Eighty million Americans will be enrolled in Medicare by 2030. That is the major health care plan for seniors and those under 65 with long-term disabilities. We focus in this note is the increasing costs for Medicare and

taking advantage of Open Enrollment in Medicare, which started October 15th.

Remember, when we turn 65 we need to enroll in the two parts of Medicare. Medicare Part A, which is hospital coverage and Part B, which is outpatient services. Since people often work beyond 65, you have to determine: must you enroll in Medicare at 65 or can you wait if you or your spouse has employer coverage? Many delay taking Social Security retirement. They must remember to apply once they turn 65 if they need

coverage. If you do not apply within your initial enrollment period, which is the three months before and three months after your turn 65 and do not have alternative insurance that Medicare accepts, then you will face lifetime penalties for Medicare and some delays in getting parts A and B. You need

to begin to think about enrolling in Medicare at age 64. If you do not sign up for Medicare, you must make sure that your coverage will allow you to enter an enrollment period so you can get in once you do retire and no longer have employer coverage.

There are two points to consider. One is, is the employer coverage from a company with 20 or more employees? If the company is smaller, then Medicare will have to be primary. So even though you could stay with that plan and even if Medicare certified, it is unlikely to be the best coverage. It will only cover 20% of your costs. So if you are with a small business, be very careful about that. But if you're with a company 20 or more and you like your coverage, then you can usually stay with it. But verify that the coverage is Medicare creditable. That is a statement that the employer’s health insurance carrier provides routinely which you will need.

When you enroll in Medicare, you can do so up to three months prior to the month you turn 65. You also have the three months after the month you turn 65. There is a seven-month window to enroll without incurring the penalty. If you are already taking Social Security retirement, you will be automatically enrolled you in parts A and B. If not, you can do it online. Go online three months ahead of time, apply for parts A and B. At the same

time you should look for your prescription drug and supplemental coverage.

Medicare Parts A and B, cover 80% of the cost of a service. That is a general statement because the fee schedule is quite complex. If you do not acquire a supplemental plan you are making a serious mistake. If you fail to have a supplemental plan and have health problems, there is no out-of-pocket cost

limit with Medicare A and B. If you have a $100,000 hospital bill, 20% is $20,000. You must have a supplement that's going to cover most or all of that 20% that you have to pay.

The term supplemental is confusing because there are two choices.

One is through a Medicare Part C plan also known as Medicare Advantage. It is called part C, but it is not a separate part of Medicare. It combines Part A, Part B, and usually a drug plan. It works like an HMO. It should cover most of the 20% that you are expected to pay. There still are co-payments with Part C.

The second more common way is with a Medigap plan. There are eleven levels or styles, which can seem complex. There are a couple plans that are very comprehensive and are worth considering to purchase. They pay for most or all of that 20% out of pocket for the hospital and outpatient services.

With a Medigap plan you must select a separate drug plan for yourself. As with Part C and Medigap, it is private insurance regulated by the government.

The difference between the two is that Medigap will cost more in premium, but cover you sooner and limit your out-of-pocket costs faster than Medicare Advantage, which often costs less per month. Some of the Medicare Advantage plans have no premium, which superficially seems great, and it works well for some people. But like a HMO, Medicare Advantage plans limit your health provider selection. So if the doctors in your area are part of the Medicare Advantage network it works well. This is

dependent upon where you live. When people have a lot of health care costs, if they have a Medicare Advantage plan, the premiums are low, but you still have a lot of co-payments and you can spend up to $7,400 in a year out-of-pocket for those medical services.

It can be confusing. So get out your paper and pencil and do some math.Look at the premium. The out-of-pocket maximum in a Medicare.

Advantage plan and ask: Are my doctors in the Plan? Are my medications in the Plan? Compare that with what a Medigap plan going to cost plus the cost of a drug plan. And just do the math. It may take some time, but you can do it.

Costs will be similar whether you have a drug plan within Medicare Advantage or a separate drug plan.

There is not yet a prescription out-of-pocket cost limit. A limit will be effective in 2025. That will be $2,000 a year. So in 2023, if you have a $7,400 out of pocket cost beyond the premium you have to pay it. In 2025, the limit will be $2,000. This is true whether it is an Advantage plan or a Medigap plan.

For your Medicare prescription drug coverage, whether a Medicare Part C Advantage plan or a stand-alone drug plan, you must examine your options. Medicare.gov, has a function wherein you can input your medications and it guide you to a drug plan. You can set up your own account at “My Medicare.” Once set up it is easy to use. There are dozens of plans, whether Medigap or Medicare Advantage. The price ranges can be significant. Every year new plans are available. It is suggested that over a three-year period that a drug plan premium can increase by 40%.

Next month we will examine some common Medicare coverage issues and how to take a Medicare if you are denied coverage.