Medicare ranks will swell for next 18 years
Boomers hitting 65 this year.
Baby boomers, the generation that once vowed to never trust anyone over 30, begin turning 65 this year. This is a historic moment, ushering a demographic tsunami through the threshold of old age.
Though this birthday no longer guarantees full retirement benefits, the big six-five still means one thing: Medicare eligibility. For the next 18 years, boomers will be enrolling in the government's health insurance system, no doubt changing the way companies deal with a growing elderly population.
Consider this: Of the 78 million boomers born between 1946 and 1964, more than 2.77 million will turn 65 in 2011, according to U.S. Census projections. That's 7,596 people aging into Medicare every day in 2011.
The number of newly Medicare-eligible seniors increases every year after that, peaking in 2025 when about 4.267 million people — or 11,691 a day — will celebrate that milestone birthday. In comparison, a decade ago, about 4,880 people a day graduated into Medicare.
Boomers will enter Medicare in numbers that will test the financial resources of a program signed into law in 1965 by President Lyndon Johnson.
"There is going to be a debate in this country in the next few years about the level of services and the sustainability of the system," says Joe Baker, president of the Medicare Rights Center, a nonprofit consumer information group. "Everyone knows that this huge demographic wave is going to have a profound effect."
But as experts haggle over the big picture, it's important for boomers to bone up on the details of Medicare, which tends to be more complicated than the usual insurance fare offered by an employer.
What's more, signing up too late can cost thousands of dollars in extra premiums and out-of-pocket expenses over a lifetime.
"The biggest pitfall I've seen people run into is that they procrastinate," says Jeff Johnson, interim state director for AARP of Florida. "They put it off and don't realize they're going to pay a penalty."
Johnson and other advocates suggest boomers write this on their calendars in big red letters: The enrollment period for first-time Medicare enrollees spans seven months — the three months before, the month of, and the three months after your 65th birthday. In this case, sooner is better.
If you sign up during the three months before your birthday, Medicare coverage will start at the beginning of the month you turn 65. Happy birthday!
If you sign up during your birthday month, coverage will begin at the start of the following month. But if you wait until the final three months of the initial enrollment period, your coverage will take that much longer, sometimes several months. Coverage will not start the month following your enrollment.
People tend to postpone a decision because they're confused by the many different health plans they can choose under Medicare, but there are resources to help. Medicare itself provides online and phone help, as do nonprofit organizations and various insurance companies.
Medicare is not a one-size-fits-all program, and health care advocates advise that before enrolling — or re-enrolling — in Medicare, people should do their homework: Make a list of prescription drugs. Find out what Medicare plans your preferred doctors and hospitals take. Determine how much you can afford to pay for health care, including premiums, deductibles and out-of-pocket expenses.
Finally, try to figure outwhat your probable health care needs will be for the following year.
This should simplify what can otherwise be a daunting experience.
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A CRIB SHEET ON THE FOUR PARTS OF MEDICARE
Part A, inpatient hospital insurance, covers hospitalizations, home health care, hospice care, skilled nursing facility stays and blood transfusions during hospitalization. If you're already receiving Social Security, you will be automatically enrolled at 65. If not, go to www.medicare.gov or visit your local Social Security office to enroll — before your birthday month, or your coverage will be delayed.
Part A usually doesn't charge a premium, but there are co-payments and a deductible of $1,132 for 2011. You can be charged the hospital deductible several times in a single year, depending on circumstances.
Part B pays 80 percent of doctors, supplies, outpatient services, physical or speech therapy and ambulance service. It does not cover prescription drugs, but under the new health care law, annual physicals and other preventive care are free. Unlike Part A, enrollees pay a premium for Part B. In 2011, new Medicare enrollees will pay $115.40 a month — slightly higher than most of those already on Medicare. Those with an annual income over $85,000 for individuals and $170,000 for couples pay higher premiums on a sliding scale.
Two warnings about Part B Medicare. First, if you don't sign up for Part B during your eligibility window but then decide to enroll later, the premium goes up 10 percent for each 12-month period that you would've had Part B but didn't — and there's no cap. Say, for example, you wait five years to sign up. Your premium would then be 50 percent higher than someone who signed up on time. Obviously, this can cost you big money over the course of your lifetime.
If you have health insurance through your work or your spouse's work, you can delay enrolling in Part B. But if your employer has fewer than 20 workers or if you are on a company retiree plan, you must enroll in Part B as soon as you turn 65. Your workplace or retiree plan will become a secondary plan. As soon as you stop actively working, contact Social Security and sign up for Part B.
Questions about a specific situation? Check with medicare.gov or your employer's human resource office.
Second, remember that Part B has no cap on out-of pocket costs after Medicare pays its 80 percent. Most people buy a separate, private Medicare supplement commonly known as a "Medigap" plan that kicks in where Medicare leaves off.
There are 10 government-approved Medigap plans. The best plan depends on an individual's health history and financial resources. Year to year, you can change plans.
Some individuals choose to opt out of Parts A and B and Medigap and instead choose a Medicare Advantage plan — known as Part C — in place of original Medicare.
Part C consists of Medicare Advantage plans. Think of them as managed care plans, with many including dental and vision care. If you decide not to take government Medicare (Parts A and B), that means you're off the Medicare rolls and on an insurance company that works like an HMO, PPO or private, fee-for-service plan. For the first time ever, Medicare is requiring Advantage plans to limit out-of-pocket expenses to no more than $6,700 in 2011, and some policies offer even lower limits.
So what's better — Medicare Advantage or Medicare Parts A, B, D and Medigap?
If you're comfortable with managed care and sticking to doctors within a plan's network, Medicare Advantage might work for you. If you want some flexibility, travel a lot or split your time between two homes, original Medicare plus Medigap plus Part D prescription drug coverage is usually better.
"I always tell people to start by asking their current doctors what Medicare Advantage plans they take," Sarmiento says. "For many that's the determining factor. They want to stay with their current doctor."
Part D covers prescription drugs. There are many plans to choose from — 27 in Miami-Dade alone — so advocates suggest you make a list of medications you're taking and check if they're covered under the plans you're considering. There's an online "plan finder" at www.medicare.gov that compares plans side by side.
Enrollees pay a regular plan premium, which varies according to coverage. Beginning next year, Part D enrollees whose income exceeds a certain threshold — $85,000 for individual tax filers, $170,000 for joint filers — will also have to pay an extra monthly adjustment pegged to income. This will range from an additional $12 to $69.10.
Counselors suggest you check Plan D every year because the list of covered drugs can change.
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