Medicare has announced the premiums and costs for the 2017 plan year. We have outlined the key costs you need to know below.
Part A Premium: While free for most people, those that must buy into Part A will pay up to $413/month based on their Social Security earnings history.
Part B Premium: $134/month
Note that the vast majority of beneficiaries will continue to be "held harmless" as a result of the paltry 0.3% Cost of Living Adjustment (COLA) for 2017. Their premium will be about $109/month on average. Actual amounts are dependent on their Social Security benefits.
Part D Costs:
Your monthly Part D premium depends on the plan you choose that best meets your needs.
Income Related Monthly Adjustment Amount (IRMAA):
Higher income earners will be subject to increased Medicare Part B & D premiums as outlined in the table below. Note that these income thresholds include any tax-exempt interest income as well.
A commonly asked question is "How does Medicare work if I'm traveling outside the U.S.?". Now that you have more time to start tackling your travel "Bucket List", it is important to understand how you will or will not be covered in the event of a medical emergency outside the United States.
There is often a high level of confusion around how Medicare works when traveling abroad. The good news is that a little proactive planning can ensure your potential healthcare needs are effectively addressed before you jump on a plane or hit the open road.
Medicare Coverage Outside The U.S.
In most cases, Medicare does not provide benefits while traveling outside of the United States. However, there are a few special exceptions where your care would be covered.
Benefits Under Medicare Supplement or Medicare Advantage Plans
Those who have selected Original Medicare likely purchased a Medicare Supplement
(a.k.a. Medigap) plan as well. Plans lettered C, D, F, G, M and N all offer foreign emergency benefits. However, the coverage is not comprehensive and tends to be fairly limited. Coverage is available for the first sixty (60) days of your trip and the plan pays 80% of the necessary emergency care expenses. You will pay a $250 deductible and then 20% of the approved costs, which are subject to a $50,000 lifetime maximum. You will be fully responsible for any care that would not normally be covered under Medicare. It's also important to note that this coverage does not apply to emergency medical evacuation, which can exceed $100,000 depending on location and severity of your health condition.
Individuals enrolled in a Medicare Advantage plan may have foreign travel benefits included as part of their plan offering. Benefits can vary by plan, so be sure to check with your insurance provider for coverage details. Remember, you may not purchase a Medigap policy if you are enrolled in Medicare Advantage.
Alternative Solutions for Protection While Traveling
Regardless of how you receive your Medicare benefits, we can probably agree that it is not the "go-to" option for traveling abroad. A serious medical emergency away from home can add more complexity and stress to an already difficult situation. Fortunately, there are some great alternative solutions available to ensure your healthcare needs are met and well covered.
Plan Wisely & Have Fun!
A trip to a foreign country often takes a lot of planning. Don't overlook the important details of how you will handle an unexpected emergency. While you may have some coverage as part of your Medicare benefits, they clearly are not sufficient in covering moderate to severe healthcare issues while outside the United States. So, plan wisely and bon voyage!
Disclosure: Boomer Benefit Planning LLC is not affiliated with or compensated by the companies referenced in this article. All content is provided for educational and informational purposes only.
Medicare beneficiaries who have elected to receive their healthcare coverage under Original Medicare will typically want to purchase a Medigap plan. Also known as Medicare Supplement insurance, these plans cover many of the out-of-pocket expenses not paid for by Medicare. Covered expenses often include deductibles, copay/coinsurance, Part B excess charges, extra days in the hospital and foreign travel emergency care.
Most states offer up to ten different plan options, lettered A-N, that are sold by multiple insurance companies. Massachusetts, Minnesota and Wisconsin offer supplemental coverage plans set at the state level. Currently, the most popular (or frequently sold) Medigap plan is letter 'F'. As shown in the table below, this plan is the most comprehensive as it covers everything in full.
So, why wouldn't you want to purchase the 'F' plan? Despite its generous coverage, there are several reasons you should avoid 'F' and consider other plan options.
1. The 'F' plan is going away!
In April of last year, the Senate approved a bill commonly referred to as "doc fix" legislation. In short, this bill was passed to amend how doctors are paid under the Medicare system and comes at an estimated cost of $200 billion over the next ten years. Under the bill, beginning in 2020, Medigap plans may no longer cover the Part B deductible. This means 'F' and the less popular 'C' plans cannot be sold to new beneficiaries.
2. 'F' Premiums likely to rise significantly.
Individuals who have purchased the 'F' plan prior to 2020 will be "grandfathered" and able to keep the plan. However, the premiums will likely rise dramatically. If an insurance company cannot sell the plan to new policy holders, the risk profile of the currently covered beneficiaries goes up. They are getting older and generally less healthy, which increases the cost of coverage for the insurance provider. Normal premium increases and related "cost of care" increases are likely to shoot up.
A good comparative example is the elimination of the 'J' plan in 2010. At the time, that was the most comprehensive plan available. Those that retained the plan after June of that year have subsequently experienced significant increases in premium as the pool of policy holders have aged and become less healthy.
3. You might be stuck with 'F'.
Many people do not realize that their health can play a big part in accessing Medigap plans. During your initial enrollment period (IEP), you have guaranteed issue rights. This means you can purchase any plan available in your area without being subject to medical underwriting. Once outside your IEP, very few plan alternatives have guaranteed issue. If your health declines or you have significant pre-existing conditions, changing to a new Medigap plan may be difficult. Insurance companies can deny coverage, charge more, or exclude coverage for the pre-existing condition.
4. Save some green with 'G'!
A fantastic alternative to 'F' is the 'G' plan. Even if the 'F' plan were not being discontinued, we recommend Medicare beneficiaries strongly consider 'G'. This plan offers the same coverage as 'F' except for the Part B deductible, which is $166 in 2016. These plans tend to have smaller premium increases and are very competitively priced. In fact, it is not uncommon for the 'G' plan to be priced at a level that still offers savings after the Part B deductible has been paid. The following example is representative of a recent real client case.
Case Background: 65 year old female residing in Illinois, purchasing a plan during her IEP. She expects to have at least 4 visits to the doctor this year.
Medigap Plan Quotes:
(Note: Boomer Benefit Planning does not sell insurance plans and has no affiliation with Mutual of Omaha. This quote is provided as an example and is not an endorsement or solicitation for a specific product.)
'F' versus 'G' Annual Cost:
Planning for healthcare in retirement is no easy task. Medicare is confusing and complex with its myriad of choices and plan structures. Despite what we often see in the marketplace, there is no "one size fits all" solution to Medicare coverage. Proper planning can save you from incurring thousands of dollars in unnecessary healthcare expense.
Have questions about this article or your specific Medigap coverage?
Leave a comment/question below or shoot us an email at firstname.lastname@example.org!
Coverage for medications within the Medicare system can, not surprisingly, be a confusing and complex topic. Many people believe that all drugs are covered under their Part D prescription drug plan. However, Medicare is comprised of four "Parts" and medications may be covered under each depending on the situation.
PART A - Inpatient / Hospital Coverage
While Part A covers you when admitted to the hospital or a skilled nursing facility (SNF), you may also have covered drugs during your stay. Generally, any payments made to the hospital or SNF will include coverage for all medications administered during your period of inpatient care.
PART B - Outpatient / Medical Coverage
Typically, coverage for medications under Part B are limited to those that are not self-administered. These would be medications that are delivered via injection or infusion within a hospital outpatient setting or other medical facility. Note that injections usually administered by the patient do not fall in this category and would generally fall under your Part D coverage. Medications covered under
Part B will be subject to the annual deductible, which is $166 in 2016. Those expenses do not apply toward the Part D deductible or "Donut Hole" limits.
Medication coverage under Part B may include:
Part C - Medicare Advantage
Medicare Advantage (MA) is a private insurance alternative to Original Medicare. These plans must offer the same medication coverage as Parts A & B. Additionally, most people participating in MA also receive Part D prescription drug benefits. It is important to note that an individual may not be enrolled in Medicare Advantage and purchase a separate Part D plan.
Part D - Prescription Drug Plan
These plans are the traditional option selected by participants in Original Medicare, which means they are purchasing individual components for Medicare benefits. That vast majority of prescription drugs will be covered under this plan if not applied to Part A or B as outlined above. Most Americans will have several plans available and they are not all the same. It is very important to regularly review your drug coverage plan, particularly during open enrollment each year. (October 15-December 7)
Insurance companies will change their formularies (i.e. how they cover a medication), pharmacy networks and supplemental benefits annually. Ignoring these changes or those related to your healthcare needs will frequently result in unnecessary out of pocket expense increases.
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The window of opportunity to leverage certain Social Security benefit claiming strategies is quickly closing. As part of the Bipartisan Budget Act of 2015, two key provisions were discontinued for future beneficiaries. These unexpected changes will reduce retirement income by thousands of dollars for millions of retirees. However, there might still be time for you!
File & Suspend
Prior to the law change, an individual who reached full retirement age could file for benefits and immediately suspend them. This allowed any eligible dependents (i.e. spouse or qualifying child) to claim benefits off the suspended individual's record while s/he continued to earn delayed credits (8% per year) until as late as age 70. At that time, the worker's benefit would begin at a much larger rate.
Under the new rule, a voluntary suspension will also suspend benefits for anyone else receiving income off the suspended record. If an individual wants to delay claiming until age 70, the eligible dependents must also wait until the worker begins receiving his/her own income.
However, if you reach full retirement age by April of this year, you may still utilize file and suspend under the old guidelines. Your claim must be made prior to April 30th, 2016!
This provision allows an individual, at full retirement age, to file for spousal income only while their own record earns delayed credits until age 70. At that time, s/he would switch from the spousal income to their own larger worker benefit. This strategy is often referred to "claim now, claim more later".
If you were 62 or older by January 1st, 2016 you retain the ability to file a restricted application at full retirement age. Everyone turning 62 after that date has lost this claiming strategy going forward. Do not expect the Social Security Administration to remind you of this grandfathered entitlement in the future. Be sure to plan appropriately so you do not lose out on this lucrative opportunity.