medicare preventive :: Article CreatorMedicare Part B: Coverage, Costs And Frequently Asked Questions
If a person enrolls in Original Medicare, the government covers 80% of their Part B expenses after they meet their annual deductible, which is $226 in 2023. Medicare beneficiaries can purchase a separate supplemental Medigap policy from a private health insurance provider to help cover the remaining 20%.
If an individual decides to enroll in a Medicare Advantage (Part C) plan instead, that plan covers the bulk of Medicare Part B expenses. However, the beneficiary typically must pay copays and coinsurance costs out of pocket. Furthermore, Medicare Advantage beneficiaries aren't allowed to have a Medigap policy.
Monthly Medicare Part B premiums can be a surprising and costly retirement expense for many people. The minimum monthly Medicare Part B premium in 2023 is $164.90 per person, and they only go higher, depending on your income. The Medicare Part B monthly premium is increasing to $174.70 in 2024.
Understanding Medicare Part B premiums is an important part of the retirement planning process. While a person usually isn't eligible for Medicare until age 65, their income at age 63 determines the premium rate they pay during their first year of coverage.
Medicare Part B premiums are calculated based on a person's modified adjusted gross income (MAGI). For Part B premiums, MAGI is the adjusted gross income an individual reports on line 11 of their federal tax return, plus any tax-exempt interest income, such as municipal bonds (line 2a) earnings.
Current year Medicare Part B premiums are based on MAGI reported on an individual's tax return from two years prior. For example, 2023 Medicare Part B premiums are based on MAGI reported on 2021 federal tax returns.
Who Pays More for Medicare Part B?
Each year the government calculates and adjusts total costs for providing Medicare Part B coverage. For most enrollees, the government agrees to cover 80% of the cost and charges beneficiaries the Medicare Part B premium to cover the remaining 20%.
In 2023 a single taxpayer whose 2021 return reported MAGI of no more than $97,000 and married couples with MAGI up to $194,000 paid the lowest base Medicare Part B monthly premium of $164.90 per person.
If a person's income is above those levels, the government shifts more of the premium cost to your personal balance sheet. Instead of covering 75% of the premium cost, the government pays anywhere from 65% to as little as 15% of the premium, based on your income-related monthly adjustment amount (IRMAA).
The annual Medicare report estimates that about 5 million beneficiaries currently pay a higher premium, and by 2029, over 10 million enrollees will pay an IRMAA surcharge.
Working Past 65: Helping Medicare-eligible Employees Navigate Health Care Coverage
As more and more employees opt to work past the age of 65, employers may find themselves increasingly fielding questions about Medicare coverage from eligible workers.
More than half of employees who continue to work after age 65 said having access to their employer's health care benefit is a significant reason, according to a survey by Medicare advisory firm Allsup. In addition, the survey found about four in 10 employees working past age 65 don't fully understand their Medicare options.
The Disability Management Employer Coalition (DMEC) recently hosted a webinar, sponsored by Allsup, titled "Understanding the healthcare perspective of Medicare aged workers" to address some of the common questions benefits professionals might encounter from employees approaching retirement age.
"Employer benefits and HR representatives are often tasked with being the expert for not only the plan they offer but also inquiries and perhaps confusion about Medicare," said Robert Sokol, director of business development, Healthcare Insurance Services, at Allsup. "Medicare-eligible employees' perception can be summed up as follows: health care is a motivating factor to stay in the workforce, many did not know they could receive Medicare while still working, there is a lack of understanding of Medicare, its various options and how it compares to an employer-sponsored health plan, and Medicare-eligible employees desire expert assistance to better understand Medicare."
When people approach age 65, they receive information about enrolling in Medicare from the government. This often prompts them to seek the help of their employer to decipher the often-complex process, said Bethany Cissell, an account executive with Allsup Healthcare Insurance Services.
Allsup's survey revealed that 54% of employees approaching age 65 will likely seek guidance about Medicare from their employer's HR benefits manager. The majority of respondents also indicated they would welcome the advice of a Medicare counselor or an employer-sponsored service that compares health insurance options including Medicare during an open enrollment period.
One of the most common questions employers are likely to encounter about Medicare is when employees can enroll. There are three main Medicare enrollment periods:
The initial enrollment period occurs when an individual is first eligible for Medicare when they turn 65 and lasts for seven months – three months before their birthday, the month of their birthday and three months after their birthday. If they are currently working, they do not have to enroll, but if they do, Medicare is a secondary payer to the employer group plan. A special enrollment period is available when an individual loses credible group health coverage. This enrollment period is commonly used by those who remain in the workforce and are covered under their employer's group health plan until they retire after age 65. This enrollment period lasts eight months from the time health coverage ends and allows them to sign up for Medicare Part A and Part B. Individuals may incur a penalty if they don't enroll in a Part D drug plan at the time they first enroll in Medicare. Finally, there is a general enrollment period that runs from January 1 through March 31 every year. Medicare-eligible employees often have questions about the various paths of Medicare, said Cissell.
Original Medicare – Medicare Part A, primarily covers hospital and inpatient services, and Medicare Part B broadly covers outpatient services and preventive care. Medicare A and B do not cover medications, so individuals generally need a standalone Part D drug plan.
In addition, enrollees can opt for a supplemental Medigap plan to make up the difference in what is not covered under traditional Medicare, said Cissell. There are 20 lettered Medigap policies to choose from that provide a range of covered services and several price points. Medigap policies are available with guaranteed issue rights, meaning they cannot ask medical questions or deny coverage for those who sign up within 6 months of enrolling in Medicare Part B.
A separate Medicare path, Part C or Medicare Advantage, is a bundled plan that covers the same services that Medicare Part A and Part B cover under one premium. The plan functions much like an employer-sponsored group health plan with copays and coinsurance and can include extras such as vision benefits, dental benefits and fitness programs.
For eligible employees, Medicare can be an attractive addition or alternative to an employer-based plan, the panelists said. While Medicare premiums fluctuate, they don't usually change as dramatically as they do in employer-sponsored plans, and deductibles and out-of-pocket costs can often be lower than with group plans.
While nearly all workers aged 65 and up are aware they qualify for Medicare, the main reason they choose not to enroll is because they are concerned their coverage will not be as good as their employer's group plan. However, Sokol and Cissell noted that although premiums associated may make Medicare appear less attractive on the surface, a personal review of the person's medical usage could reveal an opportunity to save money even when paying a higher premium.
"Seniors living and working today are more likely managing several chronic conditions – arthritis, heart disease, cancer, respiratory disease, diabetes," said Sokol. "Post-65 active workers can easily represent a high-cost population to your health plan. Medicare may offer an opportunity to bring options other than your group health plan to those post-65 active workers."
PLANNING AHEAD: What Medicare Advantage Commercials Do Not Say
About this time most years I pull out my most recent information on Medicare Advantage plans, dust it off, and address that information in one of my columns. The reason is simple. During this time, between Oct. 15 and Dec. 7, Medicare recipients, primarily Medicare Advantage recipients, are given the opportunity to choose among several plans for the coming year. It is also a time to choose among Medicare D, prescription drug plans.
Honestly, I dread the experience of writing since, shortly after, I receive one or more phone calls or emails explaining that the individual calling or emailing is thrilled with his or her Medicare Advantage plan with reasons and is disappointed I do not enthusiastically express myself as being on board. The enthusiasm might result from a zero premium plan or vision or dental benefits or the claim that Medicare Advantage gives you "more" as named in the commercials. Usually it does not discuss care.
The Medicare system is too complicated to explain in a single column or multiple columns. However, here are some observations that might not be explained in the many television commercials at this time of year. Note that I am not necessarily addressing Medicare Advantage plans provided as retiree plans by employers although they are similar and do note there are many types of plans out there.
• If you sign for a Medicare Advantage plan when you are already on a Medicare Supplement you may not be able to return to a Medicare Supplement later. Generally speaking there is a window of time around your 65th birthday when you can choose initially to sign for a Medicare Supplement. A Medicare Supplement does what the name implies — it supplements the basic Medicare benefits that almost everyone age 65 or older is entitled to. The way it works is it states it covers "All" or "All but <a given amount>" for different services. Often I hear seniors state that, although the Medicare Supplement premium is higher, they left the hospital with nothing to be paid. That is because the Medicare Supplement, as the name implies, can pay all or most of what basic Medicare does not for hospital and similar care. On the other hand Medicare Advantage plans are all over the board as to what the plan pays. Transitioning back to a Medicare Supplement plan once you are in Medicare Advantage requires medical underwriting. People generally want to return to a Medicare Supplement when they are more seriously ill. In 25 years of practice I have never seen a client by reason of medical underwriting, able to transition back to a Medicare Supplement from a Medicare Advantage. Differences in cost of care can be substantial.
• Some commercials state that Medicare Advantage plans provide more than Medicare Supplements because they can offer prescription drug coverage. This statement is deceptive. It appears to imply that someone who has coverage under a Medicare Supplement would not have prescription drug coverage. Here some history would be helpful. When the federal law passed regarding Medicare "D" it provided that Medicare Supplements would be unable to provide prescription drug coverage under their plan. This does not consider that many Supplement plans provided by a given company may be essentially informally "paired" with certain prescription drug plans so recipients are not without coverage although they are separate from the Medicare Supplement.
• Television commercials for Medicare Advantage raise enticements of zero premiums, extra benefits such as eyeglass coverage, physical fitness memberships, and so on. The actual benefit is often not so generous as described and does not apply to every plan. Benefits can vary widely. To the extent that television commercials might imply that all of the benefits described are available with all of the plans this is not so and the benefits provided are not consistent. A plan could indicate it includes dental services but cover only preventive work. It might indicate vision but only pay a limited credit.
Some solicitations state you may receive funds "added" to your Social Security check. This is a deduction from Part B premium available only in some locations.
Zero premiums does not mean zero cost. You can still and probably will have co-pays, deductibles and other expenses.
If you are already in a Medicare Advantage plan you will likely be deciding during this time whether to stay or to move to another Medicare Advantage plan. Try to choose wisely.
Janet Colliton Esq. Is a Certified Elder Law Attorney from the National Elder Law Foundation and limits her practice, Colliton Elder Law Assocs PC, to elder law, special needs, guardianships, estate planning and estate administration with offices at 790 East Market St., Ste. 250, West Chester, 610-436-6674, colliton@collitonlaw.Com. She is a member of the National Academy of Elder Law Attorneys and, with Jeffrey Jones CSA, co-founder of Life Transition Services LLC, a service for families with long term care needs.
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