Ask the Medicare Specialist

QUESTION: ANSWER:

From Tony: I’m turning 65 soon. How do I know if I should take Medicare Part B or not? I realize I have written multiple columns on this topic. However, it’s by far the most common question I receive and one of the most important to get right for those going on Medicare for the first time.

Tony’s question is a very simple and straight forward. I wish I could give a simple, one size fits all answer, but I can’t. Let me give a couple of different scenarios where one might want to opt out of Part B or take it and enroll in a Supplement or Advantage Plan.

Part B now costs $144.60 per month, so that will need to be factored into your decision. If you are taking Part B, it’s my advice that no one should just have Medicare A and B alone. Medicare by itself has no limit on what you can be billed in a calendar year (MOOP), so you would also want to choose a Supplement, which generally start at $90/month, or an Advantage Plan, which are actually available with $0 premiums. Supplements ensure you pay little or nothing out of pocket for medical services. And even the $0 HMO Advantage Plans cap your medical bills between $3,400 and $6,700 per year.

Let’s start with the person who very likely would want to opt out of Part B. If you or your spouse are still working at age 65 and the employer is picking up the tab for most, or the full cost of the plan, then you almost certainly don’t need to enroll in Part B. You may have heard opting out of Part B will result in a penalty down the road if you don’t take it when you are first eligible for Medicare. That’s not the case if you have health insurance through your own or your spouse’s employer! There are some factors that need to be considered when making this decision. How much is being deducted from your paycheck to help pay for your plan? If that amount is more than the $144.60, you will at least want to consider taking Part B.

What is your deductible, coinsurance, and MOOP? Even if you are paying less than $150 for your plan, going on Medicare may be a better option if you have a high deductible and 10% or 20% coinsurance, especially if you anticipate utilizing higher cost medical services after you turn 65. Be careful here however!

It’s not always as simple as doing math or basing a decision on your deductible. The most important consideration could be what your prescriptions will cost when you go on Medicare. Part D prescription plans all have what is known as the “Doughnut Hole.” If you fall into it, you can spend thousands of dollars out of you own pocket that you wouldn’t pay if you stayed on your group plan. I can think of several occasions where I advised people to remain on an employer plan, even when it was a $100 or more per month than Medicare and a Supplement, or Advantage Plan HMO/PPO.

If all this sounds confusing, get a copy of your Summary of Benefits and find out what you are paying for the plan at work. Give us a call and myself or one of the other licensed agents will be happy to analyze it for you. Let’s talk about those who absolutely DO NOT want to opt out of Part B.

Those who think they don’t need it because they’re healthy. An Air Ambulance ride can be as much as $15,000. That bill is eight years’ worth of Part B premiums!

If you are eligible for Medicare, DO NOT opt out of Part B and stay on an Obamacare/ACA plan because your premiums are less than Part B! Doing so will result in literally thousands of dollars in penalties!

Those who are getting their insurance from the company they retired from also need to keep Part B. Over the years, we have met hundreds of retired teachers and others who got buyouts that included a few years of no-cost health benefits. It’s completely logical to think, “Why would I want to pay for Medicare Part B when I am getting health insurance for nothing?” Unfortunately, that’s not how the government sees it. You must be “working” to avoid the consequences of not taking Part B when first eligible. We have met quite a few retirees who ended up in a serious predicament by not enrolling in Part B at age 65. Not only did they face a stiff “Late Enrollment” penalty after their insurance ran out, they also couldn’t enroll in Part B for a year or longer, either leaving them without any coverage for outpatient medical services, or forcing them to pay over $1,000 per month for COBRA! Neither situation is a good one to find yourself in.

Here are a couple of pieces of professional advice if you’re like Tony, and wondering what to do about Part B when you turn 65:

Do not opt out of Part B before talking to myself or one of the other agents. Even representative at Social Security have given our clients bad advice. Often, we can tell you over the phone in just a few minutes if opting out is a good idea and assure you won’t result in any penalties. If we feel taking Part B may be a wiser choice, we can then set up an appointment for a no cost consultation to over the pros and cons of taking Medicare and a Supplement or Advantage Plan.

If taking Part B is your best or only choice, make sure you understand the differences between the two types of plans. There is nothing more important. The wrong choice could lead to years of costly medical bills.