Financial Planning 38th Edition: Understanding the ABC’s (and D) of Medicare
INVESTMENT MANAGEMENT || FIDUCIARY ADVICE || RETIREMENT PLANNING
As Medicare enrollment season is in full swing (October 15th - December 7th), we’ve heard an outpouring of uncertainty from clients navigating their options. If you’re seeking clarity around the alphabet soup of Medicare, we have you covered. In this edition of our quarterly newsletter, we will dive into the different parts of Medicare and how to find the right fit for you.
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November 22nd – 24th
December 22nd – January 1st
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As Medicare enrollment season is in full swing (October 15th – December 7th), we’ve heard an outpouring of uncertainty from clients navigating their options. If you’re seeking clarity around the alphabet soup of Medicare, we have you covered. In this edition of our quarterly newsletter, we will dive into the different parts of Medicare and how to find the right fit for you.
Medicare has four “parts” you can enroll in, and they all offer different benefits:
Medicare Part A: This is often referred to as “Hospital Insurance’, and is a fundamental component of holistic medical coverage for retirees. Part A primarily provides coverage for inpatient hospital care and related services. This coverage extends to various healthcare facilities, including hospitals, skilled nursing facilities, hospice care, and some home healthcare options.
Medicare Part B: Part B, “Medical Insurance”, offers non-hospital health coverage (excluding vision and dental) and is similar to a traditional insurance policy. It includes a $240 annual deductible for 2024, a 20% coinsurance on doctor services and outpatient care, and monthly premiums based on Adjusted Gross Income (AGI).
Medicare Part C (Medicare Advantage): Medicare Part C, also known as Medicare Advantage, is an alternative way for retirees to receive their Medicare benefits. Instead of enrolling in Original Medicare (Part A and Part B), individuals can opt for a Medicare Advantage plan offered by private insurance companies. Medicare Advantage offers comprehensive coverage, combining benefits from part A, B, and D, along with vision, dental, and hearing (though these coverages may vary by policy).
Medicare Part D: Medicare Part D is the prescription drug coverage component of the Medicare program, and was introduced to help beneficiaries afford the costs of prescription medications (because as we all know, prescription drugs are pricey)! Monthly premiums range from $12.40 to $77.90, and Part D coverage includes the first $4,660 of drug costs, with a maximum deductible of $505. In 2026, Medicare will gain the ability to negotiate prescription drug costs, and in 2025 out-of-pocket spending will be capped for beneficiaries.
Choosing Your Medicare Path:
Option 1 “The Jetsetter”:
If you are planning to spend your retired years in more than one location (aka, if you plan to be a “snowbird”), or if you are looking for freedom and flexibility in retirement, Original Medicare may be the best option for you.
If you desire the flexibility of Medicare but are seeking more predictable costs, Original Medicare paired with a Medigap policy will typically result in lower copays and higher premiums. A Medigap policy is a form of supplemental insurance that fills the coverage gaps Medicare does not cover, such as dental, vision, and hearing. Keep in mind, should you decide to pursue a Medigap policy, that you need to enroll within the first 6 months.
Option 2 “The Happy Homesteader”:
Those who frequent their local doctors and plan to remain in one primary state may find Medicare Advantage to be an ideal choice. While Medicare Advantage (or Part C) offers more comprehensive coverage than Original Medicare, beneficiaries must consult doctors or specialists within the local network.
When to Enroll:
For those self-insured who have claimed Social Security, you’re in luck! Automatic enrollment for A and B will occur as soon as you turn 65 (make sure to check the mail for your Medicare Card). However, if you are enrolled in Part D or a Medigap policy only, you will still need to manually enroll in Medicare 3 months before your 65th birthday. You can do this online through the Social Security Administration’s website, by visiting your local Social Security office, or by calling Social Security at 1-800-772-1213.
For those actively working at age 65 and currently insured by their employer, a special enrollment period may apply:
For individuals at companies with fewer than 20 employees, enrollment begins at 65 and extends until eight months after employer health coverage ends. For individuals at companies with more than 20 employees, enrollment begins three months before their 65th birthday and lasts seven months.
Understanding your Medicare options is crucial for maintaining good health and financial stability. We recommend reviewing your options via the tools on medicare.gov or by calling a live Medicare representative (available 24/7!) at 1-800-633-4227.