I’m so Excited!

Medicare, as you know, is the national health program for seniors created in 1966 by the Lyndon Johnson administration. But did you also know that, in 1912, Teddy Roosevelt’s platform included creating national healthcare insurance? Did you know that Harry Truman tried to put together a national health program in 1945? 

The conversation around health care for all Americans is not a new conversation. And I am delighted that I get to receive the benefits of this great program that my and my employers’ 2.9% payroll taxes have funded all these years. That’s right, this isn’t an entitlement. I’ve been paying for this, and now I’m going to collect my benefit. Yay, me!  Free Medicare Part A!  Whoohoo! 

Here's what I’m going to do: 

I’m going to go the Social Security Administration site and click on Medicare. Once I’m there, I’m going to find out how far in advance I can enroll in the program. I don’t want to wait until the last minute because there can be penalties for failing to enroll. Plus, I’m a planner, right? Why would I wait? 

I’ll enter my January birth date, and it will tell me that my enrollment period will run from October 1, 2024, to April 30, 2025. Since I want my coverage to begin on January 1, 2025, I’ll sign up by December 31, 2024. It doesn’t matter if I’m still working.  It doesn’t even matter if I still have employee healthcare coverage from a corporate employer. (I do not.) I’m not taking any chances of being late. Because if I miss the enrollment window for Medicare Part A or Part B, I’ll suffer permanent penalties for how much I pay for coverage. 

Gotcha alert:  The only downside to applying for Medicare while working would be if I still contribute to an HSA (Health Savings Account.) It’s no longer permitted once you’ve applied for Medicare. 

I am signing up for Medicare because I do not intend to claim my Social Security benefits before age 70. But, if I had claimed my Social Security benefits early, I would be enrolled automatically in Medicare Part A. The only people who may delay enrollment for Medicare Part A are those who are still employed. These people have until eight months after they or their spouse stops working to enroll. 

In case you didn’t hear me celebrating above, the Medicare premium is FREE for me because I paid Medicare taxes for more than 10 years.   

So far so good. Here’s the part that makes people crazy:  I now must decide if I want traditional Medicare (Part A, B, D, and Medigap) OR if I want Medicare Advantage (Part A, C.)  There are benefits to both.   

Part A is what all Medicare has in common.  It covers: 

• hospital stays 
• skilled nursing facility stays 
• hospice 

It also covers some outpatient home healthcare where services are provided through a hospital.   

It has no premium for most people, but it does have a deductible of $1,632 in 2024. And it has some co-pays based on a schedule. 

Medicare Part B covers: 

• healthcare providers 
• outpatient care 
• home healthcare 
• durable medical equipment 
• regular preventive care.  

In other words, most of the rest. 

The cost of Medicare Part B is either deducted from your Social Security check, or you pay it directly. Based on your income, you may pay more (or less) than your neighbor for the same coverage.  

Example: 

• A household earning less than $206,000/year will pay $174.70/month  
• A household earning greater than $750,000/year will pay $594.00/month   

We are blessed, but we’re going to pay more than our neighbors for Medicare Part B.  Ah, well.  Onward. 

There are two private payor components of Medicare that are optional but important: Medicare Part D and Medicare Advantage. 

Medicare Part D is the Drug Coverage Plan. In the good news department, starting in 2025, the out-of-pocket drug copay is $2,000/year (indexed for inflation). That’s a great benefit for seniors. It doesn’t mitigate the total cost of frailty risk, but prescription drug caps and out-of-pocket limits are important.  

If I were to use Medicare Part D, I’d want to compare the list of drugs I take to the list covered by each plan before I subscribe.  And I’d review my plan every year. 

Medigap refers to a group of offerings (Parts G through N) that optionally pay for out-of-pocket costs and things NOT explicitly covered by Medicare Parts A and B. Medigap plans may pay deductibles and copayments and have extra benefits like international travel coverage. 

That’s what’s included in traditional Medicare.  If you choose this, you should choose all of the components you need at once, as your Part D and Medigap may increase if you try to purchase them a la carte. 

Medicare Advantage is a private insurance plan that replaces Medicare Parts B, D, and Medigap.  Types of Medicare Advantage plans will differ based on the county in which you live.  Some counties may have multiple offerings to choose from, while others may have relatively few. These plans look a lot like traditional HMOs, PPOs, and EPOs and will include a network of physicians, a referral system, drug coverage, and some additional benefits. 

One of the advantages of some Medicare Advantage programs is that they include dental, vision and fitness coverage; benefits that are NOT covered by traditional Medicare.  

Aside: There’s talk of changing this. In the nearly 60 years since Medicare was established, features have been added many times to improve the program; and dental and vision would be a good additions to long term health maintenance. 

As with traditional Medicare, it’s super important to compare the prescription drugs and other features you NEED to the ones that are offered every year during open enrollment. 

Here’s my challenge: What if my Medicare Advantage plan is offered in New York and I’m in Ohio, or vice-versa? Will I have trouble getting referrals to specialists? One of the reasons frequent travelers or snowbirds choose traditional Medicare is specifically for this reason.   

On the other hand, people who have large dental or vision bills frequently like the idea that these can be included in an Advantage policy. 

So, it’s decision time.  What will I do? 

Well, I have an ace in the hole. As a military spouse, I have Tricare for Life coverage available to me.  Tricare for Life is a Military Medicare Part B wraparound that pays for out-of-pocket  expenses, except my Part B premium. My Medicare ID will be connected to my military ID. Any deductibles, copays, coinsurance, and prescriptions will be covered automatically by Tricare for Life. 

Again, yay me! 

When I do the math of everything that Tricare for Life covers, it makes Medicare Part B (without Parts C and Medigap) the right option for me; this despite my Part B premium being pricey. 

Aside: The more IRA money I convert to Roth, the lower my income will appear in retirement, which will reduce my Medicare Part B premium over time, as the government looks back two years.  

Are you still with me?  On October 1, I’m going to sign up for Medicare Parts A and B here. Then I’m going to take my Medicare Number and let the military administrators add it to their database.  And then I’ll be done! 

What about you?  Do you have a clear picture of how you will apply for Medicare and which options you’ll choose? Perhaps your first stop should be Medicare.gov, where you can search by your ZIP code for Medicare Advantage, Part D Drug Plan, or Medigap policies.   

If you still find it confusing, you can gather all your prescription information and consult a Medicare broker. These salespeople work state by state to help individuals find the best Advantage, Part D and Medigap plans available in their area. 

However, caveat emptor: While they are paid by insurance providers the same amount no matter which policy they place, and the consultation comes at no cost to you, they may be receiving non-monetary gifts for placing policies with specific providers.  It’s been hard to police the industry to prevent kickback schemes. That said, these people add real value; just don’t let them talk you into a policy that you’re on the fence about.  

People love to overly complicate the Medicare enrollment process. But it really comes down to a couple of decisions and ensuring you don’t fall into a penalty situation for late enrollment.  

We have not been happy with our health insurance providers to date. Medicare will give me more options to seek out a compatible primary care provider and specialists. I think I’ll make an appointment now for my annual physical in January.  Wish me luck!  #WeRescueOurselves 

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The information contained herein and shared by Madrina Molly™ constitutes financial education and not investment or financial advice

Sherry Finkel Murphy, CFP®, RICP®, ChFC®, is the Founder and CEO of Madrina Molly, LLC.

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