No matter where you are in the retirement planning process, you’ve probably heard of Medicare, a federal insurance program designed for people older than 65. What you might not know is that with Medicare, there are many options to consider and details to keep in mind. And with healthcare being one of the top five expenses in retirement, (1) your Medicare decisions could have a significant impact on your finances in retirement.
As we draw closer to the 2019 Medicare open enrollment period, let’s review what you need to know.
Does Open Enrollment Apply To Me?
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 on 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. (2) 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 Are My Open Enrollment Options?
Medicare open enrollment is the annual opportunity that all participants have 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. (3)
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. (4)
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 1on1financial, 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. Call our office today at 909-981-1720 or simply click here to schedule a free 15-minute introductory phone call!
Philip A. Board MSFS, CFS, is a retirement planning specialist and the founder of 1on1financial, an independent comprehensive investment firm serving individuals and businesses throughout the United States. He is also the owner and CEO of Medi-cal Benefits.