Budgeting for Medicare costs

[simple girl]

Hello!

I am trying to get a handle on how much to budget for Medicare in the future. I'm starting with premiums for Part B. I see the cost is $121.80/mo in 2016. By what % would you model for increases in premiums every year?

Thanks!

 

[simple girl]

Also, for Part A, the medicare.gov site says:

Part A hospital inpatient deductible and coinsurance

You pay:

$1,288 deductible for each benefit period
Days 1-60: $0 coinsurance for each benefit period
Days 61-90: $322 coinsurance per day of each benefit period
Days 91 and beyond: $644 coinsurance per each "lifetime reserve day" after day 90 for each benefit period (up to 60 days over your lifetime)
Beyond lifetime reserve days: all costs


Questions:

1) What is a "benefit period"?
2) How much do you think should be budgeted for deductibles and co-insurances for Part A?

 

[MichaelB]

2) How much do you think should be budgeted for deductibles and co-insurances for Part A?

Hi SG. A quick question, are you planning on getting a MediGap policy in addition to Medicare A & B ?

 

[aja8888]

Also, for Part A, the medicare.gov site says:

Part A hospital inpatient deductible and coinsurance

You pay:

$1,288 deductible for each benefit period
Days 1-60: $0 coinsurance for each benefit period
Days 61-90: $322 coinsurance per day of each benefit period
Days 91 and beyond: $644 coinsurance per each "lifetime reserve day" after day 90 for each benefit period (up to 60 days over your lifetime)
Beyond lifetime reserve days: all costs


Questions:

1) What is a "benefit period"?
2) How much do you think should be budgeted for deductibles and co-insurances for Part A?

Here is a set of definitions on benefit periods:

Medicare Hospital Benefit Period - Will Medicare Pay for Care - AARP

 

[simple girl]

Hi SG. A quick question, are you planning on getting a MediGap policy in addition to Medicare A & B ?

Actually, yes, I just was reading about that and see that you can pick a plan that covers the Part A and B deductibles as well as the co-insurances. So here is what I am seeing for costs if you were to sign up this year:

Part A: $0
Part B: $1461.60/yr ($121.80/mo premium)
Part D: $1674/yr (estimate listed by Medicare for average annual costs including premiums, deductible, co-pays, and drug costs not covered by insurance)
Medigap: Plans C & F pay the deductibles and co-insurances for A&B. I got a basic online estimate for Plan C from AARP Medicare Supplement Plans - $185.09/mo, so a total cost of $2220/yr.

Total annual costs per person: $5355.60/yr.


So, let me back up a bit with my questions. Before I can project increases over the years, I need to know - are the above estimates reasonable? Am I missing additional costs?

Man this stuff hurts my head!

 

[REWahoo]

Total annual costs per person: $5355.60/yr.

So, let me back up a bit with my questions. Before I can project increases over the years, I need to know - are the above estimates reasonable?

For comparison the same Medicare related costs for DW and I last year came to $9,274, or an average of $4,637 each.

 

[MichaelB]

So, let me back up a bit with my questions. Before I can project increases over the years, I need to know - are the above estimates reasonable? Am I missing additional costs?

Man this stuff hurts my head!

Yeah, I know. Happens to everyone.

You have the cost elements in place. You can get actual prices for Medicare D policies here https://www.medicare.gov/find-a-plan/questions/home.aspx but the premium will vary as your prescription meds change over time, so using the national average is a reasonable approach.

Edit to add: one of the advantages of the MediGap C/F policy is it deals with many of the complexities of the basic Medicare B policy. For example, the deductibles and benefit periods referenced in your previous post. WIth MediGap you pretty much pay the deductible and don't worry about most other charges.

 

[meierlde]

Check the medicare web site and be sure your income is below the limits where the premiums for parts B and D cut in 85k single and 170k married filing jointly. Note that the total includes any tax exempt interest as well. The premiums rise to 389 above 214/428k.
This is becasue parts B and D are already somewhat means tested.

 

[simple girl]

For comparison the same Medicare related costs for DW and I last year came to $9,274, or an average of $4,637 each.

Thank you - that helps me feel like I am within a reasonable ballpark with my estimate!

 

[simple girl]

Yeah, I know. Happens to everyone.

You have the cost elements in place. You can get actual prices for Medicare D policies here https://www.medicare.gov/find-a-plan/questions/home.aspx but the premium will vary as your prescription meds change over time, so using the national average is a reasonable approach.

Edit to add: one of the advantages of the MediGap C/F policy is it deals with many of the complexities of the basic Medicare B policy. For example, the deductibles and benefit periods referenced in your previous post. WIth MediGap you pretty much pay the deductible and don't worry about most other charges.

Thank you, and AGREED! We'll definitely be getting a MediGap plan. I saw way too many patients who didn't have one struggle to pay the 20% co-pays. And as you said, it certainly simplifies trying to estimate costs.

Glad to hear you feel using a national average is a reasonable approach for Part D costs. My head was swimming even more with trying to figure out how to model that one.

 

[simple girl]

Check the medicare web site and be sure your income is below the limits where the premiums for parts B and D cut in 85k single and 170k married filing jointly. Note that the total includes any tax exempt interest as well. The premiums rise to 389 above 214/428k.
This is becasue parts B and D are already somewhat means tested.

I did. Our budget currently is well below the $170K limit, so I doubt that will be a problem. I don't think we have anything that would generate tax exempt interest either. That would just be municipal bonds, right?

 

[simple girl]

Total annual costs per person: $5355.60/yr.

OK, so if I use the above number as my baseline for Medicare costs in 2016, by how much do you all think I should increase that amount by in order to project costs by the time we reach age 65?

One source I found reported about a 5.8% increase annually in Medicare costs. Does this seem like a reasonable number to use?

 

[Katsmeow]

DH has medigap plan F which is nice and simple. He got the the UHC plan F through AARP. It goes up a bit each year. He is 68 and currently pays about $184 a month for that.

Remember that things like glasses aren't covered by Medicare.

 

[Buckeye]

DH has medigap plan F which is nice and simple. He got the the UHC plan F through AARP. It goes up a bit each year. He is 68 and currently pays about $184 a month for that.

Remember that things like glasses aren't covered by Medicare.

My 82-year old mother has Medicare with medigap Plan F from AARP UHC. She pays $245 in the Orlando area. Worth EVERY dime! 5-day hospital stay in 2013 for breathing problems - $0 cost to her. 2014 broken wrist with 2-day hospital stay and surgery (plate and screws) - $0 cost to her. 5-day hospital stay for GI bleeding - $0 cost to her.

The peace of mind it brings while she is (we are) in the hospital is worth its weight in gold. Same for follow-up visits.

Since it is underwritten to a certain extent, I'm glad she got it awhile ago.

Costco for glasses. The works for about $250.

 

[braumeister]

OK, so if I use the above number as my baseline for Medicare costs in 2016, by how much do you all think I should increase that amount by in order to project costs by the time we reach age 65?

One source I found reported about a 5.8% increase annually in Medicare costs. Does this seem like a reasonable number to use?

Fidelity's software inflates healthcare costs by 7% so I would recommend something closer to that.

 

[meierlde]

I did. Our budget currently is well below the $170K limit, so I doubt that will be a problem. I don't think we have anything that would generate tax exempt interest either. That would just be municipal bonds, right?

Correct that would be line 8 b on the 1040 The number is something called modified adjusted gross income.
Note that depending on what year you reach 65 you may or may not be able to get a policy that pays the medicare part b deductable of 150 or so. That part is being phased out starting in 2020. (if you turn 65 before then you can keep the medigap plans that pay the part b deductable.

 

[aja8888]

The cost estimates are in line with what we pay for Medicare, Part D, and Plan F. All in for two of us last year was about $10K. We are 70 & 72.

 

[simple girl]

Fidelity's software inflates healthcare costs by 7% so I would recommend something closer to that.

Very good to know, thank you. Wish it was lower, but I'd rather err on the side of caution!

 

[simple girl]

Note that depending on what year you reach 65 you may or may not be able to get a policy that pays the medicare part b deductable of 150 or so. That part is being phased out starting in 2020. (if you turn 65 before then you can keep the medigap plans that pay the part b deductable.

It won't be until 2029 and 2033 for us. So looks like we'll be paying the deductible. Thanks for letting me know.

 

[simple girl]

The cost estimates are in line with what we pay for Medicare, Part D, and Plan F. All in for two of us last year was about $10K. We are 70 & 72.

Thank you so much!

 

[pb4uski]

https://www.medicare.gov/Pubs/pdf/11579.pdf

For my 85 yo mother:

Part B $122
Part D 53
Medi-Gap 199

Total $374/month or $4,488/year

 

[MichaelB]

Fidelity's software inflates healthcare costs by 7% so I would recommend something closer to that.

This makes sense. It may be that overall health care costs rise more slowly over the next decade, but at the same time the cost of Medicare is subsidized and some of that subsidy might be reduced, and the cost passed along.

 

[Alan]

This is a timely thread as I have also been avoiding the details of Medicare costs, but it is my birthday next week and I realize that I'm now only 4 years away from decision time.

I did know about the income test which looks at the past 2? years of tax returns. The 2 years before I'm 65 I have to be careful with Roth conversions as they count as income in the MAGI calculations for Medicare purposes.

With standard Medicare, part B, does one pay 20% of all charges including visits to your primary Doc? My current insurance is also 20% coinsurance except for doctor visits which cost a co-pay of $30.

Is there a max OOP each year with Part B or is a Medigap insurance absolutely needed to avoid huge costs if one needs loads of treatment?

Can one have a Medigap policy one year, drop it for a year or more, then decide to have one again? (I ask because it is possible that we stay out of the country for a whole year, particularly the year I lose my retiree insurance and my wife is not yet eligible for Medicare).

 

[aja8888]

This is a timely thread as I have also been avoiding the details of Medicare costs, but it is my birthday next week and I realize that I'm now only 4 years away from decision time.

I did know about the income test which looks at the past 2? years of tax returns. The 2 years before I'm 65 I have to be careful with Roth conversions as they count as income in the MAGI calculations for Medicare purposes.

With standard Medicare, part B, does one pay 20% of all charges including visits to your primary Doc? My current insurance is also 20% coinsurance except for doctor visits which cost a co-pay of $30.

Is there a max OOP each year with Part B or is a Medigap insurance absolutely needed to avoid huge costs if one needs loads of treatment?

Can one have a Medigap policy one year, drop it for a year or more, then decide to have one again? (I ask because it is possible that we stay out of the country for a whole year, particularly the year I lose my retiree insurance and my wife is not yet eligible for Medicare).

I can't comment on what Medicare pays by itself as I have never put us in that position. It's complicated because of the various deductibles and whether or not all the services you use, including labs, accept pure Medicare.

But with Medigap policies (NOT Medicare Advantage plans), I understand that dropping one after you have signed on @ 65 will put you in a position to apply again and for the coverage with the possibility of having to "qualify" based on your medical history and any pre-existing conditions you may have. You may not get accepted or will be accepted with a higher premium or no coverage on pre-existing conditions.

There are ways around this and have to do with a change of permanent address and possibly other factors. Best thing to do is ask a sales rep or check in with the Medicare advocate in the area with questions. (Alan, PM me if you want another recommendation).

 

[Silver]

DH has medigap plan F which is nice and simple. He got the the UHC plan F through AARP. It goes up a bit each year. He is 68 and currently pays about $184 a month for that.

Remember that things like glasses aren't covered by Medicare.

I'm confused about Part F. I thought part F was part of Medicare and purchased from Medicare just like part B. Is the UHC plan through AARP a sub-contracted part F? Or just a typical medi-gap plan? And....is part F underwritten so there is a chance that it could be denied due to pre-existing conditions?