Ariana Grande’s exes and Medicare and you
You might have heard the news that famous “It” couple Ariana Grande and Pete Davidson, an actor on “Saturday Night Live,” who had been engaged since June have recently split up. If not, here is a complete timeline of their engagement and break up. This came as a surprise to virtually no one, although it may or may not have helped Pete’s career, but it did help spur views of Ariana’s new video, “Thank you, next,”which highlights several of her recent exes including Pete. In essence, the song talks about how each relationship has helped her understand herself and make positive changes in her life and move forward (good for you, girl!).
Maybe the trials and tribulations of Ariana Grande’s relationshipsdon’t make you automatically think of health care costs, but let me explain. Before retirement, most of us benefit from employer provided health care. Depending on the plan, deductibles and out-of-pocket costs may be kept to a minimum for the health care services we receive. According to this recent Kaiser Family Foundation survey, annual per person premiums can range from $0 to well over $19,000 depending on the plan and level of care with most employees paying an average of $5547 annually for premiums and out-of-pocket costs. Many of us don’t think about the amount of money spent per year (both by employer and employee) for the health care we receive—until we have to (that’s where the ‘thank you, next’ comes in.)
Once we retire, health care costs become more of “a thing.” That is because people tend to enter retirement relatively healthy and then over time start to get sick or develop chronic conditions that must be managed. In addition, initial health care costs can be relatively affordable but several years into retirement those costs can grow by 5% annually or more which can negatively impact the retirement portfolio and nest egg of a retiree. It’s important for individuals to understand the basics of Medicare and how to navigate health care costs in retirement. Here are 4 things to know about Medicare:
1. Medicare has different parts that cover specific costs and services
Original or Traditional Medicare consists of 2 parts: Medicare Part A and Part B. Part A covers inpatient and hospital coverage and is generally funded by the government through revenues paid by employees and employers for Social Security (although some people may pay a premium for Part A). Medicare Part B covers costs associated with outpatient care and services provided by doctors or health practitioners, durable medical equipment like wheelchairs and scooters and outpatient services. Most people pay a monthly premium for this and the remainder is funded by general revenues of the government.
Medicare Part C is actually Medicare Advantage which is an alternative program to Medicare and will be discussed in the next section. Individuals may either sign up for Medicare or Medicare Advantage; both programs include Parts A and B but vary in many other respects.
Medicare Part D is the prescription drug program. If you have original Medicare, you may also sign up for Part D but you will likely pay a portion of the premium. If you are a high-income retiree, your Part D premiums will be higher.
Most people who sign up for traditional Medicare also take out a Medigap plan which is a separate private plan that helps to pay for deductibles and services not covered by Medicare.
2. Is Medicare Advantage really an advantage?
Depending on where you live, you may find that opting for a Medicare Advantage plan is more cost effective than traditional Medicare. Medicare Advantage includes Medicare Parts A and B but depending on the plan, may also cover dental, vision and hearing (not covered by traditional Medicare), as well as prescription drugs. Medicare Advantage plans may be preferable to new retirees who are relatively healthy and don’t plan to see many doctors and specialists. However, some may find that as they get older and develop illness and chronic conditions, their Medicare Advantage plan may limit the services they receive and doctors they can see. It’s important to understand the trade-offs of the various Advantage plans in your state and determine what your health care needs are when choosing a health care plan.
3. When to sign up and why you shouldn’t dilly-dally
The first time you can enroll in Medicare is called your initial enrollment period. This includes the three months before your birthday, the month you turn 65 and the three months after your birthday month. Even if you are still working and covered by an employer health plan, you should sign up for Medicare Part A when you turn 65. It costs nothing to enroll and most people don’t pay a monthly premium for Part A. To enroll in Medicare for the first time, go to this site.
If you are still working you may not sign up for Part B immediately. That is because most people pay a Part B premium. However, if you delay signing up for Part B beyond the time when you’re first eligible for it, you could incur a late penalty. (The exception is if you’re still working and have “primary” health insurance from your employer.) The late penalty is permanently added t your Part B premium. For more information on Medicare cost visit this site.
4. What does Medicare NOT cover
Many people opt for a Medicare Advantage plan because these plans may cover services that are not covered by traditional Medicare. However, as explained above, many Medicare Advantage plans limit you in terms of service providers and specialists. If you do choose traditional Medicare, understand that certain services and procedures are generally not covered including:
- Dental care
- Visitation
- Hearing aids
- Cosmetic surgery
- Acupuncture
- Long term care
While most people are restricted to a particular employer-sponsored health care plan and some variations within that plan while we are working, choosing the right health care plan in retirement is crucial. Working with a financial advisor can help you explore all your options with your particular health needs and financial ability in mind.