Nearing Retirement? Here’s How the New Medicare Changes Could Affect Your Savings
Thank God for Medicare, right? The insurance program has been of undeniable help to its millions of beneficiaries spread across the United States. But did you know that there are still so many Americans who are yet to be fully versed on exactly how the program works?
If you’re just about to retire and have been paying into the insurance program, you might think that after hitting 65, you’ll be home and dry, no? Unfortunately, that won’t be the case.
Monthly Premiums
Even after retirement, you’ll still have to spend to access the services the medical insurance covers. For starters, you’ll be required to pay monthly premiums, so be sure to go for a Medicare plan that won’t strain your budget, but while still considering your health status.
Other expenses include deductibles and copays, and if you had quite the salary during your working days, you’ll have to pay more. And did you know that there’s no cap on out-of-pocket expenses?
Danielle Roberts plies her trade in Texas where she founded Boomer Benefits, an insurance firm at Fort Worth. Speaking to CNBC, she says that a significant portion of their clients is in the dark where matters Medicare are concerned.
These individuals, she says, are often appalled that they have to continue paying for Medicare services. But why wouldn’t they, when the word “free” is at the heart of all Medicare conversations? Roberts puts this point forward, saying that the program’s new beneficiaries almost always assume that Medicare is entirely free.
Backing Roberts’ point up is a poll conducted by Eligibility.com where 50% of respondents admitted to believing that Medicare is indeed free. It soon will be, if certain bills that are currently in Congress are passed, but as it stands, beneficiaries have no choice but to keep spending some more.
Instant Charges
As the current program is constructed, it starts charging you the second you enroll. If you end up enrolling late, you may just end up paying some amount in penalties, and guess what? It isn’t a one-off fee – you pay for it for as long as you’re a beneficiary.
Baby boomers are now in their 60s, and it is estimated that around 10,000 of them turn 65 daily. According to Fidelity Investments, an average retired couple is going to spend a staggering $285,000 on their health once they hit that age.
And that’s not including services that are not under Medicare such as OTC drugs, dental health, and basic vision. If they are ever in need of any of these, it’ll have to be an out-of-pocket expense.
Medicare is not all that bad though. As long as you’ve worked for at least a decade, you are somewhat safe. You pay no premiums for Original Medicare, but take note of the $1,364 deductible for each benefit period.
In 2019, Part B has been attracting premiums of $135.50 per month, while Part D attracts $32.50 every month, with a $415 deductible.
To avoid penalties for late enrollment, you have a 7-month grace period which lasts from 3 months before your 65th birthday, and 3 months after. This is for retirees who are yet to tap their Social Security benefits, so if you already have, then your enrollment is automatic.
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