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Navigating the Choice Between Employer Insurance & Medicare

Making healthcare decisions can be daunting, especially as you approach eligibility for Medicare. One significant choice many individuals face is whether to stick with their employer’s health insurance or transition to a Medicare Plan. In this blog post, we’ll explore the key factors to consider when making this decision and offer guidance to help you navigate your options effectively.

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1. Understanding Your Options:


Employer Health Insurance:

Employer-sponsored health insurance plans vary widely in terms of coverage, cost, and provider networks. Typically, these plans offer a range of benefits, including coverage for medical services, prescriptions, and preventive care. Understanding the specifics of your employer’s plan, such as the type (HMO, PPO, etc.), network limitations, and out-of-pocket costs, is crucial for making an informed decision.

Medicare Plans:

Medicare is a federal health insurance program primarily for individuals aged 65 and older, as well as some younger individuals with disabilities. It consists of several parts, including Part A (hospital insurance), Part B (medical insurance), Part C (Medicare Advantage), and Part D (prescription drug coverage). Each part offers different levels of coverage and comes with its own costs and considerations.

2. Weighing the Factors:

Price Comparison:

Comparing the costs of employer insurance versus Medicare involves evaluating premiums, deductibles, copayments, and out-of-pocket maximums. While employer plans may offer subsidies, Medicare premiums vary based on income and can include additional costs for prescription drug coverage and supplemental insurance (Medigap).

Coverage Scope:

Consider the breadth of coverage and provider flexibility offered by both employer insurance and Medicare. Employer plans may have network restrictions, whereas Medicare allows for greater choice in healthcare providers but may come with certain limitations depending on the type of plan selected.

Creditable Coverage:

Understanding whether your employer insurance provides “creditable coverage” is crucial for avoiding penalties when enrolling in Medicare. Employers are required to disclose this information, which determines whether your current coverage meets Medicare’s standards.

Employer Requirements:

Some employers may require retirees to enroll in Medicare Part B to maintain coverage. It’s essential to review your employer’s policies and consult with HR to understand any requirements that may impact your decision.

Special Considerations:

State-specific variations: Medicare plans and coverage options can vary depending on your state. It’s recommended to research your specific state’s Medicare landscape for more detailed information.

Medigap: Medigap plans help supplement Medicare coverage by filling in gaps like deductibles and copayments.

Employer Size: The size of your employer plays a crucial role in determining your healthcare options and coverage continuation after leaving your job. Employers with 20 or more employees are mandated by federal law to offer COBRA coverage to eligible employees. COBRA, which stands for Consolidated Omnibus Budget Reconciliation Act, allows you to continue your employer-based health insurance for a limited period, usually up to 18 months, after leaving your job or experiencing a qualifying event such as termination, reduction in hours, or other qualifying life events.

While COBRA provides a valuable safety net for maintaining health insurance coverage during transitional periods, it’s essential to be aware that COBRA can be expensive. As a COBRA participant, you are responsible for the entire premium, including the portion previously subsidized by your employer. This often results in significantly higher monthly premiums than what you were previously paying as an active employee. Therefore, individuals opting for COBRA coverage should carefully assess the financial implications and explore alternative coverage options, such as Medicare or individual health insurance plans, to ensure cost-effectiveness.

Medicare Coordination: For employees of large companies with 20 or more employees, another viable option is to coordinate Medicare with your employer’s coverage. Medicare, the federal health insurance program primarily for individuals aged 65 and older, typically serves as secondary insurance when combined with employer-sponsored health insurance. This means that your employer coverage remains primary, covering expenses first, while Medicare serves as secondary insurance, covering costs that your employer plan does not cover.

When considering Medicare coordination with employer coverage, it’s essential to evaluate the costs and benefits of Medicare Parts A and B compared to your employer coverage. Medicare Part A, which covers hospitalization, is often premium-free for individuals who have worked and paid Medicare taxes for a sufficient duration. However, Medicare Part B, which covers medical services and doctor visits, typically requires a monthly premium. By comparing the premiums, deductibles, copayments, and coverage limits of Medicare Parts A and B with your employer’s plan, you can determine the most cost-effective option that best meets your healthcare needs.

3. Making the Decision:

Assessing Your Healthcare Needs:

Take stock of your current healthcare needs and anticipate any future medical services or prescriptions you may require. Consider factors such as chronic conditions, prescription drug coverage, and preferred healthcare providers when evaluating your options.

Evaluating Financial Implications:

Evaluate the financial aspects of both employer insurance and Medicare, including premiums, out-of-pocket costs, and potential retirement savings. Factor in your budget, retirement income, and any available resources for covering healthcare expenses.

Consulting with HR or a Medicare Specialist:

Seek guidance from your HR department to understand the details of your employer’s insurance plan and any implications for Medicare enrollment. Additionally, consider consulting with a Medicare specialist who can provide personalized advice based on your individual circumstances.

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Frequently Asked Questions About Medicare

1. What factors should I consider when deciding between employer insurance and Medicare? When making this decision, it’s essential to consider factors such as your age, employer size, coverage scope, costs (including premiums, deductibles, and copayments), benefits, provider network, and any specific requirements or coordination rules set by your employer or Medicare.

2. How does COBRA coverage work, and is it a cost-effective option? COBRA coverage allows eligible individuals to continue their employer-based health insurance for a limited period after leaving their job or experiencing a qualifying life event. While COBRA provides continuity of coverage, it can be expensive as participants are responsible for the entire premium, including the portion previously subsidized by their employer. It’s essential to assess the financial implications and explore alternative coverage options, such as Medicare or individual health insurance plans, to ensure cost-effectiveness.

3. Can I coordinate Medicare with my employer’s coverage? Yes, individuals working for large companies with 20 or more employees can coordinate Medicare with their employer’s coverage. Medicare typically serves as secondary insurance, covering costs that your employer plan does not cover. It’s crucial to evaluate the costs and benefits of Medicare Parts A and B compared to your employer coverage to determine the most cost-effective option that best meets your healthcare needs.

4. What should I do if I’m approaching Medicare eligibility age and still employed? If you’re nearing Medicare eligibility age and still employed, it’s advisable to review your employer’s health insurance policies, consult with human resources or benefits administrators, and explore your Medicare options. Consider factors such as your healthcare needs, financial situation, and any specific requirements or coordination rules set by your employer or Medicare.

5. How can I make an informed decision about my healthcare coverage options? To make an informed decision, gather information about your employer’s health insurance plan, review Medicare options and eligibility criteria, compare costs and benefits, assess your healthcare needs and financial situation, consult with licensed insurance agents specializing in Medicare, and seek guidance from healthcare professionals.

6. What if my spouse covers me under their employer’s health insurance plan? If your spouse covers you under their employer’s health insurance plan, you may still have options regarding Medicare enrollment. The decision may depend on factors such as your spouse’s employer size, coverage scope, and coordination rules. It’s advisable to assess your healthcare needs, review your spouse’s employer coverage, and explore Medicare options to determine the most suitable healthcare coverage arrangement for your situation.

Understanding the 2024 Medicare Changes: What You Need to Know

On October 12, 2023, the Centers for Medicare & Medicaid Services (CMS) released the 2024 premiums, deductibles, and coinsurance amounts for the Medicare Part A and Part B programs and the 2024 Medicare Part D income-related monthly adjustment amounts. These changes will impact millions of Americans and their access to healthcare. In this blog, we will delve into the key changes in Medicare Parts A and B and Part D to help you better understand how these adjustments may affect your healthcare costs in 2024.

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Medicare Costs 2024

Medicare is an essential program that provides health coverage for millions of Americans. However, understanding the costs associated with Medicare can be complex. This guide will help you navigate the costs of Medicare in 2024, including premiums, deductibles, coinsurance, and copayments. We will also discuss the various coverage options available to you.

Coverage options:

Medicare offers different coverage options to cater to your specific needs. These options include Original Medicare (Part A and Part B), Medicare Advantage Plans (Part C), Part D (Prescription Drug Coverage), and Medicare Supplemental Insurance (Medigap). Each option comes with its own set of costs and benefits, so choosing the one that best suits your healthcare needs is essential.

  • In 2024, there will be notable changes in Medicare costs and premiums:

    1. Medicare Part B premiums are set to rise to $174.70, marking an increase from the 2023 rate of $164.90. This adjustment reflects the ongoing evolution of healthcare expenses and the need for sustainable funding.

    2. The deductible amount for Medicare Part A, which beneficiaries are required to pay when they are admitted to a hospital, will rise to $1,632 in 2024. This marks an increase of $32 from the previous year’s amount of $1,600. The rise in deductibles is due to the ever-changing healthcare costs and inflationary factors.

    3. For all Medicare Part B beneficiaries, the annual deductible will be $240 in 2024, up from $226 in 2023. 

1. Medicare Part A (Hospital Insurance) Costs

Medicare Part A covers hospital inpatient care; for most individuals, it comes with a $0 premium. This is because they or their spouse paid Medicare taxes for a minimum of 10 years while working, generally equivalent to at least 40 quarters. This is often referred to as “premium-free Part A.”

However, if you don’t qualify for premium-free Part A, you may be able to buy it at a cost. In 2023, this premium is either $278 or $506, depending on your work history and that of your spouse. These premiums will be $278 or $505 in 2024.

  • Deductible: The Part A deductible in 2023 is $1,600 ($1,632 in 2024) for each inpatient hospital benefit period before Original Medicare starts to pay. It’s important to note that there’s no limit to the number of benefit periods you can have in a year, which means you may pay the deductible more than once in a year.

  • Inpatient Stay:

    • Days 1-60: $0 after you pay your Part A deductible.
    • Days 61-90: $400 ($408 in 2024) *copayment each day.
    • Days 91-150: $800 ($816 in 2024) copayment each day while using your 60 lifetime reserve days.
    • After day 150: You pay all costs.

  • Skilled Nursing Facility Stay: For beneficiaries in skilled nursing facilities

    • Days 1-20: $0 copayment.
    • Days 21-100: $200 ($204 in 2024) copayment each day.
    • Days 101 and beyond: You pay all costs.

  • Home Health Care: $0 for covered home health care services.

  • Hospice Care: $0 for covered hospice care services. However, you may have to pay a copayment of up to $5 for each prescription drug and other similar products for pain relief and symptom control while you’re at home. You also pay 5% of the Medicare-approved amount for inpatient respite care.

*For enrollees age 65 and older who have fewer than 40 quarters of coverage or certain persons with disabilities, a monthly premium is required to voluntarily enroll in Medicare Part A. These premiums vary depending on quarters of coverage:

*Individuals with at least 30 quarters of coverage or who are married to someone with at least 30 quarters of coverage may buy into Part A at a reduced monthly premium rate of $278 in 2024.

*Certain uninsured aged individuals with less than 30 quarters of coverage and individuals with disabilities who have exhausted other entitlement will pay the full premium, which will be $505 a month in 2024, a $1 decrease from 2023.

2. Medicare Part B (Medical Insurance) Costs

Medicare Part B Premium and Deductible Medicare Part B covers essential medical services such as physician visits, outpatient hospital services, durable medical equipment, and various other health services not covered by Medicare Part A. In 2024, there will be significant changes to Part B premiums and deductibles:

  1. Premium Increase: The standard monthly premium for Medicare Part B enrollees will be $174.70 for 2024, a $9.80 increase from $164.90 in 2023. This increase is primarily due to projected increases in healthcare spending and a policy remedy regarding the 340B-acquired drug payment. This amount can be higher depending on your income. You’ll pay this premium each month, even if you don’t get any Part B-covered services.

  2. Deductible Increase: The annual deductible for all Medicare Part B beneficiaries will be $240 in 2024, up from $226 in 2023, an increase of $14. Which you pay before Original Medicare starts to cover your services. This deductible is paid once each year.

  • General Costs for Services (Coinsurance): You usually pay 20% of the cost for each Medicare-covered service or item after you’ve paid your deductible. This applies as long as your doctor or healthcare provider accepts the Medicare-approved amount as full payment.

Clinical Laboratory Services: $0 for covered clinical laboratory services.

  • 20% of the Medicare-approved amount for durable medical equipment (like wheelchairs, walkers, hospital beds, and other equipment).

Inpatient Hospital Care: 20% of the Medicare-approved amount for most doctor services while you’re a hospital inpatient.

Outpatient Mental Health Care:

  • $0 for your yearly depression screening.
  • 20% of the Medicare-approved amount for visits to your doctor or other healthcare provider to diagnose or treat your condition.
  • If you get your services in a hospital outpatient clinic or hospital outpatient department, you may have to pay an additional amount to the hospital.

Partial Hospitalization Mental Health Care: After you meet the Part B deductible, you pay:

  • 20% of the Medicare-approved amount for each service you get from a doctor or certain other qualified mental health professional.
  • Coinsurance for each day of partial hospitalization services you get in a hospital outpatient setting or community mental health center.

Outpatient Hospital Care: Usually 20% of the Medicare-approved amount for doctor and other healthcare providers’ services. You may also pay a copayment to the hospital for each service you get in a hospital outpatient setting.

The 2024 Part B total premiums for high-income beneficiaries with full Part B coverage are shown in the following table:
Medicare Part B Premiums for Full Part B Coverage based on Modified Adjusted Gross Income (MAGI):

Beneficiaries who file tax returns with modified adjusted gross income: (magi) Total Monthly Premium Amount (Individual) Total Monthly Premium Amount (Joint)
Less than or equal to $103,000 (Individual) $0.00 $174.70
Less than or equal to $206,000 (Joint) $0.00 $174.70
Greater than $103,000 and less than or equal to $129,000 (Individual) $69.90 $244.60
Greater than $206,000 and less than or equal to $258,000 (Joint) $69.90 $244.60
Greater than $129,000 and less than or equal to $161,000 (Individual) $174.70 $349.40
Greater than $258,000 and less than or equal to $322,000 (Joint) $174.70 $349.40
Greater than $161,000 and less than or equal to $193,000 (Individual) $279.50 $454.20
Greater than $322,000 and less than or equal to $386,000 (Joint) $279.50 $454.20
Greater than $193,000 and less than $500,000 (Individual) $384.30 $559.00
Greater than $386,000 and less than $750,000 (Joint) $384.30 $559.00
Greater than or equal to $500,000 (Individual) $419.30 $594.00
Greater than or equal to $750,000 (Joint) $419.30 $594.00

Income-Related Monthly Adjustment Amounts for Married Beneficiaries Who File Separate Tax Returns (Full Part B Coverage):

Modified Adjusted Gross Income (MAGI) Adjustment Amount Total Monthly Premium
Less than or equal to $103,000 $0.00 $174.70
Greater than $103,000 and less than $397,000 $384.30 $559.00
Greater than or equal to $397,000 $419.30 $594.00

3. Medicare Advantage Plan (Part C) Costs

Medicare Advantage Plans offer an alternative to Original Medicare. Costs can vary depending on the specific plan you choose. It’s important to have Part B and continue paying your Part B premium to stay in your Medicare Advantage Plan.

  • Premiums & Other Costs: Varies by plan, including deductibles, copayments, and coinsurance. These amounts can change each year.

  • Out-of-Pocket Limit: Varies by plan. Once you reach the plan’s limit, the plan pays 100% of your covered health services for the rest of the calendar year.

4. Medicare Part D (Drug Coverage) Costs

Medicare Part D provides coverage for prescription drugs. Costs can vary depending on the specific Part D plan you choose.

  • Premium: Varies by plan, and it may be higher based on your income. You can avoid paying a penalty by joining a Medicare drug plan when you first get Medicare Part A and/or Part B and ensuring you don’t go 63 days or more without creditable drug coverage.

  • Deductibles, Copayments, & Coinsurance: These costs vary by plan and pharmacy. You can find Medicare drug plans in your area and compare their costs and coverage.

Since 2011, a beneficiary’s Part D monthly premium has been based on their income. These income-related monthly adjustment amounts impact about 8% of people with Medicare Part D. These individuals will pay the income-related monthly adjustment amount in addition to their Part D premium. Here are the 2024 Part D income-related monthly adjustment amounts for high-income beneficiaries:

Income-Related Monthly Adjustment Amounts for Beneficiaries who file individual tax returns and joint tax returns with modified adjusted gross income:

Modified Adjusted Gross Income (MAGI) Adjustment Amount
Less than or equal to $103,000 (Individual) or $206,000 (Joint) $0.00
Greater than $103,000 and less than or equal to $129,000 (Individual) or Greater than $206,000 and less than or equal to $258,000 (Joint) $12.90
Greater than $129,000 and less than or equal to $161,000 (Individual) or Greater than $258,000 and less than or equal to $322,000 (Joint) $33.30
Greater than $161,000 and less than or equal to $193,000 (Individual) or Greater than $322,000 and less than or equal to $386,000 (Joint) $53.80
Greater than $193,000 and less than $500,000 (Individual) or Greater than $386,000 and less than $750,000 (Joint) $74.20
Greater than or equal to $500,000 (Individual) or Greater than or equal to $750,000 (Joint) $81.00

Premiums for high-income beneficiaries who are married and lived with their spouse at any time during the taxable year but file a separate return:

Modified Adjusted Gross Income (MAGI) Adjustment Amount
Less than or equal to $103,000 (Separate Tax Return) $0.00
Greater than $103,000 and less than $397,000 (Separate Tax Return) $74.20
Greater than or equal to $397,000 (Separate Tax Return) $81.00

Part D Extra Help

Additional help paying for your prescriptions may be available. You may qualify for a Low-Income Subsidy (LIS) if your yearly income and resources are below certain limits. You may qualify for Extra Help if your assets are not worth more than $33,240 if you are married or $16,660 as a single individual. Your annual income is limited to $29,580 for a married couple living together or $21,870 for an individual.

 

Part D Late Enrollment Penalty

Did not sign up for Part D when first eligible and did not have creditable coverage for more than 63 days? you may have to pay a late enrollment penalty for as long you have part D. The monthly premium will have a penalty of: 1% of the national base premium ($34.70 in 2024) multiplied by the number of full, uncovered months you were eligible.


Part D Catastrophic coverage

In 2023, when your out-of-pocket spending reaches $7,400, You’ll automatically receive catastrophic coverage. This means you’ll pay only a small coinsurance percentage (up to 5%) or copayment for your covered Part D drugs for the remainder of the calendar year.

Starting from January 1, 2024, when your out-of-pocket spending reaches $8,000:
  • You’ll automatically be enrolled in “catastrophic coverage.”
  • This ensures you won’t have to make any copayments or pay coinsurance for covered Part D drugs for the rest of the calendar year.
  • This out-of-pocket spending amount includes certain payments made on your behalf by other individuals or entities, such as Medicare’s Extra Help program.

5. Medicare Supplemental Insurance (Medigap) Costs

Medigap policies are designed to cover the costs that Original Medicare (Part A and Part B) doesn’t. The costs for Medigap policies can vary based on the policy you choose, your location, and other factors.

  • Premium: Varies based on the Medigap policy you buy, where you live, and other factors. This amount can change each year. To keep your Medigap policy, you must have Part B and keep paying your Part B premium.

  • Other Costs: Medigap policies usually help pay your portion of the costs (like deductibles and coinsurance) for services that Part A and Part B cover in Original Medicare. The amount you pay for Part A and Part B services with a Medigap policy can vary depending on the policy you buy.

  • The 2024 out-of-pocket (OOP) limits for Medigap plans K & L are $7,060 and $3,530

Medicare Part B covers services such as physician visits and outpatient care. In 2023, the monthly premium for Part B is $164.90 ($174.70 in 2024), although this amount can be higher depending on your income. You’ll pay this premium each month, even if you don’t get any Part B-covered services.

  • Deductible: The Part B deductible is $226 ($240 in 2024), which you pay before Original Medicare starts to cover your services. This deductible is paid once each year.

  • General Costs for Services (Coinsurance): You usually pay 20% of the cost for each Medicare-covered service or item after you’ve paid your deductible. This applies as long as your doctor or healthcare provider accepts the Medicare-approved amount as full payment.

Clinical Laboratory Services: $0 for covered clinical laboratory services.

Home Health Care:

  • $0 for covered home health care services.
  • 20% of the Medicare-approved amount for durable medical equipment (like wheelchairs, walkers, hospital beds, and other equipment).

Inpatient Hospital Care: 20% of the Medicare-approved amount for most doctor services while you’re a hospital inpatient.

Outpatient Mental Health Care:

  • $0 for your yearly depression screening.
  • 20% of the Medicare-approved amount for visits to your doctor or other healthcare provider to diagnose or treat your condition.
  • If you get your services in a hospital outpatient clinic or hospital outpatient department, you may have to pay an additional amount to the hospital.

Partial Hospitalization Mental Health Care: After you meet the Part B deductible, you pay:

  • 20% of the Medicare-approved amount for each service you get from a doctor or certain other qualified mental health professional.
  • Coinsurance for each day of partial hospitalization services you get in a hospital outpatient setting or community mental health center.

Outpatient Hospital Care: Usually 20% of the Medicare-approved amount for doctor and other healthcare providers’ services. You may also pay a copayment to the hospital for each service you get in a hospital outpatient setting.

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Other Changes

Immunosuppressive Drug Coverage

Starting in 2023, individuals whose full Medicare coverage ended 36 months after a kidney transplant and who don’t have certain other types of insurance coverage can continue Part B coverage for immunosuppressive drugs by paying a premium. For 2024, the standard immunosuppressive drug premium will be $103.00.

Income-Related Monthly Adjustment Amounts for Beneficiaries Filing Individual Tax Returns (Part B Immunosuppressive Drug Coverage Only):

Medicare Part B Premiums for Immunosuppressive Drug Coverage Only based on Modified Adjusted Gross Income (MAGI):

MAGI Level Total Monthly Premium Amount (Individual) Total Monthly Premium Amount (Joint)
Less than or equal to $103,000 (Individual) $0.00 $103.00
Less than or equal to $206,000 (Joint) $0.00 $103.00
Greater than $103,000 and less than or equal to $129,000 (Individual) $68.70 $171.70
Greater than $206,000 and less than or equal to $258,000 (Joint) $68.70 $171.70
Greater than $129,000 and less than or equal to $161,000 (Individual) $171.70 $274.70
Greater than $258,000 and less than or equal to $322,000 (Joint) $171.70 $274.70
Greater than $161,000 and less than or equal to $193,000 (Individual) $274.70 $377.70
Greater than $322,000 and less than or equal to $386,000 (Joint) $274.70 $377.70
Greater than $193,000 and less than $500,000 (Individual) $377.70 $480.70
Greater than $386,000 and less than $750,000 (Joint) $377.70 $480.70
Greater than or equal to $500,000 (Individual) $412.10 $515.10
Greater than or equal to $750,000 (Joint) $412.10 $515.10

Income-Related Monthly Adjustment Amounts for Married Beneficiaries Who File Separate Tax Returns (Part B Immunosuppressive Drug Coverage Only):

Modified Adjusted Gross Income (MAGI) Adjustment Amount Total Monthly Premium
Less than or equal to $103,000 $0.00 $103.00
Greater than $103,000 and less than $397,000 $377.70 $480.70
Greater than or equal to $397,000 $412.10 $515.10
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Frequently Asked Questions About Medicare

Q1: What are Medicare premiums?

Medicare premiums are monthly fees that individuals pay to enroll in certain parts of the Medicare program. The primary parts of Medicare are Part A (Hospital Insurance), Part B (Medical Insurance), Part C (Medicare Advantage), and Part D (Prescription Drug Coverage).

Q2: Are there different types of Medicare premiums?

Yes, there are different types of Medicare premiums. Part A premiums are based on your work history and can be premium-free for most people. Part B and Part D premiums are based on income and may vary.

Q3: How are Medicare premiums determined for Part B and Part D?

Medicare Part B and Part D premiums are income-based. The higher your Modified Adjusted Gross Income (MAGI), the higher your premium may be. The adjustment amounts are added to the standard premium for individuals with higher incomes.

Q4: What is Modified Adjusted Gross Income (MAGI)?

MAGI is a measure of income used to determine Medicare premium adjustments. It includes your adjusted gross income plus any tax-exempt interest income.

Q5: Can I find out my specific premium and adjustment based on my income?

Yes, you can find out your exact premium and adjustment amounts by checking the Medicare website or contacting Medicare directly. They provide tables and calculators to help you determine your costs based on your income.

Q6: Do Medicare premiums change annually?

Yes, Medicare premiums are subject to change each year. They can increase or decrease based on various factors, including inflation and changes in healthcare costs.

Q7: What is a Medicare deductible?

A Medicare deductible is the amount you must pay out of pocket before Medicare starts covering certain healthcare services. Both Part A and Part B have deductibles.

Q8: Do the Medicare deductibles change from year to year?

Yes, Medicare deductibles can change annually. The specific amounts for deductibles are updated to account for changes in healthcare costs.

Q9: What is the purpose of Medicare premium adjustments?

Medicare premium adjustments are designed to ensure that individuals with higher incomes contribute more to the Medicare program. These adjustments help fund the program and provide financial support to those with lower incomes.

Q10: How can I get help with Medicare costs if I have a limited income?

If you have limited income and resources, you may be eligible for assistance to help cover Medicare premiums and other costs. Your state may offer programs to provide financial support.

Q11: Can I avoid penalties if I don’t sign up for Medicare Part A or Part B when first eligible?

In some cases, delaying enrollment in Part A or Part B can result in penalties. To avoid these penalties, it’s generally recommended to enroll during your initial enrollment period.

Q12: Can I switch between different Medicare parts or plans based on my changing needs?

Yes, you can change your Medicare coverage during certain enrollment periods. These periods include the Annual Enrollment Period and Special Enrollment Periods, depending on your circumstances.

Q13: Where can I find more information about Medicare premiums, deductibles, and adjustments?

For detailed information about Medicare premiums, deductibles, and adjustments, you can visit the official Medicare website, contact Medicare directly, or consult with a qualified healthcare professional.

Social Security Benefits Will Rise 3.2% in 2024

On Thursday, October 12, 2023, the Social Security Administration announced that Social Security benefits will increase by 3.2% in 2024. This is a significant decrease from the 8.7% increase in 2023, which was the largest increase in four decades.

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3.2% in 2024

The 3.2% increase will average $59 more per month for Social Security beneficiaries. The average monthly check will be $1,907, up from $1,848 in 2023. The increase will take effect starting in January 2024. This is a significant decrease from the 8.7% increase in 2023, which was the largest increase in four decades.

  • The COLA increase will apply to Supplemental Security Income (SSI) benefits.
  • The maximum amount of earnings subject to Social Security tax (taxable maximum) will increase to $168,600 in 2024.
  • The COLA increase will not apply to Medicare Part B premiums, which are expected to increase by 5.9% in 2024.

Why the decrease in the increase?

The cost-of-living adjustment (COLA) for Social Security benefits is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The CPI-W is a measure of inflation that tracks the prices of goods and services that are commonly purchased by urban wage earners and clerical workers.

The CPI-W increased by 8.7% in the year ending September 2022, which is the highest rate of inflation in the United States since 1981. However, the CPI-W is expected to moderate in 2023, which is why the COLA for 2024 is lower.

What does this mean for Social Security Beneficiaries?

The 3.2% increase in Social Security benefits will help to offset the rising costs of living, but it is important to note that it will not fully keep up with inflation. This means that Social Security beneficiaries may still see their purchasing power decline in 2024.

  • The COLA increase is lower than the current inflation rate, which means that Social Security beneficiaries will still be losing purchasing power.
  • The COLA increase is not enough to keep up with the rising cost of healthcare, which is a major expense for many Social Security beneficiaries.
  • Many Social Security beneficiaries rely on their benefits to meet their basic needs, such as food and housing. The COLA increase will help to ensure that they can continue to afford these necessities.

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What are the Income Limits for 2024?

The maximum amount subject to Social Security tax will increase to $168,600.

The Social Security Administration sets its income limits for people receiving Social Security benefits yearly. This is the amount you are allowed to earn without getting a reduction on your Social Security payments. If you make more than the limit ($22,320 in 2024), your benefits will be reduced (if you are younger than the retirement age). Luckily these reductions will be returned to you when you reach full retirement. The social security benefits are only withheld temporarily.

If you’re younger than full retirement age during all of 2024, they will deduct $1 from your benefits for each $2 you earn above $22,320. If you reach full retirement that year, the limit changes to $59,520 (2024). They will deduct $1 in benefits for every $3 you earn above the limit.

If you are older than full retirement and decide to work, you will receive your full benefits; there are no income limits.

For more examples, visit ssa.gov. 
*note: there are different rules if you work outside the country or are on disability.

You will automatically enroll in Original Medicare (Part A and Part B) when you turn 65. Check before signing up for Medicare Part B if you or your spouse are still covered under an employer-provided group health plan.

 

What can Social Security Beneficiaries do?

There are a few things that Social Security Beneficiaries can do to prepare get the most out of their benefits:

  • Review your budget. Take some time to review your budget and see how the increase in your benefits will impact your spending. 
  • Plan for retirement. If you are retired, the increase in your benefits can help you to maintain your retirement lifestyle. However, it is important to continue to plan for retirement and to make sure that you have enough savings to last throughout your retirement years.
  • Consider annuity guaranteed income. Annuities are a financial product that can provide a regular stream of income, which can complement your Social Security benefits. Exploring annuity options may help you secure additional financial stability during retirement. Work with a licensed financial services professional to determine if this strategy fits your needs
  • Check if it could be more beneficial to wait to collect benefits. Waiting to collect Social Security benefits can be better because it can result in higher monthly payments. If you wait until your full retirement age or later, you’ll receive larger monthly payments, which can help you cover your expenses in retirement. Additionally, if you delay your benefits until age 70, your monthly payments will increase even more. This can be especially beneficial if you expect to live a long time in retirement and need a reliable source of income. However, the decision to wait ultimately depends on your individual circumstances and financial goals.

The 3.2% increase in Social Security benefits will be a welcome relief for many beneficiaries. However, it is important to remember that inflation is still high and that the increase in benefits will not fully keep up with the rising cost of living. Social Security recipients should review their budget and plan for retirement accordingly.

Check out our other blog to learn when is the best time to collect Social Security Benefits.
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Frequently Asked Questions About Social Security Benefits

  1. When can I start receiving Social Security benefits?

    • You can start receiving Social Security benefits as early as age 62, but your full retirement age (FRA) depends on your birth year. It typically ranges from 65 to 67. You can choose to delay benefits beyond your FRA, which may result in higher monthly payments.

  2. How is my Social Security benefit amount calculated?

    • Your benefit amount is calculated based on your highest-earning 35 years of work, adjusted for inflation. The Social Security Administration uses a formula to determine your average indexed monthly earnings (AIME), which is then used to calculate your primary insurance amount (PIA), the base for your monthly benefit.

  3. Can I work and still receive Social Security benefits?

    • Yes, you can work while receiving Social Security benefits, but if you are under your full retirement age, there is an earnings limit. If you earn more than this limit, a portion of your benefits may be withheld. After reaching your FRA, you can work and earn without any benefit reduction.

  4. What is the maximum Social Security benefit I can receive?

    • The maximum benefit varies depending on the year you retire, but in 2021, the maximum monthly benefit at full retirement age was $3,895. This amount can change with inflation and higher-earning individuals may receive a higher maximum benefit.

  5. Is it better to start collecting benefits early or wait until full retirement age?

    • The decision to collect benefits early or wait depends on your individual circumstances. Starting early means smaller monthly payments but more of them, while waiting until FRA or later results in larger monthly payments but fewer of them over your lifetime. The optimal choice varies for each person.

  6. How are Social Security benefits taxed?

    • Social Security benefits can be subject to federal income tax if your combined income (including half of your Social Security benefits, plus other income) exceeds a certain threshold. The percentage of benefits subject to tax depends on your income level.

  7. What happens to my benefits if I’m divorced or widowed?

    • If you are divorced, you may be eligible to receive benefits based on your ex-spouse’s record if you were married for at least ten years and meet certain conditions. If you are widowed, you may be eligible for survivor benefits, which can be based on your deceased spouse’s or ex-spouse’s earnings.

  8. Can I receive Social Security benefits from a spouse’s or ex-spouse’s work record?

    • Yes, if you meet certain criteria, you can receive benefits based on your spouse’s or ex-spouse’s earnings, including a spousal benefit or a divorced spousal benefit.

  9. What is the cost of living adjustment (COLA), and how does it affect my benefits?

    • COLA is an annual adjustment to Social Security benefits to account for inflation. It helps ensure that your benefits retain their purchasing power, and it typically results in a modest increase in your monthly payments.

  10. How do I apply for Social Security benefits, and what documentation do I need?

    • You can apply for Social Security benefits online, by phone, or in person at a Social Security office. You will need documents such as your Social Security card, birth certificate, and information on your work history, earnings, and banking information for direct deposit.

How to Lower Your Medicare Costs During Annual Enrollment for 2024

Medicare annual enrollment for 2024 is just around the corner, and there are some potential changes to be aware of. Whether you’re already on Medicare or about to enroll for the first time, it’s crucial to understand how these changes could impact your healthcare costs and coverage. In this blog post, we’ll break down three big Medicare changes you may see in 2024 and provide practical tips on how to lower your Medicare costs during open enrollment.

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Annual Enrollment Period (AEP):

  1. Dates: The Annual Enrollment Period, often called the Medicare Annual Election Period, occurs annually from October 15th to December 7th. This is the time when most Medicare beneficiaries can make changes to their Medicare coverage for the upcoming year.

  2. Changes Allowed: During AEP, you can make a range of changes to your Medicare coverage, including:

    • Switch from Original Medicare (Part A and Part B) to a Medicare Advantage plan (Part C).
    • Switch from a Medicare Advantage plan back to Original Medicare.
    • Change from one Medicare Advantage plan to another.
    • Enroll in or switch Medicare Part D prescription drug plans.

Coverage Effective Date: Changes made during AEP take effect on January 1st of the following year. It is crucial to make decisions and submit any necessary paperwork during this period to ensure your coverage is in place when the new year begins.

Three Big Medicare Changes for 2024

 1. The End to Some Out-of-Pocket Costs for Catastrophic Prescription Costs

One of the most significant changes expected in 2024 is the reduction of out-of-pocket costs for catastrophic prescription expenses. If your Part D out-of-pocket spending for prescriptions exceeds $8,000, you won’t have to pay copayments or co-insurance. This is a significant improvement from the 5% co-insurance you had to pay after reaching $7,400 in 2023.

Tip: If you have high prescription drug costs in 2023, consider comparing Part D plans for your medications in 2024 to take advantage of this change.

2. Bigger Savings for Low- and Moderate-Income Individuals

Expected in 2024, individuals who qualify for Medicare’s Extra Help subsidies will pay $0 for Part D premiums and deductibles. This change also includes reduced costs for generic and brand-name drugs. To be eligible for Extra Help, your 2023 income must be below $21,870 (or $29,580 for couples), with limited resources not exceeding $16,660 (or $33,240 for married couples), excluding your primary residence, vehicles, and personal possessions.

Tip: If you meet these income and resource thresholds, be sure to sign up for Extra Help when enrolling in a Part D plan.

 3.Improved Mental Health Care Coverage: 

Medicare will now cover mental health services provided by marriage and family therapists, as well as mental health counselors. However, it’s essential to ensure that these professionals accept Medicare for you to benefit from this coverage.

Tip: Consider Medicare Advantage plans with networks that include your mental health professionals you need for your care.

Considering making any changes to your coverage?

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Schedule Your 2024 Medicare Review
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Medicare Tips

  • Review the Annual Notice of Change: Medicare Part D and Medicare Advantage plans will announce their rules and costs for 2024.  You’ll receive an Annual Notice of Change and Evidence of Benefits in late September if you’re already enrolled in one of these plans.
  • Pay attention to changes in premiums, co-insurance, copayments, and prescription coverage.
  • If you’re enrolling in a Part D or Medicare Advantage plan for the first time in 2024 or considering switching plans, comparison shopping is crucial.
  • You can compare plans online through Medicare’s Plan Finder tool, call Medicare at 800-MEDICARE, Consider meeting with a Medicare agent or broker, but make sure they represent all available plans in your area.

As a Medicare beneficiary, it’s a good idea to review your plan annually to stay current on any changes and ensure that you have the most suitable coverage for your healthcare needs. By doing so, you can avoid paying for services you don’t need and take advantage of any new benefits. Reviewing your plan and making any necessary adjustments is crucial to guaranteeing the best possible coverage for you. 

  1. Changing Healthcare Needs: Your health can change from year to year. New medical conditions may arise, and your existing conditions may require different treatments or medications. By reviewing your coverage annually, you can ensure that your plan still meets your healthcare needs.

  2. Coverage Changes: Medicare Advantage and Part D prescription drug plans can change their benefits, premiums, copayments, and formularies (the list of covered drugs) each year. What was covered one year may not be covered the next, or the cost-sharing for your medications may change. Reviewing your plan helps you stay informed about these changes.

  3. Network Changes: Medicare Advantage plans often have provider networks. Doctors and hospitals can join or leave these networks, which can affect your access to healthcare providers. It’s crucial to check if your preferred healthcare providers are still in-network.

  4. Financial Considerations: Your financial situation may change from year to year. You might have different income levels, which can affect your eligibility for programs like Extra Help or Medicare Savings Programs. Additionally, you may find more cost-effective plans that better suit your budget.

  5. Plan Performance: Medicare releases annual star ratings for Medicare Advantage and Part D plans, which evaluate plan quality based on various factors. Reviewing these ratings can help you choose a plan with a good track record of providing quality care and services.

  6. New Plan Options: Medicare plans evolve, and new plans become available. By reviewing your coverage, you can explore new plan options that may offer better coverage, lower costs, or additional benefits that align with your needs.

  7. Avoiding Penalties: If you miss certain enrollment periods or don’t sign up for specific types of coverage when you’re first eligible, you may face penalties or delayed coverage. Regularly reviewing your Medicare coverage helps you stay aware of these deadlines.

  8. Preventing Surprise Expenses: Without reviewing your coverage, you may inadvertently discover that a medical service or medication you need is no longer covered or is subject to high out-of-pocket costs. This can lead to unexpected medical expenses.

  9. Maximizing Benefits: Medicare offers various preventive services and wellness benefits. By reviewing your coverage, you can take advantage of these services, such as annual wellness visits, vaccinations, and screenings, to maintain your health proactively.

AEP vs. OEP: Understanding the Differences for Medicare

Medicare is a federal health insurance program for people aged 65 or older and some younger individuals with specific disabilities. Two important enrollment periods are the Annual Enrollment Period (AEP) and the Open Enrollment Period (OEP). In this blog, we’ll explore their key differences to help you make informed decisions about your coverage.

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Annual Enrollment Period (AEP):

  1. Dates: The Annual Enrollment Period, often called the Medicare Annual Election Period, occurs annually from October 15th to December 7th. This is the time when most Medicare beneficiaries can make changes to their Medicare coverage for the upcoming year.

  2. Changes Allowed: During AEP, you can make a range of changes to your Medicare coverage, including:

    • Switch from Original Medicare (Part A and Part B) to a Medicare Advantage plan (Part C).
    • Switch from a Medicare Advantage plan back to Original Medicare.
    • Change from one Medicare Advantage plan to another.
    • Enroll in or switch Medicare Part D prescription drug plans.

  3. Coverage Effective Date: Changes made during AEP take effect on January 1st of the following year. It is crucial to make decisions and submit any necessary paperwork during this period to ensure your coverage is in place when the new year begins.

  4.  In 2023, individuals can contribute to an HSA if they have not yet enrolled in Medicare and have an HSA-eligible health insurance policy with a deductible of at least $1,500 for individual coverage or $3,000 for family coverage. This eligibility remains the same regardless of whether they obtain their insurance through an employer or independently. For 2023, the maximum contribution limits are set at $3,850 for individual coverage and $7,750 for family coverage. Additionally, those aged 55 or older can make an extra catch-up contribution of up to $1,000 to boost their HSA savings.

Open Enrollment Period (OEP):

  1. Dates: The Medicare Open Enrollment Period occurs annually from January 1st to March 31st. It allows beneficiaries who are already enrolled in a Medicare Advantage plan to make certain changes to their coverage.

  2. Changes Allowed: During OEP, beneficiaries can:
    • Switch from one Medicare Advantage plan to another.
    • Return to Original Medicare and add a standalone Medicare Part D prescription drug plan.
  3. Coverage Effective Date: Changes made during OEP generally take effect on the first day of the month following the month you make the change. For example, if you make a change in February, your new coverage will typically start on March 1st.

Key Differences:

Now that we’ve outlined the basics of both AEP and OEP let’s delve into the primary differences between these two Medicare enrollment periods:

    1. Scope of Changes: AEP offers more flexibility, allowing beneficiaries to make a broader range of changes, including switching between Original Medicare and Medicare Advantage. OEP is more focused, primarily enabling changes within the Medicare Advantage landscape.

    2. Timing: AEP occurs in the fall, while OEP occurs in the early months of the year. This timing is crucial for planning as changes made during AEP become effective on January 1st, whereas OEP changes typically take effect later.

    3. Eligibility: All Medicare beneficiaries can participate in AEP, whereas OEP is specifically for individuals already enrolled in a Medicare Advantage plan. If you have Original Medicare with a standalone Part D plan, AEP is more relevant to you.

    4. Frequency: AEP happens yearly like clockwork, providing an annual opportunity to reevaluate your Medicare coverage. OEP is less known and utilized, as it only applies to a subset of beneficiaries. 

Considering making any changes to your coverage?

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Schedule Your 2024 Medicare Review
AEP vs. OEP: Understanding the Differences for Medicare

Review your Medicare Plan at least once a year.

As a Medicare beneficiary, it’s a good idea to review your plan annually to stay current on any changes and ensure that you have the most suitable coverage for your healthcare needs. By doing so, you can avoid paying for services you don’t need and take advantage of any new benefits. Reviewing your plan and making any necessary adjustments is crucial to guaranteeing the best possible coverage for you.
 

  1. Changing Healthcare Needs: Your health can change from year to year. New medical conditions may arise, and your existing conditions may require different treatments or medications. By reviewing your coverage annually, you can ensure that your plan still meets your healthcare needs.

  2. Coverage Changes: Medicare Advantage and Part D prescription drug plans can change their benefits, premiums, copayments, and formularies (the list of covered drugs) each year. What was covered one year may not be covered the next, or the cost-sharing for your medications may change. Reviewing your plan helps you stay informed about these changes.

  3. Network Changes: Medicare Advantage plans often have provider networks. Doctors and hospitals can join or leave these networks, which can affect your access to healthcare providers. It’s crucial to check if your preferred healthcare providers are still in-network.

  4. Financial Considerations: Your financial situation may change from year to year. You might have different income levels, which can affect your eligibility for programs like Extra Help or Medicare Savings Programs. Additionally, you may find more cost-effective plans that better suit your budget.

  5. Plan Performance: Medicare releases annual star ratings for Medicare Advantage and Part D plans, which evaluate plan quality based on various factors. Reviewing these ratings can help you choose a plan with a good track record of providing quality care and services.

  6. New Plan Options: Medicare plans evolve, and new plans become available. By reviewing your coverage, you can explore new plan options that may offer better coverage, lower costs, or additional benefits that align with your needs.

  7. Avoiding Penalties: If you miss certain enrollment periods or don’t sign up for specific types of coverage when you’re first eligible, you may face penalties or delayed coverage. Regularly reviewing your Medicare coverage helps you stay aware of these deadlines.

  8. Preventing Surprise Expenses: Without reviewing your coverage, you may inadvertently discover that a medical service or medication you need is no longer covered or is subject to high out-of-pocket costs. This can lead to unexpected medical expenses.

  9. Maximizing Benefits: Medicare offers various preventive services and wellness benefits. By reviewing your coverage, you can take advantage of these services, such as annual wellness visits, vaccinations, and screenings, to maintain your health proactively.

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Frequently Asked Questions About AEP & OEP


Annual Enrollment Period (AEP) 

  1. What is the Annual Enrollment Period (AEP)?

    • AEP is the annual period from October 15th to December 7th, when Medicare beneficiaries can make changes to their Medicare coverage for the following year.

  2. What changes can I make during AEP?

    • During AEP, you can switch from Original Medicare to Medicare Advantage, change from one Medicare Advantage plan to another, return to Original Medicare, or enroll in or switch Medicare Part D prescription drug plans.

  3. When do changes made during AEP take effect?

    • Changes made during AEP become effective on January 1st of the following year.

  4. Can I enroll in Medicare for the first time during AEP?

    • AEP is primarily for beneficiaries who are already enrolled in Medicare. If you’re new to Medicare, you generally have an Initial Enrollment Period (IEP) based on your 65th birthday.

Open Enrollment Period (OEP) 

  1. What is the Open Enrollment Period (OEP)?

    • OEP takes place annually from January 1st to March 31st and allows Medicare beneficiaries already enrolled in a Medicare Advantage plan to make certain changes to their coverage.

  2. What changes can I make during OEP?

    • During OEP, you can switch from one Medicare Advantage plan to another or return to Original Medicare and add a standalone Medicare Part D prescription drug plan.

  3. When do changes made during OEP take effect?

    • Changes made during OEP generally take effect on the first day of the month following the month you make the change. For example, changes made in February typically take effect on March 1st.

  4. Can I switch from Original Medicare to a Medicare Advantage plan during OEP?

    • No, you generally cannot switch from Original Medicare to a Medicare Advantage plan during OEP. AEP is the appropriate period for such changes.

General 

  1. Can I make changes to my Medicare coverage outside of AEP and OEP?

    • Yes, Special Enrollment Periods (SEPs) allow for changes in certain circumstances, such as moving to a new area, losing other coverage, or qualifying for Medicaid.

  2. What happens if I miss the AEP or OEP deadlines?

    • Missing these enrollment periods may limit your options for changing your Medicare coverage. You might have to wait until the next AEP or OEP, or you may qualify for a Special Enrollment Period (SEP).

  3. Should I review my Medicare coverage every year, even if I’m satisfied with it?

    • Yes, it’s a good practice to review your coverage annually. Your healthcare needs may change, and insurance plans can also change their benefits and costs yearly.

  4. Where can I get help or information about Medicare enrollment periods?

    • You can contact Medicare directly, work with a licensed insurance agent specializing in Medicare, or visit the official Medicare website (medicare.gov) for information and resources.