Health care is one of the most important pieces of your retirement planning puzzle. There are many assumptions about what the government offers and what retirees need to cover on their own. If you’re in the midst of planning for your retirement health care, here are 6 Medicare facts every retiree should know.
Medicare comes with a price tag
Medicare coverage has two main parts: Part A and Part B. Part A helps pay for your hospital services. This part of Medicare is free as long as you and your spouse paid payroll taxes for at least 10 years. If you’re not eligible for the free version, you can pay a monthly premium which may be several hundred dollars.
Part B is to cover doctor office visits and any outpatient services you need. Part B can sometimes come with a hefty price tag. The standard 2019 Part B premium was about $135.50 per month. The majority of taxpayers pay this amount. However, if your adjusted gross income surpassed a certain threshold for the past 2 years, you’ll pay the standard premium amount and Income Related Monthly Adjustment Amount (IRMAA).
In addition to the monthly premium, your 2019 deductible is $185. Once you meet this deductible, you may have to pay 20% of the Medicare approved amount for most doctor services, outpatient therapy services, and durable medical equipment (DME).
You’ll also have to pay a monthly premium on your Medicare Part D plan. This plan is to supplement your prescription drug costs. Plans may vary depending on the taxpayer’s specific needs. Along with paying your monthly premium you must pay your deductible amount. According to Medicare, no drug plan deductible exceeded $415 in 2019.
You also have the option to pay a copayment for your prescription drugs on the drug tier. For example, if you’re purchasing generic drugs, your copayment could be less than other alternatives.
You’ll need to review your Medicare Part D plan regularly
Speaking of drug plans, it may not be wise to stick to one plan for your entire retirement. In many cases, your drug plan shouldn’t be the same year after year. Plan formulas tend to evolve, so you may receive better coverage for the drugs you use one year and less coverage the next.
That’s why it’s important to review all of your options each year to ensure your Part D plan matches your drug needs. If you’re eligible for other forms of drug coverage, read all the information provided by the insurer. Be sure to speak with your administrator or plan provider prior to making any decisions.
Premiums can fluctuate over time
While you may assume your Medicare costs will be a fixed expense in your retirement budget, you need to think again. As with many factors that go into retirement planning, costs can fluctuate from year to year. This is also the case with your Medicare premium.
In 2018, the standard Medicare premium was $134. Today, the Medicare Part B premium is $135.50. This may not seem like a drastic increase, but there’s no guarantee premiums won’t continue to rise.
Some Medicare recipients have protection under the hold harmless rule. If retirees collect Social Security benefits and their Medicare Part B premium comes out of their benefit check every month, the hold harmless rule may apply. This rule protects your Social Security benefits from reducing due to an increase in your Medicare Part B premium. Of course, limitations and restrictions may apply.
Medicare offers a host of free services
Luckily, some of Medicare’s offerings don’t come with a price tag. There are a number of free services available to help you maintain your health and physical well-being. Some of these services include but are not limited to:
- Cardiovascular disease (behavioral therapy)
- Nutrition therapy services
- Obesity screenings & counseling
- One-time “Welcome to Medicare” preventive visit
- Flu shots
- Hepatitis B shots
- Pneumococcal shots
- Yearly “Wellness” visit
Using these preventative services can help you keep your body in peak condition. After all, you want to enjoy your golden years, not spend them in a hospital or quarantined in your home. The healthier you are the better the lifestyle you’ll achieve in retirement.
You can receive medical care right from the comforts of your own home
Many retirees have mobility issues, making it difficult to attend doctor office visits or annual checkups. Instead of getting the care they need, many forgo proper treatment and care, because it’s too cumbersome.
Fortunately, Medicare offers a service called Telehealth. With Telehealth services, you can use an interactive 2-way telecommunication device to connect with your doctor or health care professional outside of your region. Telehealth provides this device to qualified taxpayers. Here’s a list of some of the visits you may be able to forgo if they’re not in your region:
- A doctor’s office
- A hospital
- A critical access hospital (CAH)
- A rural health clinic
- A federally qualified health center
- A hospital-based or critical access hospital-based dialysis facility
- A skilled nursing facility
- A community mental health center
High-Earners Have to Pay More
If you exceed a certain income threshold, you may have to pay more for Medicare Parts B and D. Both parts will require a surcharge payment. For example, if you and your spouse file jointly and earn over $170,000 annually, you will pay $189.60 in a monthly premium for Medicare Part B.
Additionally, depending on their income level your Part D coverage can range from $13.00 to $74.80 a month.
The Bottom Line
Health care is one of the largest expenses you’ll face during retirement. It’s important to utilize every resource you have and understand all of your health care options. The more you know the better prepared you’ll be when faced with these costs.
If you need a better understanding of your options, you may want to consider partnering with a financial planner who can help you fit all of the pieces of your retirement puzzle together. Health care is a vital part of your retirement and financial planners can help you make a plan of action for addressing the costs associated.