Here's advice for sorting out Medicare changesThere have been some important changes in laws affecting Medicare during the last year, but some other aspects of the program remain the same. With a new wave of Baby Boomers turning 65 each year, the Minnesota Society of CPAs offers these tips on what you need to know to ensure your coverage and minimize any potential added costs.
There have been some important changes in laws affecting Medicare during the last year, but some other aspects of the program remain the same. With a new wave of Baby Boomers turning 65 each year, the Minnesota Society of CPAs offers these tips on what you need to know to ensure your coverage and minimize any potential added costs.
Dodge the donut hole
The good news is that the so-called “donut hole” – the gap in Medicare Part D prescription drug coverage – has been narrowed. If the total you and the plan spend on medications costs more than $2,840 but less than the yearly $4,550 out-of-pocket spending limit, until recently you were hit for the full cost of your prescriptions. But, beginning this year, those who fall in the donut hole get a 50 percent discount on brand-name drugs and declining costs on generic medications. The charge for brand-name drugs will begin to drop starting in 2013 and the donut hole will be closed completely by 2020. (Those who already receive Medicare Extra Help, a program for people with low incomes, are not eligible for these discounts.) The new law also covers many preventive care options under Medicare, such as a yearly wellness exam and screening for a number of conditions.
Get in sync on sign-up
If you want your Medicare coverage to begin promptly at the time of your sixty-fifth birthday, it’s still important to sign up as soon as possible, because waiting could delay coverage. The initial Medicare enrollment period begins three months before your sixty-fifth birthday and ends three months afterwards, but the exact start of coverage depends on when you sign up. It will start by the time you hit 65, if you sign up during the three months before your birthday. If you enroll during your birthday month, you will be covered as of the first day of the following month. Signing up during the three months after your birthday could delay the start of coverage for several months, depending on the timing. To enroll, call 800-772-1213, or visit http://www.socialsecurity.gov/medicareonly.
Sign up for Part A even if you are working
Medicare Part A covers hospital costs even for those who are working and have separate health insurance. Part A coverage is free as long as you’ve paid Medicare taxes for more than 10 years (or are married to someone who has), so it’s worth signing up when you’re turning 65, no matter what your employment situation.
Don’t forget Medicare Part B coverage when you stop working
Medicare Part B covers medically necessary services beyond hospital costs, such as doctor’s services, outpatient care and home health services. You must pay a premium to enroll, and there is a yearly deductible. As a result, those who are working and have health insurance will probably want to delay enrollment until they retire. When you are ready, remember to enroll during the special enrollment period for Medicare Part B coverage. Those enrollment periods occur when you or your spouse are working and covered under a group health plan or during the eight months after the employment or the group coverage end, whichever comes first. If you don’t sign up when you’re first eligible, you’ll end up paying a permanent penalty. There’s also a smaller penalty for late enrollment in Medicare Part D coverage for prescription drugs.
Consult your CPA
These are just a few of the rules and procedures you should be aware of to guarantee you make the most effective and least costly choices. (Note, as well, that there are different timelines and rules for those with disabilities.) If you want help understanding your options, consult a local CPA. To locate a CPA, visit www.mncpa.org/referral.
The Minnesota Society of Certified Public Accountants (MNCPA) serves the public interest by advancing the highest standards of ethics and practice within the CPA profession.