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Medicare Part B standard monthly premiums are set to increase by roughly 6% in 2024, jumping from $164 and change per month to $174 and change per month. The annual deductible is also set to increase from $226 to $240.
On the other hand, some big news headlines have been floating around sharing that the average Medicare Part D premiums nationwide are set to decrease slightly by about $1 per month next year in 2024.
However, Medicare Part D, which covers prescription drugs, varies widely by your chosen plan and your state of residence. And those headlines are hiding some dramatic increases in Part D premiums in several states with very large retiree populations. States like California, Texas, New York, Florida, and Pennsylvania.
For high-end plans in those states, the average Medicare Part D premium increase in 2024 is projected to be around 40%. Also, as many listeners are all too familiar with, Part B and Part D premiums can be much higher than those standard premiums if your modified adjusted gross income exceeds the IRMA surcharge thresholds.
IRMA is that pesky surcharge that affects Medicare members who make too much money. And it doesn't take much for a retiree to exceed those IRMA thresholds if they've been a good saver and or have healthy income coming in from pensions, annuities, investments, etc.,
I'm not sure how you spent your Thanksgiving week, but I spent a good chunk of mine updating my comprehensive guide on how to navigate Irma surcharges, which includes the freshly updated 2024 Irma brackets. So if you want to view the updated income numbers and get ahead of next year's planning, I'll include a link to the article in today's show notes. And I'll also include a link to it in the episode description for today. So you can access it directly from your podcast app. Now,
Now, while not everyone will be negatively impacted by Irma or the changes to Medicare Part B and Part D premiums, many retirees will be or should be reviewing their Medicare plans right now during the open enrollment period, which began on October 15th and closes next Thursday, December 7th.
As a reminder, this specific enrollment period applies to everyone currently on Medicare. It allows them to change their Medicare health plans and prescription drug coverage for the upcoming year to better meet their needs. We all know that navigating Medicare is confusing and challenging. And unfortunately, many retirees make Medicare decisions without understanding the long-term implications. Long-term implications that in worst case scenarios can put a retirement plan in jeopardy.
Welcome to the Stay Wealthy Podcast. I'm your host, Taylor Schulte, and today I'm sharing three big Medicare pitfalls to watch out for. These pitfalls, these mistakes, they're easily avoidable, but unfortunately, all too common. So if you're currently using this enrollment season to evaluate your current Medicare plan, or you wanna just brush up on your Medicare knowledge ahead of turning age 65, you're gonna enjoy today's episode. To grab the links and resources mentioned today, just head over to youstaywealthy.com forward slash 205. ♪
As a refresher, there are two main ways to get Medicare when you turn 65. You can enroll in what's often referred to as Original Medicare, or you can instead opt for a Medicare Advantage plan. Original Medicare is a federal health insurance program that provides Part A, hospital insurance coverage, and Part B, medical insurance coverage. If you need or want Part D, prescription drug coverage, you can elect to join a separate Medicare drug plan.
Medicare Advantage plans, on the other hand, often referred to as Part C, are offered by private, Medicare-approved companies. They cover everything that original Medicare covers and usually include Part D prescription coverage as well. They also typically offer additional benefits that you may or may not need, such as dental, vision, fitness, hearing, and more.
The Medicare plan that you choose directly impacts how much you pay for coverage, the doctors you have access to, the quality of your care, and the services you receive. In other words, it's a very important decision. And while Medicare Advantage plans often look very enticing, there are some major downsides that aren't always clearly spelled out when people are evaluating their options.
For example, last month, the Wall Street Journal ran an article sharing a story about a man who enrolled in a Medicare Advantage plan when he turned 65. Several months later, he was diagnosed with prostate cancer, and he quickly found out that the specialists he wanted to see were not in his network of available doctors.
So in response, he attempted to switch from his Medicare Advantage plan back to original Medicare, which would give him access to more doctors. And with large out-of-pocket costs looming over him due to his cancer diagnosis, he also tried to get a Medigap policy, which would help cover those expenses.
But Medigap insurers rejected him because of his prostate cancer diagnosis. And this leads us to Medicare pitfall number one, which is sometimes cleverly referred to as the Medigap trap.
Medigap is extra insurance that you can voluntarily purchase from a private insurance company to help you pay for out-of-pocket costs that you may incur. In order to buy Medigap, you must be enrolled in original Medicare. In other words, you cannot enroll in a Medicare Advantage plan and buy a Medigap policy. It's one or the other. So if you have original Medicare and you're worried about covering out-of-pocket expenses in retirement, you can elect to purchase a Medigap policy.
Now, while Medigap coverage may not be for everyone, it is important for everyone on Medicare to know that they can only get a Medigap policy during the annual open enrollment window that ends again next week on December 7th.
It's also important to know that if you pass on Medigap when you first have the chance, it is not guaranteed that you'll be able to purchase it in the future. You see, unlike most health insurance, insurers can reject Medigap coverage due to pre-existing medical conditions, just like the man in the Wall Street Journal story who was diagnosed with prostate cancer.
The only time period where Medigap insurers cannot reject you or charge you higher premiums due to pre-existing conditions is when you first join Medicare at age 65. Specifically, when you join Medicare at age 65, you have six months from when Part B coverage kicks in to buy a Medigap policy without being rejected. During this time period, you'll also typically get better pricing and have more options to choose from.
After that window, there's no guarantee that you'll be able to buy a policy in the future and options may be limited and or more expensive. Now, if you're outside of this six month window, there are some hyper specific situations where you are guaranteed to be able to buy a Medigap policy and avoid being denied. These situations are known as guaranteed rights.
One popular guaranteed right is if you initially choose a Medicare Advantage plan, but decide that you don't want it anymore and you opt out during what's called the trial period. This is known as a trial right. And in short, it says that if you opted for a Medicare Advantage plan when you were first eligible for Medicare and within the first year, you decide that you want to switch back to original Medicare, you have the right to purchase a Medigap policy.
Now, there are some additional nuances here that I'm not going to go into right now. But if you want to learn more and also learn about the other guaranteed rights that may apply to you, I'll link to a good resource in the show notes for today, which can again be found by going to youstaywealthy.com forward slash 205.
Once again, Medigap policies are not for everyone, but everyone should be aware of their rights to purchase and the potential consequences if coverage is skipped. And while opting for Medigap coverage is a highly personal decision that should be discussed with your trusted advisors, there are three main reasons why a Medigap policy might be suitable for you.
One, you have a healthy retirement plan and you're okay paying a little more in premiums to be able to choose any doctor you want, regardless of network or geographical location. This is especially beneficial to retirees who plan to do a lot of traveling or live in different parts of the country during different times of the year.
Two, in a similar vein, if you want the ability to see a specialist without a doctor's referral, a Medigap policy might be fitting. And then lastly, perhaps the most obvious, you're likely a good fit for Medigap if you have health concerns or ongoing medical issues and you need the extra coverage to help with those high out-of-pocket expenses. Before
Before we move on, it's important to note that Medigap does not provide prescription coverage, so you would still need to purchase a Part D plan. Also, it's worth noting that Medigap premiums are typically higher than a Medicare Advantage plan. So be sure to weigh all of your options, talk to your trusted advisors, and have a clear understanding of your guaranteed rights in the chance that you skipped Medigap and you've determined that it is, in fact, something you want to purchase.
Okay, pitfall number two is auto-renewing your Medicare Part D prescription coverage every single year. So as mentioned at the top of the show, there are some headlines flying around right now that are misleading people into believing that Part D premiums are going down next year.
But since the cost of your Part D premium depends on a number of factors, including your state of residence, it's very possible for your Part D premiums to increase significantly in 2024. To be sure, and to confirm you have the best plan, everyone should take advantage of the current open enrollment period that ends next week on December 7th to review your options.
A great resource to lean on is the Medicare plan finder on the medicare.gov website, which I'll link to in the show notes. The tool is interactive. It'll prompt you to enter all of your prescription drugs and dosages and then present the different plan options available to you.
While we're talking about plan D mistakes, it's also worth mentioning that your part D prescription plan should be an individual decision. In other words, I don't suggest blindly choosing the same plan as your spouse. There are no household discounts here when buying part D coverage. And since most couples don't take the same prescriptions, you may find that one plan is better for you and another one is better for your spouse. You can use the same tool I just referenced on the medicare.gov website to evaluate your options.
And to avoid any confusion, if you're on a Medicare Advantage plan instead of original Medicare, your plan likely includes Plan D coverage. So this is a step that you can potentially skip. All right. The last Medicare pitfall to share with you today is failing to read the limits apply fine print when shopping for Medicare Advantage plans.
First, before I share more here, it's worth noting that if you're currently enrolled in a Medicare Advantage plan and you want to switch or are considering switching to a different Medicare Advantage plan, your open enrollment period begins on January 1st and ends on March 31st. So you have a little bit more time.
If you fall into this camp or you're considering a Medicare Advantage plan, be sure to read the Limits Apply fine print when reviewing your options. Again, you can use the tool on the Medicare.gov website to evaluate options available to you. After entering some basic personal information, you'll be provided with a list of plans. Click on the plan details and on the next page, you're going to see a hyperlink that says Limits Apply under each section of the plan.
Click on that link to read the fine print that's initially hidden on the page to ensure that you know what those limitations are. Unfortunately, most people don't read the fine print and then find out the hard way that something isn't covered or requires tedious steps in order to get approval.
This is especially common when people get a little older and need more costly care. You know, routine care wasn't an issue, but now that they have more complex medical needs, they start to run into hurdles that prevent or delay access to the care that they need.
To be extra safe when evaluating Medicare Advantage plans, I would suggest going directly to the insurer's website and downloading what's called the full evidence of coverage. I'll link to one of these documents from Anthem in today's show notes so you can see what it looks like and the information contained. Unfortunately, these documents are typically 200 plus pages, so it's still a chore to fully understand the ins and outs of these plans.
As always, please consider leaning on a professional if needed. And while there are some Medicare specific experts that are out there, they may not be able to be completely objective when providing advice. A certified financial planner who does not sell insurance and specializes in retirement planning may be a good place to start.
But if you prefer a Medicare broker, it might just be wise to do some of your own research first, either through the Medicare website or other free advocacy organizations that I'll link to in today's show notes.
Choosing the right Medicare plan is a big decision. It's not just a quick box to check at age 65. So take your time, talk to the right professionals and evaluate your options while you're still healthy. So you don't find out the hard way down the road that you don't have the coverage you need. Once again, to grab the links and resources mentioned in today's episode, just head over to youstaywealthy.com forward slash 205. Thank you as always for listening, and I'll see you back here next week.
This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. This podcast is not engaged in rendering legal, financial, or other professional services. ♪
