If your 65th birthday is approaching, now is a great time to familiarize yourself with Medicare and the enrollment process you will soon use to sign up for your benefits.
The Initial Medicare Enrollment Period begins 3 months (or 90 days) before your 65th birthday and ends 3 months after (exceptions may apply if your or your spouse are working and/or covered by an employer group health plan). During this time, you will have the option to sign up for hospital, physician, prescription, and other coverages. This can be done through two Medicare coverage models:
- The traditional model includes enrolling individually in Medicare Part A (hospital coverage) and Part B (general physician/preventive care), as well as Part D (prescription drug plan). It is also common to include a Medicare Supplement Plan to help cover deductibles, co-pays, and some other out-of-pocket costs.
- The alternative model consists of similar coverage for hospital, physician, and prescription drug needs, but is packaged together and sold by private insurance companies as one Medicare Advantage Plan, also referred to as Medicare Part C. Please note that there are a variety of Advantage Plans to choose from and these private plans are often restricted to a more regional network of healthcare providers.
2021 Medicare Costs
Generally, Medicare Part A ends up being free for most individuals. However, if you do not qualify for free coverage, premiums can cost up to $471 per month.
- While premiums are typically free, keep in mind that there are deductibles and co-pays that still apply.
Part B has a premium beginning at $148.50 per month. This applies to individuals and MFS (married filing separately) with income of $88,000 or less and MFJ (married filing jointly) with income of $176,000 or less. As income rises, so do these premiums. At the highest Medicare income bracket (individuals with $500,000+/MFJ with $750,000+/MFS with $412,000+), these premiums currently top out at $504.90 per month.
Part D premiums work in a similar fashion. For those in the lower income brackets (less than $88,000 for individuals/MFS or less than $176,000 for MFJ) Part D is included in their Part B plan premium. However, for those in the top income range, Part D separately costs up to $77.10 per month.
Similar to income tax brackets, there are a variety of ranges and premium amounts in between. In addition, Advantage Plan (Part C) and Supplement Plan costs vary widely, depending on the company you go through and the state in which you live.
Refer to your advisor, https://www.medicare.gov/, or other trusted Medicare resources for more information regarding your specific situation and estimated costs.
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