Aug 31, 2023 By Gary Boatman 3 min read

Medicare is the government health care program for citizens age 65 and up and people who have been on Social Security Disability for at least two years.

While people approaching retirement age think about Social Security years in advance, they often do not consider Medicare. Normally, people use more health care as they age. Some studies have shown that a 65-year-old couple will spend $315,000 on medical expenses. This includes both premiums and out-of-pocket costs. Proper planning can help reduce those costs.

Everyone goes on Medicare when they reach age 65, unless they are covered by an employer plan that covers 20 or more employees. If you work for a smaller company, you must enroll in Medicare. You can enroll up to three months before your birthday, the month of your birthday, or three months after. If the company has enough employees, you can stay on the company plan until you retire. Once you do retire, you must sign up for Medicare within eight months. If you do not sign up when required, you could have a gap in medical coverage and you will have to pay a penalty that lasts for life.

There are some important considerations you must consider before starting Medicare. Make sure that your doctors accept Medicare. Some doctors do so for existing patients, but not new ones. Medicare does not cover all medical expenses during retirement. It is an 80/20 plan with lots of deductibles. To help with these expenses, most seniors have some kind of supplemental coverage. Some of these cover limited networks of doctors, and some offer wider choices. Make sure your doctors are in your plan. All plans must provide every type of specialist.

Many employers are switching to high deductible plans to help control cost. Often these plans are combined with a health savings account (HSA) that can help pay these deductibles. Once you start Medicare, you can no longer contribute to an HSA. If you have a positive balance in your account, you can continue to use it, but cannot contribute more.

Some higher income people are surprised that their Medicare Part B premiums could be higher. Medicare’s Income-Related Monthly Adjustment Amount starts to come into effect for an individual with income over $97,000 and couples over $194,000. Sometimes, people accidentally trigger higher rates by pulling a large sum out of a qualified account or doing a Roth conversion. People with large balances in qualified accounts such as IRAs and 401(k)s need to manage taxes because a survivor can really see Medicare premium’s sky rocket.

Whether at age 65 or later because of working for a larger employer, a Medicare recipient can qualify for any supplement policy regardless of health for the first 6 months of eligibility. After that time, some types of policies can ask health questions and deny coverage. If you qualified in the first six months, you can keep the coverage for life as long as you pay premiums.

Every year there is an annual enrollment period for people on Medicare between Oct. 15 and Dec. 7. During this time, you get to make choices about your plan based on changing health concerns. If your health picture has changed or you got new doctors or medications, a different plan may provide better coverage. The change would start on Jan. 1. Making the best choices about Medicare can save you money. Do your homework and study the options.

Gary Boatman is a Monessen-based certified financial planner and the author of “Your Financial Compass: Safe passage through the turbulent waters of taxes, income planning and market volatility.”