5 Ways to Budget for Medicare

Medicare - Ways to budget image 343333An estimated 44 million Americans are currently enrolled in the Medicare program, and about half of those beneficiaries have noticed their monthly premiums increase in 2019, as reported by the Washington Examiner. While those in a lower income bracket are not subject to this upturn, for many people with Part B coverage, the standard cost per month is now $135.50, as opposed to $134 in 2018.

Part B is one of the most common plans offered by Medicare and it insures physician visits, hospital care, medical equipment, and in some cases, home health services. On the surface, a $1.50 rise in premiums might not seem like too much of an issue. However, when you consider the supplemental add-ons from other plans or the accrued expenses from higher levels of specialized care, this could turn into a burden over time.

In fact, as a result of these escalated prices, around 19% of beneficiaries have either “skipped or delayed a medical procedure due to the cost despite having a Medicare plan,” and another 22% spend $100 or more out-of-pocket each month, based on data from a recent HealthMarkets survey. The following tips help make budgeting for Medicare insurance more affordable so you will not have to forfeit quality and inclusive healthcare coverage based on the cost alone.

Identify the Right Plan for Your Health Needs

Before choosing a Medicare plan to enroll in, first assess the different services you require in terms of any pre-existing conditions. Do you visit a certain kind of specialist or take a prescribed medication, for instance? Then it might be worth the investment in an Advantage plan, which offers additional coverage that you would be charged out-of-pocket for with standard Medicare. Often this plan covers Part D insurance (drug prescriptions), emergency care, vision, dental, hearing and specialist referrals that are deemed medical necessities. So, consider if you need the extra cushion of Medicare Advantage or if you can save on premiums with just Parts A and B.

Choose Providers in Your Network

Whether it’s a primary care doctor, a referred specialist or an urgent clinic, when you stick with providers in your insurance plan’s network, this can reduce the overall expense drastically. This is because Medicare plans negotiate with the doctors and hospitals in their network, which means that members pay a lower cost when they access care, according to a press release from UnitedHealthcare. Moreover, since most plans coordinate with a large bandwidth of physicians, it’s not difficult to find an in-network provider. Keep in mind you will need to refer back to the list of options each year, as they tend to change annually, so the doctor who treated you in 2019 might not be in your network still in 2020.

Investigate the Benefits of a Supplemental Plan

With a standard Medicare plan, you are responsible for 20% of a medical bill for tests, exams, procedures and hospital admittance, while your insurance covers the remaining 80% once you meet the deductible. But there are gaps in the coverage that Parts A and B will not count for, and these can lead to financial strain if you handle these expenses out-of-pocket. In order to avoid this, Medicare offers supplemental insurance—known as Medigap—which cushions you against the costs standard Medicare does not cover. There are 10 supplemental plans to choose from and each of their available benefits are standardized across most states, with the exception of Minnesota, Wisconsin and Massachusetts.

Factor in Any Hidden Expenses

In addition to owing your premiums each month, there are other costs associated with Medicare that you will be charged for out-of-pocket too. Many of these hidden expenses are related to supplemental coverage—in most cases, Part D—and it’s important to calculate these expenses in advance so your budget is prepared to sustain them. Here are some additional costs you should know about which can be accrued through a Medicare policy, depending on your plan and deductible:

  • Part D late enrollment fees: If you decide not to enroll in Part D when you first become eligible and have lacked any creditable prescription medicine coverage for at least 63 days in succession, then your premiums might tack on a penalty for late enrollment if you do need Part D at some point.
  • Copayments or coinsurance: The prescription drugs covered by Medicare are all sorted into various benefit tiers with higher or lower copayments based on the level of each tier. As such, the amount you are charged for a particular medication will depend on which tier it has been categorized in.
  • Expenses in the coverage gap: When you exceed a certain out-of-pocket amount combined with the allotted Medicare coverage on your prescription medicine, you are in the coverage gap. This means that you owe the total cost of medication, aside from any pharmaceutical discounts or federal subsidies.
  • Income related monthly adjustment amounts: This extra fee can be applied to your Part D coverage—not to your standard Medicare premiums—if your income is in a higher socioeconomic bracket of $85,000 annually for an individual or $170,000 annually for a married couple who files together.

Check if You Qualify for Financial Assistance

If you meet the qualifications for Medicare enrollment but have limited resources and cannot afford the premiums and other costs, then you may be eligible to receive financial subsidies on a state, federal or joint basis. These subsidized options do not cover the entirety of Medicare related expenses, but they can make the payments feel more accessible if you live on a fixed income in retirement. Here are four types of financial assistance offered to help you counterbalance the price of Medicare:

  • Medicaid: This option is available if your finances and measurable resources fall under the criteria for “medically needy” as determined by the state in which you live. Medicaid assists with out-of-pocket costs and some additional services not insured by Medicare, such as nursing home care or personal check-up visits.
  • Extra Help: This option is available if you need assistance to cover your prescription drug costs on Medicare Part D. You are eligible for Extra Help if you have proof of Medicaid or Supplemental Security Income. Once you produce this documentation, you will be charged no more than $8.50 for brand name medicines and $3.40 for generic.
  • PACE: This option is available if you are 55 or older, require nursing home care, and reside in the area where a Program for All-Inclusive Care of the Elderly (PACE) organization is located. PACE operates through a contract with different providers in the community to offer subsidized dentistry, hospital or nursing home care, medications, laboratory or x-ray tests, specialist treatments, nutritional counseling, emergency services and occupational or physical therapy.
  • Medicare Savings Program: This option is available to offset the premiums, deductibles, copayments and coinsurance of standard Medicare if your measurable resources are equal to or below the income limits of your state. These resources can include money, stocks and bonds, home, vehicle, furniture, burial plot and expenses or household items. The types of Medicare Savings Programs include:
  • Qualified Medicare Beneficiary
  • Specified Low-Income Medicare Beneficiary
  • Qualifying Individual
  • Qualified Disabled and Working Individual

Medicare can be a huge unexpected burden for those who don’t anticipate the extra costs. Be sure that you plan accordingly and budget correctly so there are no surprises!