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HEALTH | Medicare—Some Things You Should Know

Most of us remember our first real paycheck with a paystub that showed both our gross earnings and our net earnings. Then realizing your employer automatically deducts for FICA and Medicare likely was a sobering experience. However, after decades of working, we are immune to the taxes, and, for the most part, do not think about them; until you get closer to the magic age of 65.

At age 65 you qualify for Medicare. Finally, you can sit back and reap the rewards of years of paying into the system. Unfortunately, reality is not quite so seamless. You worked hard; you paid into Medicare; your Medicare should be free, right? Unfortunately, most likely, no. Medicare includes a number of different expenses including deductibles, copays, and premiums. Not to mention the additional cost of Medigap coverage to make sure you actually have the coverage you need.

Healthcare is not cheap. A recent study estimates an average couple’s post-65 health care costs at $285,000. Before that causes too much anxiety, remember that is for two people spread out over 30 years. Without factoring in the time value of money, that is about $5,000 per person per year for 30 years—that is totally doable.

An overly simple Medicare coverage summary:

  • Part A covers hospital costs after you meet a deductible

  • Part B is optional coverage for medical expenses and requires an annual premium

  • Part D is for prescription drug coverage

  • Medicare Advantage plans are all-in-one, managed care plans that provide the services covered under Parts A, B, and sometimes D

  • Medigap policies, are private-insurance solutions that cover the gaps in Medicare Parts A and B


If you have initiated Social Security benefits before age 65, you are automatically enrolled in Medicare Parts A and B.

If you are holding off initiating Social Security benefits, then you will need to enroll in Medicare Parts A and B on your own during the 7-month enrollment period that starts three months before your birthday and ends three months after your birthday.

If you miss the enrollment period, you will be assessed a 10% penalty for each year you should have been enrolled. The penalty is added to your monthly Medicare Part B premium in perpetuity.

Things to remember:

  • You can switch your Medicare plans each year during the open enrollment periods

  • You can change or cancel your Medigap coverage at any time

  • Make sure and enroll when you first qualify because late-enrollment penalties are lifelong

Spend time sitting down with a specialist to build a strategy for your unique needs.

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