When it comes to retirement, there seems to be a never-ending checklist of tasks to complete in order to prepare yourself for this major milestone. To name a few, you need to save enough to maintain your lifestyle, invest wisely, create a withdrawal strategy, minimize your taxes, and claim your Social Security benefits. But there’s one other critical piece of retirement planning to keep in mind: signing up for Medicare.
The problem with Medicare, a federal insurance program designed for people age 65 and older, is that it often seems complicated. One of the things that makes it so confusing is that applying for Medicare isn’t a one-time event that you can just forget about as you move on with life. How can you make sense of the various plans and enrollment periods and make the best coverage decision for your life, health, and wallet? Let’s go over some basics.
Who Qualifies For Medicare Open Enrollment?
Medicare open enrollment is for people who are already a part of the Medicare system. Even if you have only signed up for Parts A and B, you can still take advantage of open enrollment.
If you have not yet enrolled in Medicare, then open enrollment does not apply to you. Your initial enrollment period is based upon your birthday, not a set date on a calendar. You need to sign up for coverage during the window of time that starts three months before the month of your 65th birthday and ends at the end of the third month after your birthday month, for a total of 7 months.
When Is Medicare Open Enrollment?
Open enrollment for existing Medicare participants, though, has nothing to do with your birthday. It is at the same time every year, and everyone currently enrolled can take advantage of it, even if you only began Medicare the month before. This year, open enrollment goes from October 15, 2019, to December 7, 2019. The decisions you make during that period affect your 2020 medical coverage.
In 2019 and the years following, there is a new open enrollment period for Medicare Advantage plans only from January 1 to March 31. (1) This open enrollment is more restrictive than the fall Medicare open enrollment. Also, it only applies to Medicare Advantage plans, so any other changes need to be made during the Medicare open enrollment that is fast approaching.
What Can I Do During Open Enrollment?
Medicare open enrollment is the annual opportunity that all participants get to change their Medicare coverage. Here are some of the changes you can make during open enrollment:
- Enroll in Medicare Part C (Medicare Advantage) for the first time. If you currently have Parts A and B (Original Medicare), you can switch to Part C. Part C is contracted by outside companies and offers the same coverage as Original Medicare but can include even more services.
- Switch back to Original Medicare (Parts A and B) if you currently have Medicare Advantage (Part C).
- Change your current Part C plan to a different Medicare Advantage plan.
- Enroll in or drop Part D prescription drug coverage.
- Change your current Part D plan to a different prescription drug coverage Part D plan.
What Will Open Enrollment Changes Cost?
The costs of Parts C and D vary depending on the plan you choose. If you’re looking at switching from a Part C plan to Original Medicare, then the costs will depend upon your income and how long you worked and paid into the Medicare system.
The standard premium for Medicare Part B is $135.50 for 2019. However, if your income is over $85,000 for a single person or $170,000 for a couple, then your premium will be higher. The range for high-income earners is from $189.60 to $460.50. (2)
Medicare Part A is free if you or your spouse paid into Medicare for at least 10 years, or 40 quarters. If you only have 30-39 quarters, it costs $240. The premium for less than 30 quarters is $437. (3)
What Should I Do During Open Enrollment?
The best Medicare choices for you will depend on your health and financial situation. Original Medicare is affordable and provides basic care. However, it doesn’t cover things like dental and hearing, which can be covered by Part C plans. Also, if you take medications, having the right Part D plan can have a big impact on your finances.
Medicare can be confusing, especially with the variety of Part C and Part D plans available to you. Also, you need to make sure that the plan you choose is compatible with your financial plan and you can afford the premiums without jeopardizing your future. Because of this, it’s helpful to work with an experienced professional when reassessing your Medicare coverage during open enrollment.
At Fiduciary Wealth Management, we understand that Medicare coverage is an important part of your overall retirement plan. As such, we want to make ourselves available to you as you evaluate your options and answer any questions you may have about your insurance coverage or retirement plan. Schedule a phone call now to get started!
About Rocklin Senavinin, CFP®
With nearly 20 years of experience in the financial planning industry, Roc has dedicated his career to helping individuals live comfortably in retirement and enjoy the assets they have spent their career building. He is co-founder of Fiduciary Wealth Management, a fee-only registered investment advisory firm in Little Rock, Arkansas. As a CERTIFIED FINANCIAL PLANNER™ professional, he has advanced training in the holistic process of creating a personal financial plan that addresses a person’s comprehensive needs for the short and long term. To learn more, connect with Roc onLinkedIn or visitwww.fidwm.com. If you have questions, feel free toschedule a phone call using this link.
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(2) https://www.mymedicarematters.org/costs/parts-a-b/
(3) https://www.medicare.gov/your-medicare-costs/medicare-costs-at-a-glance