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HEALTH INSURANCE IN RETIREMENT
Each year at this time, those that have Medicare for their health
insurance must decide if they want to make any changes to their coverage.
For those used to having their health insurance while working in a
group plan offered by their employer, having to think about managing
it yourself in retirement can be difficult and daunting. Let’s consider
some of the basics, but you need to work with an expert in this field.
Part A of Medicare includes inpatient hospital costs, skilled nursing
facilities when medically necessary (for a limited time), some home health
care, and hospice care. Part A is free for most, and you automatically
qualify for it at age 65. It becomes your primary coverage even if you
have a group plan which will then act as a supplement for this Part
A coverage. You need to sign up for Part A between 3 months before
your 65th birthday and 4 months after even if you are keeping your
group coverage.
Part B generally covers outpatient experiences, including doctors,
testing costs, flu shots, rehab, physical therapy, etc. There is a premium
associated with Part B which is based on income. It can be as low as
$134 per month or as high as $428.60 in 2019. This is usually deducted
from your Social Security benefits, but can be paid directly if not yet
receiving Social Security. To be eligible you must be age 65, paid
Medicare premiums for the past 10 years and be a US citizen or
permanent resident. If you do not join at 65, you can apply between
January 1st and March 31st of any subsequent year, but coverage does
not begin until the following July 1st. Be careful to make sure that
there is no gap in coverage. Also, there could be higher premiums if
you delay starting Part B after age 65.
Because Part A and B have deductibles and co- insurance costs, most
people on Medicare will purchase a supplemental plan which comes
in various shapes and sizes with the most expensive plans costing up
to $2,500 per year or more depending upon where you live. In short,
90 TAMPA BAY MAGAZINE | NOVEMBER/DECEMBER 2018
V. Raymond Ferrara, CFP®
Chairman
Chief Executive Officer
Eric R. Ebbert, MBA, CFP®
President
Chief Operating Officer
it is possible that premiums for Part A, B and a supplement could
exceed $7,500 per year per person.
Part C is a Medicare Advantage plan offered by private insurers
which combines Part A and B and usually covers drugs as well. While
offering everything that Medicare covers, these plans may provide
extra coverage for things like dental, vision, hearing aids, gyms, etc.
The negative to these plans is they usually have a limited network of
providers in exchange for their lower cost.
Part D covers prescription drugs at a discount, but please be aware
that you are still going to pay something out of pocket and for some
drugs it can be very high. Buying supplemental coverage for Part
D is important and these plans are very complex and depend on the
drugs you have to take.
Many people who come to ProVise for retirement planning do
not budget properly for all of the costs associated with healthcare in
retirement. Over 25 years in retirement all of this can add up to well
over $250,000 per individual. On top of that you have to factor inflation
into the equation. The good news is that Medicare premiums for those
that are enrolled in the program are capped in that the premium cannot
go up any faster than the increase in Social Security each year. The bad
news is that there may not be an increase in the net monthly Social
Security benefit as a result. For those that wait to enter into Medicare
past age 65, they will likely pay the higher rate when they enter. Thus,
you should consider this in making a decision to stay with your group
plan versus joining Medicare at age 65.
If you would like to discuss Medicare, Social Security or any other
part of your retirement plan please schedule a meeting with us in
either the Clearwater or Tampa office. This meeting is complimentary.
For full disclosure, we do not sell health insurance, but can refer you
to an expert in this field.
About ProVise Management Group, LLC: ProVise is a financial planning and investment management firm registered with the Securities and Exchange Commission (SEC)
and has been in business since 1987. Our 14 professional advisors serve approximately 1100 clients in over 30 states. As of 06/30/18 we were managing approximately
$1.445 billion for our individual, corporate, not-for-profit and 401k retirement plans. Please visit our website at: provise.com. Investment Advisory Services offered through
ProVise Management Group, LLC. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations
are complex and are subject to change.