The Alphabet Soup of Medicare!

Posted 10/14/21

One of the most confusing topics that we help our clients navigate is Medicare; the various parts (A-B-C-D) as well as the costs for each “part” of Medicare.

Let’s start with the …

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The Alphabet Soup of Medicare!


One of the most confusing topics that we help our clients navigate is Medicare; the various parts (A-B-C-D) as well as the costs for each “part” of Medicare.

Let’s start with the basics.  Most people become eligible for Medicare (Part A-B-C-D) at their 65th birthday.  Generally, you should sign up at that time as there is no charge for Medicare Part A if you or your spouse have worked for at least 10 years and paid into the Medicare system via your paycheck.  If you don’t qualify, then you would have to purchase this benefit.

Medicare Part A typically covers hospital stays, hospice, skilled nursing care following a qualifying hospitalization and some home health care.  There are various deductibles that would apply under Part A and these deductibles tend to change each year.

Medicare Part B typically covers doctor services, outpatient services and medical equipment. Like Part A, there are various deductibles for Part B plus co-payments that you would be required to pay, and these deductibles and co-payments could change each year.

Medicare Part C provides the same services as Part A and Part B and may also include some prescription drug coverage as well as other services.  These plans are called Medicare Advantage plans.  Deductibles and co-payments can vary under these plans as you have many different choices.

Medicare Part D provides some coverage for your prescription medications, also with deductibles and co-payments.

There are exceptions to the age 65 rule for those with various types of disabilities.  When you would qualify for Medicare under the disability rules are too complex for this article, as it depends on the type of disability and how long you have been disabled under the Social Security parameters.

The rule for enrollment gives you a span of 3 months prior to your 65th birthday month (your birthday month and 3 months after your birthday month.)  In essence, it is a seven-month window, which is ample time to get set up for these programs.

If you are fortunate enough to have a health insurance plan through your employer, you do not have to sign up for these benefits during that seven-month window if you continue to work beyond the age 65 “window.”  As an example, if you work until you are 67, you have an eight-month “window” of time to sign up for the various options offered by Medicare.

Medicare Part A is free, if you qualify; Medicare Part B has a monthly premium, which is  $148.40 for 2021. This premium amount is for most people and typically goes up each year.  However, if you fall into higher income brackets, you will likely pay a higher premium for the various parts of coverage.  For 2021, the surcharge starts after your adjusted gross income reaches $88,000 for a single tax filer and $176,000 for a married couple filing jointly, and it goes up from there.  Keep in mind that if your taxable income is above these numbers, there is a surcharge on your Part D plan as well.

This is a key point.  Each year, the government has an annual enrollment period that will always be from October 15th through December 7th.  These dates are set in stone, so to speak.  The annual enrollment period allows anyone already in the Medicare system to change plans.  We recommend that you check on your existing plan to determine if changes are going to be made and to ascertain if you are still in the best plan for you and your current health circumstances.

Keep in mind that when you first qualify to sign up for a Medicare supplement plan, you are guaranteed acceptance regardless of any medical challenges that you may have.  You do not have the same guarantee of coverage if you choose to switch during the “open season” as many people call it.  Conversely, Medicare Advantage plans are required to cover pre-existing medical conditions with the exception of end stage renal disease and Lou Gehrigs disease.

There are many different deductibles and co-payments for the various parts of Medicare.  A Medicare Supplement plan provides benefits to augment “original Medicare” and will dramatically decrease your out-of-pocket expenses that original Medicare does not cover such as deductibles and co-payments.  This is a standalone plan that you would pay an additional premium for.  An estimate for premium for a 65-year young person is about $150 per month for a typical plan.  The premiums costs more based on higher ages.

Our goal is to provide clear guidance and simple explanations of the Medicare rules.  Call 401-333-8000 should you wish to have an in-depth conversation about your choices.

This content is provided for informational purposes only and is not intended to serve as the basis for financial decisions.  We are an independent financial services firm helping individuals create retirement strategies using a variety of investment and insurance products to custom suit their needs and objectives.  Investing involves risk, including the potential loss of principal.  No investment strategy can guarantee a profit or protect against loss in periods of declining values.  Any references to lifetime income generally refer to fixed insurance products, never securities or investment products.  Insurance and annuity product guarantees are backed by the financial strength and claims paying ability of the issuing insurance company.  Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM).  AEWM and Massey and Associates, Inc. are not affiliated companies


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