For seniors aged 65 and above, Medicare is a crucial resource for reducing healthcare expenses. However, 50% of Americans admit to being perplexed by the various plan options during open enrollment. Here’s what you need to know right away:
Medicare open enrollment is the designated period when seniors have the opportunity to modify their plan, including adjustments to premiums, cost-sharing requirements, prescription drug coverage, and even the inclusion of other household members on Medicare. If you find that your monthly expenses are becoming burdensome or if you desire more comprehensive care options, it might be necessary to make changes to your plan. This open enrollment period also allows you to explore new doctors for your healthcare needs.
The open enrollment period for 2021 runs from October 15 to December 7, but many seniors still find themselves uncertain about what steps to take during this time.
What is Medicare?
Medicare is a social insurance program designed to offer health care coverage to individuals aged 65 or older, certain younger individuals with disabilities, and those with end-stage renal disease. The program is administered by the US federal government and funded primarily through payroll taxes called Federal Insurance Contributions Act tax (FICA) and contributions from general revenues.
What Are the Key Parts?
Part A (Hospital Insurance) provides coverage for hospital care, including a semi-private room, nursing services, meals, and necessary medications. It encompasses stays in various types of hospitals, such as critical-access and mental hospitals.
Part A also includes coverage for skilled nursing facility care, certain home health care services, and hospice care.
Part B (Medical Insurance) covers most medical expenses not covered by Part A, including doctors’ services, outpatient care, and supplies.
Part C (Medicare Advantage) offers a private insurance alternative to receive benefits provided by Parts A and B.
Part D provides prescription drug coverage.
Eligibility for Medicare?
The standard age for Medicare eligibility is 65. However, you may also qualify for Medicare if you’re under 65 and have been receiving Social Security or Railroad Retirement Board disability benefits for at least 24 months (meeting the “24-month requirement”). If you are still employed, you have the option to delay Part B enrollment and consider purchasing a private Medigap insurance plan instead. This could be a viable and beneficial choice for those with employer-sponsored health plans.
What Are Medicare Costs?
Your monthly Part B premium is calculated based on your income and the “base amount” of $121.80 (for 2019). In most cases, the government deducts the Part B premium directly from seniors’ Social Security payments, so they don’t have to pay separately. However, even if you are responsible for paying your own premiums, coverage will not be denied due to an inability to pay for Part B.
If you earn a substantial income in a year and need to repay some or all of the benefits you received, the government may withhold future Social Security payments. The same situation may occur if your estate lacks sufficient funds to cover the cost of your care after your passing.
What Are the Biggest Changes?
Medicare Part A premiums have risen to $471 monthly unless you qualify for premium-free coverage.
Medicare Part B premiums have increased to $148.50.
The maximum deductible for Medicare Part D has gone up to $445.
The Part D coverage gap, also known as the donut hole, has been closed.
For the year 2021, the income bracket threshold was raised for inflation to $88,000 for individuals or $176,000 for couples.
All Medicare plans now include treatment and testing for COVID-19.
Medicare giveback checks offer rebates of up to $2,088 per person.
What Are the Biggest Perks to Look for?
1. Medicare premiums are tax-deductible.
When you file your taxes, you have the option to deduct some or all of your Medicare premiums, which can lower your taxable income and result in tax savings. This deduction benefit is unlimited, meaning there are no restrictions on the amount you can deduct. Your eligibility for the premium tax credit is based on your income and expenses throughout the year.
2. You’ll get some free preventive services.
Medicare Part B provides coverage for various preventive health services at no cost to you. These services include a yearly wellness visit, flu shots, cardiovascular disease screenings, and diabetes screenings. These valuable resources can help you take charge of your health and make informed decisions for a healthier future, preventing the need for costly treatments related to these health issues in the long run.
How Do I Enroll?
You have several options to apply for Medicare. You can apply online, by mail, or in person at a Social Security office. Additionally, you can call Social Security and sign up over the phone. However, please note that if you choose to apply over the phone, you won’t have the opportunity to ask questions about the plans to the person assisting you.