Kelly Greene in the Wall Street Journal reminds seniors that Medicare’s open-enrollment period is an opportunity for them to lower their bills by re-evaluating their Medicare coverage. Just as you rebalance an investment portfolio, as seniors’ needs change, they need to make adjustments to see whether they are getting the best price for the same services. Elementary, you say? Here’s the shocking truth. A a recent Allsup survey of 1,000 Medicare beneficiaries 65 or older found:
- Only 15% said they had changed their Medicare plans in the past year or plan to do so in the next 12 months.
The A B Cs of Medicare Coverage
Step 1: Take a Fresh Look Each Year
- Seven of the top 10 drug plans will have double-digit premium increases next year, according to Avalere Health, a health-care consulting firm.
- Some Medicare Advantage Plans are raising their out-of-pocket costs for 2013, such as the costs that must be paid for the first six days of hospitalization, or for premiums and deductibles.
Step 2: Know How Medicare Premium Rates Are Set
- While the standard Part B premium is $99.90, Those with 2010 incomes above $85,000 (or $170,000 for married couples filing a joint tax return) pay more than the standard Part B premium, and higher Part D (drug program) premiums.
- Higher-income people can take advantage of a special adjustment that can reduce premiums if their incomes have fallen due to “life changing” events, such as the death of a spouse, divorce or work stoppage (this is called an “Income Related Monthly Adjustment Amount redetermination.”)
- Social Security won’t recognize some other events that temporarily boost a person’s income, including capital gains and converting a traditional individual retirement account to a Roth IRA.
Step 3: Consult a Planner
Some Medicare beneficiaries and their children consult professionals for help. Advisory firms like Allsup can charge a small monthly fee to help people choose their Medicare coverage and manage it on an ongoing basis, or an affordable lump sum to assess all a person’s Medicare options. It can make a difference. For example, life changes can knock a new recipient into a higher premium category, but with proper planning, recipients may avoid this by timing income-producing investment moves to piggyback on other life events, such as retirement. And, recipients may get a reprieve under certain circumstances, that can reduce their premium. Here’s an example:
- If a recipient works past 65 in a job that provides health coverage, and signs up for Medicare a few months before retiring, his income from two years before can puts him over the threshold for larger premiums – even though his retirement income is significantly less. This can be avoided.
There are also free resources for independent counseling, including: the Medicare Rights Center, and your State Health Insurance Assistance Program.