David Lerner Associates: Seven Things You Might Not Know About Medicare
1. Medicare is funded by a payroll tax that’s withheld from the paychecks of most working Americans. It amounts to 1.45 percent of earnings for employees, with the employer also contributing 1.45 percent. However, self-employed individuals pay the full 2.9 percent themselves.
Note:Beginning this year, individuals earning more than $200,000 per year and couples earning more than $250,000 per year must pay an additional Medicare tax equal to 0.9 percent of earnings, thanks to the Affordable Care Act.
2. The initial enrollment period for Medicare begins three months before, and concludes three months after, your 65th birthday, with coverage starting on the first day of your birthday month if you desire. If you miss this window, you’ll have to wait until January 1 of the following year, with coverage starting the following July 1.
3. There are three primary types of Medicare insurance: Part A hospital insurance, Part B medical insurance and Part D prescription drug insurance. There is usually no premium required for Part A, while the standard Part B monthly premium in 2013 is $104.90 (it’s higher for individuals earning more than $85,000 and couples earning more than $170,000 a year). A variety of different Part D prescription drug plans are available with different coverages, premiums and out-of-pocket costs.
4. In addition to monthly Part B premiums, there are also deductibles, co-pays and coinsurance involved with Medicare. This year, the Part B deductible is $147 — after this, Medicare typically pays 20 percent of the Medicare-approved amount for services. Note that there is no annual limit on your potential out-of-pocket expenses.
5. You can supplement your Medicare coverage by purchasing an additional Medicare Advantage or Medigap plan. These plans cover some services that Medicare doesn’t, as well as some of Medicare’s cost-sharing requirements. You can buy any Medigap policy sold in your state (regardless of your health condition) starting the month you turn 65 and enroll in Plan B, for up to six months. After this, your premiums could increase, and you might even be denied coverage.
6. Medicare includes free physical exams and preventative care, including a free “welcome to Medicare” preventative checkup during the first year you’re enrolled in Part B. After the first year, you’ll be eligible for annual wellness checkups. In addition, many preventative healthcare services are now provided without a deductible or cost sharing, thanks to the Affordable Care Act.
7. Keep in mind that a wide variety of medical services and procedures used by many retirees are not covered by Medicare. These include dentures, hearing aids, and routine eye and dental checkups. Nor does Medicare cover extensive long-term care in an assisted living facility or nursing home.
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities. Member FINRA & SIPC.