Medicare: Things to Keep in Mind

by Michael on February 20, 2018

in Consultant,Medicare

Medicare is an entitlement because receiving it is based on work credits that a person has accumulated.

My estimation of it is mostly positive. However, there is a lot of confusion regarding the program.

Up until now, Medicare has used SSN as a means of identifying a person. This is changing later this year when new cards begin to be released. These will not have a persons SSN recorded on the card, rather a unique number just for Medicare. This will be similar to what a person may be used to from their prior insurance carrier. This change is welcomed for many reasons.

Original Medicare is Part A (Hospitals) and Part B (Doctors and similar).

There is also a Part C and a Part D, both named rather poorly.

Part C is also referred to as Medicare Advantage. It is simply Medicare being run by Insurance Companies. Although this could have been done well, I do not feel it is. In most cases, a person is better off sticking with Original Medicare. There are exceptions to this, and this is why a person really needs to talk to an insurance agent who is not working for an organization pushing Medicare Advantage due to first-year commissions. Again, Medicare Advantage has it’s place, but unless one lives in a densely populated area, it is usually the case that Original Medicare and a Supplement is to their advantage.

Part D is prescription drug coverage. Medicare covers drugs in the hospital, but not out. This is where the so-called Part D comes into play. It is an additional expense, and certainly not without fault, however, over the long haul most will benefit from this program. Unless a person is taking a lot of drugs when going onto Medicare, they should purchase the least expensive plan. Why buy at all? Because if a person chooses not to purchase when first entering Medicare, they will be punished when they buy it later. The “punishment” is 1% a month that they did not have it. This may seem small, but consider that if a person decides they need this when age 70 (not an unrealistic scenario), the penalty will be 60% (60 months times 1%) and this will be applied to the plan they now purchase which in itself is likely going to be 3x the cost of the inexpensive plan at age 65. The penalty could easily amount to $7,000 over the next 10 years.

Because decisions one makes when entering Medicare can be costly if made without considering all the factors, I recommend spending an hour or so getting familiar with all the choices and consider how these choices may impact you.

I am here to help. Call me anytime (209) 390-1163 or drop me a line.

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