Keep this information handy. It could be a financial lifesaver.
Many retirees find that a good number of their expenses go down once they’re no longer working. If you pay off your home before you wrap up your career, then you might spend less on housing in retirement than you did previously. And if you no longer have a job to commute to daily, then you may find that you’re able to reduce your transportation costs by not having to buy as much gas or pay as many tolls.
But if there’s one essential expense that tends to increase in retirement, it’s healthcare. And that’s due to a few different factors.
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Aging tends to bring about more health issues — and it’s hard to get around that. And if you had outstanding coverage through your job, you may find that you’re facing higher costs as Medicare enrollee.
The good news, though, is that if you’re savvy with Medicare, you can set yourself up to enjoy a nice amount of savings on healthcare. Here are three essential things to know about Medicare if that’s a goal of yours.
1. When to enroll initially
Your initial window to sign up for Medicare spans seven months. It begins three months before the month of your 65th birthday and ends three months after that month.
If you have coverage under a qualifying group health plan through your job, then you don’t have to worry about signing up for Medicare during your initial enrollment period. But if not, then you definitely don’t want to delay your enrollment, as doing so could mean facing lifelong surcharges on your Part B premiums.
Specifically, you’ll be charged 10% more for Part B for each year-long period you were eligible for Medicare but didn’t sign up. So pay attention to when you’re supposed to enroll.
And if you’re delaying because you already have coverage, make sure you’re actually on a qualifying plan. That usually means a plan with 20 employees or more.
2. When to sign up for Medigap
As a Medicare enrollee, you could face numerous out-of-pocket costs, from hospital stay deductibles to coinsurance. That’s why it pays to sign up for Medigap coverage.
Also known as supplemental insurance, Medigap is designed to pick up the tab for costs you incur for covered services. To be clear, if there’s a service Medicare won’t pay for, like dental or eye exams, Medigap won’t come to the rescue. But if you’re stuck with a costly deductible following a hospital stay, that’s where Medigap can help.
Your initial window to sign up for Medigap starts the first month you’re enrolled in Medicare Part B and are at least 65 years old. You then have six months to sign up for coverage before you risk being denied for health reasons or getting stuck with higher costs.
3. How to navigate open enrollment
Medicare open enrollment takes place every year from Oct. 15 through Dec. 7. This isn’t the time to sign up for coverage in the first place. Rather, it’s when existing enrollees are allowed to make changes to their Medicare coverage.
It’s important to research your plan choices thoroughly during open enrollment, because switching from one Part D drug plan to another could leave you paying less for the medications you take. Or, it could result in less costly premiums.
Similarly, if you’re on a Medicare Advantage plan, it’s important to see what other options you have. If you find that you’re not using many of your current plan’s benefits, that could be reason enough to switch to a plan that’s less expensive.
Even though there’s time between now and open enrollment, it’s a good idea to list the costs you’re facing based on your coverage. Those include your monthly premiums and the copays you’re looking at for your medications.
It could also help to make a list of the things you wish your current plan did better. For example, if you’re on a Medicare Advantage plan that lacks provider choices, that’s something that could go on your wish list so you can prioritize it once plan options become available to you in October.
The more you know about Medicare, the easier it might be to save money on healthcare expenses. Keep these points in mind to lower your costs and stretch your retirement income further.
