Episode 4 - Untangling Social Security and Medicare

Social Security and Medicare options can be confusing and overly complex when one decides to sign up for these government benefits as retirement approaches.  Timing and choice of services will affect us as we move through our retirement years.  In this episode, I will attempt to explain what it all means.

BrandCrowd
One stop for Logos, Social Media Posts with your logo, Youtube Banners with your logo.

Disclaimer: This post contains affiliate links. If you make a purchase, I may receive a commission at no extra cost to you.

Transcript

Episode 4 – Untangling Social Security and Medicare

When I first decided that I was going to retire, I was, I guess naïve, about the whole social security / Medicare dilemma.  I thought it was just a simple act of going online and signing up, collecting a check, and having my medical insurance laid out for me.  What an awakening I had once I began doing my research and trying to decide on what I needed to do.  In today’s episode, I’ll try and untangle the ins and outs and complexities of social security and Medicare.  So, stay with me… I’ll be right back.  

Social Security

I think it’s safe to say, that most of us will at some point in our retired lives, make the decision to collect social security benefits.  It’s a program we’ve paid into our entire working career, so hopefully we’ll get to reclaim some of the money that’s been withheld from our checks our whole life. But it’s important to understand the questions surrounding social security.   

The age that you can claim your Full benefits varies depending on when you were born.  If you were born between 1943 and 1954 your full retirement age is 66 and 67 for those born 1960 and later. There are additional criteria if you were born in 1942 or years between 1954 and 1960.  For instance, I was born in 1957, so my full retirement age is 66 and 6 months.  Why it has to be so darn confusing I don’t know.  

Now, you don’t have to wait until full retirement age to begin drawing social security benefits.  You can start at age 62, but if you do so you will be giving up a portion of the monthly payment you would get if you waited until full retirement age.  And if you delay taking your benefits after you reach your full retirement age, your benefit will increase 8% per year for each year you delay up to age 70.  You must be the one that makes that decision, based on your financial situation and what you think your life expectancy might be.  It may or may not make sense to delay.  If you have questions regarding what’s in your best interest, you should seek the guidance of a qualified financial planner. I am not one and can’t advise you on what’s best.

I do suggest that you go onto the social security administration website and do some reading and take advantage of the estimation tools that they have available there.  That site is SSA.GOV.  You can establish and account by creating a username and password and after answering a few questions, you’ll be able to see and review your work salary history.  Social Security uses your highest 35 years of earnings adjusted for inflation to index the average monthly earnings and that in turn is used to figure out how much you will draw.  Make sure everything looks correct and contact social security if you have any concerns.  You can then go through the different scenarios that will allow you to estimate how much you will draw at different dates and help you understand the effects of taking early retirement or delaying. When it’s time you can start your benefit application right there on the same website.

Some of us will continue to work, whether it’s part time or full time after we’ve made the decision to begin drawing our check.  However, there are limitations to how much you can make while working and there are penalties you might face if you go over those limits.  It’s called the Social Security Wage Limit.  In 2023 the amount is $21,240, but if you go over that, SSA will take a dollar for every 2 you have earned over the limit.  If you reach full retirement age in 2023, that wage limit increases to $56,520.  Once you are full retirement age, you can then earn any amount.  

 Every state is going to have different tax laws, and you’re going to have to do your research there and plan for the taxes you’ll have to pay at the end of the year if your state is one of the   Federal Social Security Tax Limits do apply and if your gross income, nontaxable interest and half of your social security payments exceed $25,00 ($32,000) for couples, part of social security benefit could be taxed.  It gets even worse, the more money you make.

 It’s all laid out and explained well on the website and I feel that SSA.gov is a great resource, but you can always call your local social security office and make an appointment to see someone face to face.  I’ve found that the staff are great to work with anytime I’ve made a call.

  Medicare is a federal government health insurance program for individuals aged 65 and older, as well as certain younger individuals with disabilities. What I will address today is only the portion for those 65 and older.  It consists of several different parts that cover different aspects of your healthcare and can be a bit confusing.

 My best advise here is to find yourself a licensed Medicare insurance agent that can go through all of your options to determine the plan or plans that are right for you.  I am not that person and can’t make recommendation, but I will try and cover what you need to consider or question regarding each part of Medicare.

 Sometimes Medicare is referred to as Original Medicare.  That is Part A and Part B.  It’s important to note that when you first become eligible, you need to sign up at that point or you could incur penalties that will continue for the entire time you are on Medicare.  You can avoid those penalties if you’re still working, and your employer provides your healthcare plan.  Again, you need to talk with and advisor or call the folks at Medicare.gov to be sure you’re covered if this is the case.

 Medicare Part A (Hospital Insurance): 

 Inpatient Hospital Stays: Part A covers hospital stays, including semi-private rooms, meals, general nursing, and other services and supplies while you are physically in the hospital bed.

 Skilled Nursing Facility Care: Part A also covers eligible stays in skilled nursing facilities for individuals who meet certain requirements. This can be for those needing short-term rehabilitation services or long-term care.

 Hospice Care: Part A covers hospice care for individuals with a terminal illness or condition. This includes medical and support services provided to manage pain and provide comfort during the final stages of life.

 Home Health Services: Part A covers medically necessary home health services, such as part-time skilled nursing care, physical therapy, occupational therapy, speech-language pathology, and durable medical equipment. This can enable individuals to receive necessary care in the comfort of their own homes.

 Preventive Services: Part A covers certain preventive services, such as screenings for cardiovascular disease, various types of cancer, diabetes, and more. These services are aimed at early detection and prevention of serious health conditions.

 It's important to note that while Part A covers certain costs, there may still be deductibles, coinsurance, and copayments associated with these services. It's advisable to review your specific situation and understand the coverage details to better plan for potential healthcare expenses. Most people do not pay a premium for Part A if they or their spouse paid Medicare taxes while working.

 Medicare Part B (Medical Insurance):

 While most people do not pay for Part A, everyone pays for Part B.  The costs for 2023 is ~$167 per month and inn 2024 that will increase to $175.  That is deducted straight out of your social security check before you receive it.

 Primary Care Visits: Part B covers visits to primary care doctors, including general practitioners, family physicians, internists, and geriatricians. These visits typically involve routine checkups, screenings, preventive services, and the management of ongoing conditions.

 Specialist Visits: Part B also covers visits to medical specialists such as cardiologists, dermatologists, oncologists, neurologists, and other specialized healthcare providers. These visits may involve the diagnosis, treatment, and management of specific medical conditions.

 Diagnostic Tests and Services: Part B covers a variety of diagnostic tests and services, including but not limited to X-rays, MRIs, CT scans, laboratory tests, blood tests, and biopsies. These tests help doctors diagnose and monitor various medical conditions.

 Outpatient Procedures: Part B covers outpatient procedures performed in a hospital or a healthcare facility. Examples of covered procedures include minor surgeries, endoscopies, colonoscopies, cataract removal, joint injections, and certain rehabilitation therapies.

 Ambulatory Services: Part B covers ambulance transportation to a hospital or skilled nursing facility when it is deemed medically necessary. It helps cover the cost of transportation when other means of transportation (such as private vehicles) would be inappropriate due to the patient's condition.

 Mental Health Services: Part B covers mental health services provided by psychiatrists, psychologists, clinical social workers, and other mental health professionals. This includes outpatient therapy, counseling, and psychiatric evaluations.

 Preventive Services: Part B emphasizes preventive care and covers a wide range of preventive services, such as regular wellness exams, vaccinations, screenings for various conditions (e.g., cancer, diabetes, cardiovascular disease), and counseling for smoking cessation or obesity.

 Remember, while most doctor visits and outpatient services are covered by Medicare Part B, it's important to check with your healthcare provider and review the specifics of your coverage to understand any limitations or requirements. 

 What’s not covered by Part A and Part B

 A lot of things you might have been accustomed to with your employer provided healthcare policies are not included in Medicare Part A and Part B.  These include vision insurance for exams and prescription glasses, Dentures, routine Physicals, Dentures, and most dental care. Hearing aids and long-term health care such as permanent assisted living or nursing homes, so most of us will need some form of supplemental insurance coverage.  Let’s look at some of that now.

 Medicare Part D

Medicare Part D is a prescription drug coverage program offered by private insurance companies that have been approved by Medicare. It helps beneficiaries cover the cost of prescription drugs.

 Here are some key points to understand about Medicare Part D:

  Enrollment: You can enroll in a Part D plan when you first become eligible for Medicare, during the Initial Enrollment Period (IEP). If you don't enroll during this period and you don't have other creditable prescription drug coverage, you may have to pay a late enrollment penalty when you do sign up.

 Coverage: Part D plans offer a list of covered prescription drugs, known as a formulary. Each plan has its own formulary, so it's important to review the specific medications covered by the plan you choose. Typically, plans will have different tiers or levels of drugs, with each tier having a different cost-sharing requirement.

 Costs: Part D plans have various costs, including a monthly premium, an annual deductible (up to a certain limit), co-payments or coinsurance for each prescription, and any applicable late enrollment penalties. Premiums and costs can vary between plans, so it's important to compare plans to find one that meets your needs.

 Choosing a Plan: There are many different Part D plans available, so it's important to compare options based on your specific needs. You can use the Medicare Plan Finder tool on the official Medicare website or work with a licensed insurance agent to help you compare and choose the right plan for you.

 Remember, Medicare Part D is optional, but if you take prescription medications, it's important to consider enrolling in a Part D plan to help manage your medication costs. 

 Medicare Part C,

 Also known as Medicare Advantage, is an alternative way to receive your Medicare benefits. It combines the coverage of Medicare Parts A (Hospital Insurance) and B (Medical Insurance) into a single plan, offered by private insurance companies approved by Medicare.  Under certain circumstances Medicare Advantage Plans could be the way to go, but when deciding whether Medicare Part C, or Medicare Advantage, is the right choice for you, there are several factors to consider. 

 Coverage Needs: Evaluate your healthcare needs and determine which services and benefits are important to you. Medicare Advantage plans may offer additional coverage beyond Original Medicare, such as prescription drugs (do you take a lot of medications), vision (do you wear prescription glasses or contacts), dental, hearing (do you need hearing aids), and wellness programs. Consider whether the plan's coverage aligns with your specific needs.

 Network of Providers: Medicare Advantage plans often have a network of doctors, hospitals, and other healthcare providers that you must use to receive full benefits. Check if your preferred healthcare providers are in the plan's network. If you have established relationships with specific doctors or specialists, make sure that they are covered under the plan.

 Cost: Review the costs associated with Medicare Advantage plans. This includes monthly premiums, deductibles, co-payments, and coinsurance. Compare these costs to what you would pay under Original Medicare. Consider your budget and how the plan's costs fit into your budget and align with your financial situation. 

 Prescription Drug Coverage: If you take prescription medications, check if the Medicare Advantage plan includes prescription drug coverage, Review the plan’s (list of covered drugs) to ensure your medications are included and assess the copayments or coinsurance for prescriptions.

 Flexibility and Travel: Medicare Advantage plans may have restrictions on seeing out-of-network providers, which can limit your flexibility. If you frequently travel or live part of the year outside of the plan's service area, consider whether the plan fits your lifestyle and healthcare needs in different locations.

 Plan Ratings and Reviews: Research the quality ratings and customer reviews of Medicare Advantage plans. Medicare provides Star Ratings for Medicare Advantage plans based on factors like member satisfaction, customer service, and health outcomes. Considering these ratings can give you an idea of the plan's performance and member experience.

 It's essential to carefully compare the options available to you and consider how well Medicare Advantage aligns with your unique healthcare needs, preferences, and budget. You may also find it helpful to consult with a licensed insurance agent specializing in Medicare to receive personalized guidance. 

 Medicare Supplement Insurance

 Often called Medigap plans are a type of health insurance policy that helps cover the gaps in Original Medicare. Original Medicare consists of Part A (hospital insurance) and Part B (medical insurance), but it doesn't cover all medical costs. 

 Medicare supplement insurance plans are sold by private insurance companies and can help pay for out-of-pocket expenses such as deductibles, copayments, and coinsurance. These plans are standardized and labeled with letters A through N, (excluding the letters e, h, I and J).

 Each offering different levels of coverage. It's important to note that Medicare supplement insurance cannot be used alongside Medicare Advantage plans.  Each “Lettered” supplement plan is going to be different and there is so much to cover, I won’t do that here, but a lot of research on your part will be needed to decide which on is right for you.  The plan premiums on some of these plans can be quite high, but you can decide which one fits your budget and level of care you require.  

 Folks, I can’t say it enough.  There is a lot to unpack when reviewing the different Medicare coverages available.  Get yourself some help and seek the advice of someone licensed in this field, talk to your primary health care provider for any assistance they may be able to provide. You just don’t want to be left with an expensive surprise down the road.  Start early, long before you’re ready, so that you have plenty of time to make the right decision and put this part of your retirement planning behind you, so you can enjoy your days with peace of mind.

 I hope you got something out of this episode, and I hope I might have pointe