Monday, November 28, 2022

How Much Is Medicare When You Turn 65

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Summary:

Medicare may cover many medical expenses, but it doesnât cover everything. Your Medicare costs depend on the type of Medicare coverage you have. You might pay premiums, deductibles, and coinsurance/copayments for each type of Medicare coverage you have.

There are different types of Medicare coverage that may help you manage medical expenses. Hereâs an overview of the types of medical expenses that different parts of Medicare may cover. Weâll also discuss other types of Medicare coverage.

So Much For That Generous Social Security Raise

In 2022, seniors on Social Security are in line for a 5.9% cost-of-living adjustment , their largest in decades. All told, the average benefit will rise from $1,565 a month to $1,657 a month, representing a $92 increase.

But now, about one-third of that raise will be wiped out by the higher cost of Medicare Part B. And while its easy to argue that seniors will still come out ahead financially, lets also remember that the whole reason Social Security benefits are rising so much in 2022 is that inflation has driven the cost of living up substantially. And so while Medicare Part B hikes wont take seniorsentire Social Security raise, the remainder of that increase will no doubt be eaten up by higher gas, grocery, and utility costs.

For years, Medicare premiums costs have risen at a much faster rate than Social Security COLAs, leaving seniors struggling to keep up. In addition to higher monthly premiums, seniors on Medicare will face an annual Part B deductible of $233 in 2022. Thats a $30 increase from 2021, and while it may not seem like a huge jump on its own, combined with premium increases, it certainly leaves many beneficiaries in a tough spot.

For Workers At Small Businesses

If you have health insurance through a small company , you should sign up for Medicare at age 65 regardless of whether you stay on the employer plan. If you do choose to remain on it, Medicare is your primary insurance.

However, it may be more cost-effective in this situation to drop the employer coverage and pick up Medigap and a Part D plan or, alternatively, an Advantage Plan instead of keeping the work plan as secondary insurance.

Often, workers at small companies pay more in premiums than employees at larger firms.

The average premium for single coverage through employer-sponsored health insurance is $7,470, according to the Kaiser Family Foundation. However, employees contribute an average of $1,243 or about 17% with their company covering the remainder.

At small firms, the employees share might be far higher. For example, 28% are in a plan that requires them to contribute more than half of the premium for family coverage, compared with 4% of covered workers at large firms.

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The Parts Of Medicare

Social Security enrolls you in Original Medicare .

  • Medicare Part A helps pay for inpatient care in a hospital or limited time at a skilled nursing facility . Part A also pays for some home health care and hospice care.
  • Medicare Part B helps pay for services from doctors and other health care providers, outpatient care, home health care, durable medical equipment, and some preventive services.

Other parts of Medicare are run by private insurance companies that follow rules set by Medicare.

  • Supplemental policies help pay Medicare out-of-pocket copayments, coinsurance, and deductible expenses.
  • Medicare Advantage Plan includes all benefits and services covered under Part A and Part B prescription drugs and additional benefits such as vision, hearing, and dental bundled together in one plan.
  • Medicare Part D helps cover the cost of prescription drugs.

Most people age 65 or older are eligible for free Medicare hospital insurance if they have worked and paid Medicare taxes long enough. You can sign up for Medicare medical insurance by paying a monthly premium. Some beneficiaries with higher incomes will pay a higher monthly Part B premium. To learn more, read .

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Lower-than-expected spending on an expensive drug and other things means beneficiaries will pay less next year.

Medicare beneficiaries are getting a rare bit of good news as their Part B premiums and deductibles will tick down next year after the government health insurance plan spent less than projected in 2022. Unfortunately, the cost reductions beneficiaries will see next year are much smaller than the increases they shouldered this year. At the same time, deductibles for hospitalization costs under Part A will be going up. If youre new to Medicare and wondering what these letters are all about, well get to that see Medicare Open Enrollment Presents Choices, below.

The Centers for Medicare and Medicaid Services has announced the standard Medicare premiums for Part B beneficiaries will be $164.90 a month in 2023, down $5.20 from the $170.10 monthly charge in 2022, or about 3% less. The annual deductible for all Medicare Part B beneficiaries will be $226 in 2023, which is $7 less than the 2022 deductible of $233.

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I Turn 65 This Year: How Much Will I Need For Medicare

Q: I turn 65 later this year and Im in good health. How much will Medicare premiums cost, and what other costs will I have? I do not get health insurance where I work.

A: Planning healthcare costs is extremely important, but not an easy task. According to the Kaiser Family Foundation, healthcare expenses, on average, accounted for nearly 15 percent of Medicare household budgets in 2009. But even if youre in good health today, youre not out of the woods. The amount you spend on healthcare not only grows every year, but your need for more healthcare services increases with age.

Since you dont receive health insurance coverage where you work, you will need to enroll in Medicare Part B, which covers doctors and hospital outpatient services when you first become eligible for Part B. That period starts three months before you turn 65, includes the month you turn 65 and ends 3 months after the month you turn 65.

In addition, you will need a plan to cover the portion of costs that Medicare does not pay which are considerable, either a Medicare supplement with a Part D plan for drug coverage or Medicare Advantage plan that includes drug coverage. Spending on Medicare and health insurance premiums comprise the biggest share of healthcare costs, nearly two-thirds of overall senior healthcare spending.

Premiums and coverage details can vary enormously, but here are a few things to consider:

Delaying Enrollment Could Result In A Permanent Penalty

As described above, you cant reject premium-free Medicare Part A without also giving up your Social Security benefits. But since your work history is allowing you access to Medicare Part A without any premiums, few people consider rejecting Part A coverage.

The other parts of Medicare, however, do involve premiums that you have to pay in order to keep the coverage in force. That includes Medicare Part B and Part D , as well as supplemental Medigap plans. Medicare Part C, otherwise known as Medicare Advantage, wraps all of the coverage into one plan and includes premiums for Part B as well as the Medicare Advantage plan itself.

So its understandable that some Medicare-eligible people, who are healthy and not using much in the way of medical services, might not want to enroll in Part D and/or Part B. Similarly, people who are eligible for Part A but with premiums might want to avoid enrolling in order to save money on premiums. But before deciding to postpone enrollment in any part of Medicare, its important to understand the penalties and the enrollment limitations that will apply if you decide to enroll in the future.

There are penalties associated with delaying your Medicare enrollment unless the reason youre delaying is that you are still working and youre covered by the employers health plan. If thats the case, youll be eligible for a special enrollment period to sign up for Medicare when you eventually retire.

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What Happens If You Don’t Sign Up For Social Security At 65

If you are not receiving your Social Security benefits when you turn 65, you will need to apply for Medicare benefits three months before you turn 65. If you don’t sign up for Medicare Part B when you’re first eligible, you may have to pay a late enrollment penalty for as long as you have Medicare coverage.

What Is The Medicare Part B Late Enrollment Penalty

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If you dont sign up for Part B when youre first eligible, you may be required to pay a late enrollment penalty when you do choose to enroll. Additionally, youll need to wait until the general enrollment period .

With the late enrollment penalty, your monthly premium may go up 10 percent of the standard premium for each 12-month period that you were eligible but didnt enroll. Youll continue to pay this penalty for as long as youre enrolled in Part B.

For example, lets say that you waited 2 years to enroll in Part B. In this case, youd pay your monthly premium plus 20 percent of the standard premium.

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But You Don’t Have To Sign Up For Medicare

Just because you’re turning 65 this year doesn’t mean you’re giving up your job. And if you plan to keep working, you may continue to have access to a group health insurance policy through your employer.

If you’re happy with that coverage and want to keep it, you can delay your Medicare enrollment and avoid a late signup penalty. But if you’re not happy with that group plan, know that you’re allowed to work and get health coverage through Medicare at the same time.

Furthermore, if you’re keeping your group health coverage through your job, you may want to sign up for Medicare Part A regardless. Though you’ll pay a premium for Parts B and D, Part A is generally free for enrollees. Signing up could give you access to secondary insurance that may pick up the tab for hospital care your primary insurance doesn’t cover.

That said, once you enroll in Medicare, you won’t be eligible to contribute to a health savings account. And so if you’re currently taking advantage of that option, you may want to forgo that free Part A coverage if you’re keeping your group plan through work.

How Much Does Medicare Cost

The total cost of Medicare for you will depend on what parts and plans you select for your coverage.

Medicare plan
  • Monthly cost: Usually free
  • Annual deductible in 2022: $1,556

According to the Medicare program, 99% of enrollees get Medicare Part A for free. Those who do not qualify will pay between $274 and $499 per month in 2022, with the exact amount based on how much they or their spouse have paid in Medicare taxes.

Medicare Part A costs nothing for most enrollees due to their previous participation in the workforce. If you have worked for more than 10 years or 40 quarters, then you are eligible to pay $0 for Medicare Part A. This is because, during your working years, you contributed to Social Security and Medicare payroll taxes.

A large cost for Medicare Part A is the deductible, which is the amount you have to pay for medical care out of pocket before the plan’s benefits begin.

For 2022, the Medicare Part A deductible is $1,556. That’s a $72 increase from 2021. However, this cost is usually covered if you enroll in a Medigap policy or Medicare Advantage.

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What Happens If You Dont Sign Up For Medicare

If you do not sign up for Medicare Part A or Part B when you first become eligible, you may be subject to a late enrollment penalty if you choose to sign up later on.

  • The Part A late enrollment penalty is only applicable to beneficiaries who do not qualify for premium-free Part A . The Part A late enrollment penalty is up to 10 percent of the monthly premium , and you must pay the penalty for twice the number of years that you could have had Part A but did not. For example, if you were eligible for Part A for two years before you finally signed up, you would have to pay the extra 10 percent penalty for four years.
  • The Part B late enrollment penalty is up to 10 percent of the standard Part B premium for each 12-month period that you could have had Part B but did not. You have to pay this penalty for as long as you are enrolled in Part B.

Late enrollment penalties do not apply to everyone who delays coverage, however.

For example, if you delay enrollment because you have employer-provided health insurance coverage, you may be able to enroll in Medicare Part A and/or Part B at a later date without facing a late enrollment penalty.

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Should You Sign Up For Medicare If Youre 65 And Still Working

Are You Turning 65?

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If youre 65 or older, still working and are covered by employer health insurance, it can make sense to sign up for Medicare now. Enrollment might reduce your out-of-pocket costs.

Millions find themselves in this situation. The proportion of Americans ages 65 to 74 who are working is projected to reach 30.2% in 2026, according to the Bureau of Labor Statistics.

But Medicare is complicated, and there are a lot of caveats and some surprise expenses to be avoided. So for working people 65 or older, heres help with figuring out when to enroll in Medicare and how to avoid costly late-enrollment penalties and gaps in coverage.

A note for married couples where one spouse is covered by the others employer insurance: The information provided here also applies to you when you turn 65.

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Will The Medicare Age Be Raised To 67

In recent years, the proposal to raise the Medicare eligibility age to 67 began to gain traction. However, many are actually in favor of lowering the Medicare age below 65 rather than pushing it back to 67.

As of now, there has not been any indication that either of these proposals will become law. The standard Medicare enrollment age is currently 65 and there are no plans of changing that in the near future.

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Questions To Ask Your Employer Benefits Manager Include:

  • Will my health insurance change if I enrolled in Medicare? If so, how?
  • How much is deducted from my paycheck for my employer health insurance?
  • Do I have through my employer?
  • How will my covered dependents be impacted if I choose to get Medicare?

This information will help you weigh your choices and decide whats best for you. You may decide to enroll in Medicare Part A, Part B or both. Or you may be able to and want to delay enrolling in Medicare all together until you retire.

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Who Is Automatically Enrolled In Medicare

If youre already receiving Social Security or Railroad Retirement Board benefits at least four months before your 65th birthday, youll be enrolled automatically in Medicare Part A and Part B. If you live in Puerto Rico and are receiving those benefits, only Part A will come to you automatically youll need to take extra steps to enroll in Part B.

Youll receive your Medicare card in the mail and can start using it the beginning of the month you turn 65. If your birthday is on the first day of a month, your coverage will start a month earlier.

Part A, which covers hospitalization, is free if you or your spouse has paid Medicare taxes for 40 quarters, the equivalent of 10 years. Part B, which covers doctor and outpatient services, has a monthly premium of $170.10 for most people in 2022, and the Social Security Administration will automatically deduct the premium from your monthly benefit.

But if you or your spouse is still working and you have health insurance from that employer, you may not have to enroll in Part B yet. You can send back the card and enroll in Part B later. Follow the instructions on the back of the card to delay enrolling in Part B if youre already receiving Social Security or Railroad Retirement benefits.

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What it helps cover:

  • Medicare Advantage plans are required by law to provideat minimumthe same coverage, benefits and rights provided by Original Medicare Part A and Part B, with the exception of hospice care.
  • Many Medicare Advantage plans also choose to offer prescription drug coverage, as well as coverage for routine dental, vision and hearing benefits.

What it costs:

  • Medicare Advantage plans are offered by private insurance companies contracted by the federal government, so they vary in cost, coverage, deductibles and copays.
  • Many Medicare Advantage plans offer affordable or plus a variety of coverages and benefits not offered by Original Medicare .

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