Health Insurance

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Why is health insurance important to your financial health?

Health insurance is an assurance of a person’s financial security against unforeseen life events.

Many people enjoy medical insurance as an employee benefit, often with their employers paying whole or part of the premiums. Many employers offer a choice between HMOs (health maintenance organizations) and traditional fee-for-service care. Rates for HMOs are usually cheaper, but have more constraints.  Employees are responsible for paying their deductible, coinsurance and copays up to their out-of-pocket maximum.

Privately purchased health insurance is much more expensive, often by several hundred dollars a month, depending on such things as deductibles, coverage choices, and location.

If you are under 65 years of age, a health savings account (HSA) is a tax-advantaged account, which works in conjunction with a high-deductible health plan and allows you the ability to save tax-free money for eligible medical expenses.  Money in your HSA rolls over year after year and remains yours even if you change jobs or health plans. To be eligible to open an HSA, you need to have a high-deductible health plan that meets IRS guidelines for the annual deductible and out-of-pocket maximum.

People are living longer, meaning more time in retirement and higher healthcare costs. The sooner you begin to plan for your healthcare costs in retirement, the better chance you have of not derailing your financial plan. Unplanned healthcare costs in retirement will be a primary reason many people fail to meet their retirement goals and objectives.

 

As you near retirement, what are your options for health coverage?

If you are 65 or older when you retire, your worries may lessen when it comes to paying for health care, as you are most likely eligible for certain health benefits from Medicare, a federal health insurance program.

Medicare was first created in two parts, Medicare Part A and Medicare Part B, also known as Original Medicare.  Part A helps pay for hospital and skilled nursing care and Part B helps pay for routine medical care and doctor visits.  You may have to pay a premium penalty if you do not enroll in Medicare Parts A, B and D when you are first eligible.

You can add additional coverage to help pay for the costs Medicare doesn’t cover and protect yourself from unexpected high costs of medical care.  Additional Medicare coverage provided by private health plans may include Medicare Cost plans (available only in select counties); Medicare Advantage plans (Part C); Medigap (Medicare Supplement) plans; and Prescription Drug Plans (Part D).

 

Enrollment Periods

Enrollment into Medicare Part A and Part B can be done by visiting

https://www.ssa.gov/benefits/medicare or calling the Social Security office at 1-800-772-1213.

You may be able to delay enrollment in Medicare Part B without penalty if you are insured on a large employer group plan and the coverage is through current employment, either yourself or a spouse, and not as a retiree.

If you do not apply for Medicare during your Initial Enrollment Period due to employer coverage, you will have an eight-month special enrollment period to enroll in Medicare Part B without penalty when your active employment or the employee insurance ends, whichever is first.  Contact the Social Security office three months before you want the coverage to begin.

Newly eligible individuals may enroll in a plan during their Initial Coverage Election Period.  This is the 7-month window around the beneficiary’s 65th birthday.  It begins the three month prior to the 65th birthday, the month of the 65th birthday, and the three months following the 65th birthday.  During this time the individuals may enrolls in a Medicare Advantage Prescription Drug plan.

If the newly eligible individual wishes to enroll in a Medigap plan, under federal law, the individual has a six-month open enrollment period that begins the month they are 65 or older and enrolled in Medicare Part B.

The Annual Election Period occurs each year October 15th through December 7th during which times individuals have one enrollment or disenrollment choice available.  The last enrollment request made is the enrollment request which will become effective January 1st.

A Special Enrollment Period occurs when certain events occur in your life, such as if you move or you lose employer insurance coverage.  You are able to make changes to your Medicare Advantage plan and Medicare Prescription drug plan during this period, however, rules about what changes you can make can differ for each Special Enrollment Period.

Enrollment in Medicare Part D may be delayed without penalty if you have other creditable prescription drug coverage.  Verify the coverage is creditable by asking the plan for a Notice of Creditable Coverage.  You will need to enroll in a Medicare Part D plan within 63 days of your employee plan coverage ending.

Insurance agents are a valuable resource and can provide information in regards to the Medicare options available near you.  Working with an agent can save you time, money and frustration, as an agent knows the different carrier plans and can assist you in finding the plan which will best suit your individual needs.

Our office has several agents available to assist you and can be contacted by calling 320-243-3100.

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