2 weeks Ago By [email protected] (Maurie Backman)
Once you retire, you may find that some of your expenses decrease. Your home might cost less to live in if you manage to pay off your mortgage ahead of retirement. And if you're no longer commuting to work every day, you might spend less money on gasoline and tolls.
You may even be able to unload a car altogether and get by using public transportation and your own two feet. But if there's one big expense that tends to rise during retirement, it's healthcare. And unfortunately, this holds true even if you kick off your senior years in great physical shape.
The good news, though, is that managing your Medicare enrollment efficiently could lead to big savings on healthcare throughout retirement. Here are three moves that could substantially lower your costs. 1.
Signing up when you're supposed to Your initial Medicare enrollment period lasts seven months. It starts three months before the month you turn 65 and ends three months after that month. If you don't enroll during that initial seven-month window, you'll be able to sign up at a later point in time.
But by then, it may be too late to avoid the costly Medicare Part B penalty that might ensue. Medicare enrollees are assessed a surcharge of 10% per 12-month period they're eligible for coverage but fail to sign up. So for example, right now, the standard monthly Medicare Part B premium is $174.
70. But a 12-month delay in your enrollment could leave you paying $192.17 per month instead.
And that surcharge doesn't just apply for a single year -- it's lifelong. So as the cost of Medicare Part B increases, your surcharge and total costs increase as well. 2.
Signing up for Part A alone when you still have employer coverage If you're covered by a qualifying group health insurance plan during your initial Medicare enrollment window, you won't automatically be penalized with a Part B surcharge for not signing up then. Instead, you'll get a special enrollment period that begins once you leave your job or your qualifying group health coverage ends. And as long as you enroll in Medicare within that period, you can avoid paying more for Part B due to being penalized (you might pay more as a higher earner, but that's a different situation).
But even if you have qualifying group health coverage at age 65, it could pay to sign up for Medicare Part A alone. Unlike Part B, there's generally no monthly premium for Part A. This doesn't mean you won't face costs like deductibles and coinsurance under Part A, but there's usually no cost for your hospital coverage itself.
The benefit of signing up for Medicare Part A only when you already have insurance is that it can serve as secondary coverage to your employer plan in the event of a hospital stay. If your primary plan leaves you on the hook for certain costs, those may be picked up or reduced once your Medicare coverage kicks in. That said, the one drawback of enrolling in Part A is that you'll have to halt contributions to a health savings account as a Medicare enrollee.
This holds true whether you're signing up for Part A alone or Part A plus Part B. Funding one of these accounts can exempt a nice chunk of your income from taxes, so you'll have to weigh that loss against the benefit of added coverage. 3.
Signing up for Medigap as soon as that option becomes available There are numerous out-of-pocket costs you might face once your Medicare coverage begins. With Part A alone, you're looking at an inpatient deductible of $1,632 per hospital stay this year. That's why it pays to sign up for Medigap , or supplemental insurance, as soon as you're able to.
Medigap might pick up the tab for deductibles and other costs so you're not forced to raid your retirement savings every time you need expensive care. Just as there's an initial enrollment period for Medicare, there's also one for Medigap. It lasts six months and begins the first month you're enrolled in Part B and are 65 or older.
During that window, you can't be denied Medigap coverage due to a pre-existing condition. And you're more likely to snag the best premium rate you're eligible for. Like Medicare, you can sign up for Medigap beyond your initial enrollment window.
And while you won't face a late enrollment penalty per se, you're likely to pay more for Medigap if you sign up beyond that initial six-month period. The more you know about Medicare, the better equipped you'll be to make smart decisions with regard to your enrollment. That could, in turn, save you serious money in retirement, so do your research while you're still working and have time to weigh your options.
.
