If you have higher income, that’s not just higher income from a job, but it’s also higher income if you are taking withdrawals from tax-deferred retirement savings, which counts in the income calculations. If you’re making a Roth conversion from a traditional IRA, that money is taxable and is included in the calculation for the high-income surcharge.
Here’s how that works: If you made more than $109,000 as a single filer or $218,000 as married filing jointly two years ago, you might be hit with what’s known as the Medicare Income-Related Monthly Adjustment Amount (IRMAA).
Can you push back on that surcharge?
You can contest the IRMAA by filing Form SSA-44 with the Social Security Administration. It has to be a certain kind of life-changing event that pushed your income below what it was two years ago. Qualifying events include retiring or reduction in paid income from a job, marriage, divorce/annulment, death of a spouse, loss of income-producing property, or a loss of pension.
Nobody is going to make that request for you, and you will need to provide documentation to reduce your premium.
Let’s talk about Medicare and long-term care costs. What do people need to know?
Neither Medicare nor Medicare Advantage covers long-term care expenses. Medicare covers some skilled nursing care after you’ve been in a hospital and rehab care. But that long-term care, the custodial care that you might need, such as assistance with activities of daily living long-term, is not covered. That’s one of the biggest gaps in healthcare costs that people have after retirement.
What should retirees who are traveling internationally know about their Medicare coverage?
In general, Medicare does not cover you when you are traveling out of the country. Most Medigap plans do provide some foreign travel coverage. A Medicare Advantage plan might have some additional coverage.
If you’re doing a lot of foreign travel, I recommend looking into a travel insurance policy that might be able to cover medical evacuation and things like that. Also, if you’re living abroad, understand that your Medicare will not be covering your healthcare.
What are some tips for people shopping for a Part D plan?
There is now a $2,100 cap on the amount that you pay out-of-pocket for your Part D prescription drug plan. That’s a great thing. But that cap is only for drugs that are covered under your plan. And each plan has a different formulary, which is its list of covered drugs. And those can change from year to year.
So every year during open enrollment season, which is in the fall from Oct. 15 through Dec. 7 every year, I recommend going to Medicare’s online searchable Plan Finder on the Medicare.gov site. Type in your zip code and then your drugs and dosages, and it will tell you exactly what each plan in your area will charge for your specific medications.
“You don’t have to be in your mid-60s to have to know about Medicare,” according to author Kim Lankford. (Photo courtesy of Kim Lankford)
A lot of retirees move to a different state after they’ve enrolled in Medicare. What do they need to be aware of?
If you have original Medicare, moving is not too big a deal. It covers any doctor and hospital that participates in the Medicare program, which is most of them.
If you have a Medigap plan that fills in the gaps in Medicare, you usually need to let your Medigap plan know if you’ve moved.
If you move to a new state with a Medicare Advantage plan, you generally will have to get a new plan. That means researching the doctors and hospitals you might need for care in your new town to make sure they’re covered by a new plan.
You don’t have to be in your mid-60s to have to know about Medicare. So many of my friends are in their 50s and are helping aging parents. We are thrust into this and don’t know the basics about Medicare.
Starting two years ago, I had to make decisions about my parents’ Part D plan. Now, during open enrollment, I go on the Medicare Plan Finder, type in their drugs, and decide whether they’re going to stay with their same plan or not.
