Medicare Part B is what most of use are familiar with and covers Doctors, Outpatient hospital, Medical Services and Supplies. Part does have an annual premium where as Part A does not. Part be increases periodically and increased in 2016 to $121.80 per month from $104.90 in 2015 for most. Those fortunate enough to be higher income will have the unfortunate higher premiums of up to $389.80.
Here is the exact income chart according to Medicare
A few things you need to consider when asking yourself if you want to take part B.
- If I delay taking my Medicare Part B, what could the Part B premium be when I finally sign up? While you are not grandfathered for life, you can still lock in a lower rate for some period of time if rates increase the following year. For example: many folks are still paying $104.90 even though the 2016 rate is now $121.80.
- Higher age = Higher premiums (in some cases) – If you are buying a Medicare Supplement, some companies will lock you in at the age you buy your supplement. This does NOT mean your costs will never increase however it does mean that it will not increase simply because your age changes. That slimy practice is called ‘Age Rating’ and believe it or not, a LOT of companies operate that way which results in guaranteed increases year to year.
- Is the monthly premium worth the benefit? It depends and not by itself. Having Original Medicare Parts A & B with nothing else is reckless and exposes you to catastrophic costs. You will want to sit down with a Medicare specialist (not a broker) which will help you understand Medicare Supplements and compare it to your current plan so that you can compare apples to apples.
- Is there a penalty for not taking Part B? There can be a penalty for not taking part B when you are eligible. The key is whether or not you have creditable coverage. If you do, you will not be penalized for postponing part B. However not having creditable coverage (the VA is NOT creditable health coverage) will cause you to be penalized. The Part B late enrollment penalty is 10% of the Part B premium for each year you did not enroll and lasts for the rest of your life!
Part B is ultimately what gives you your ‘Guaranteed Issue’ period. Which means you can get any Medicare Supplement you want with no health questions. That is key to protecting your future health costs. Once that Guaranteed Issue period runs out, you will have to medically qualify to get or change a Medicare Supplement.
There are three phases to our wealth and how it’s managed: Accumulation, Preservation, and Distribution. If properly managed and planned for, these three phases can guarantee that you have a safe and profitable retirement while providing the legacy you dream of to your children or beneficiaries.
The first phase, accumulation is where we spend most of our lives. This should be and usually is during our working years and drives us to work harder and hopefully start saving. There are some scary figures out there saying that a large number of the work force is living pay check to pay check and with today’s employers providing less and less retirement benefits such as pensions or 401k’s it has become even more crucial for us to find other ways to start a plan.
The second phase, preservation is about moving your assets to low or no risk accounts in order to protect what you’ve spent most of your life accumulating and limit the risk of loss. Unfortunately many people wait until it’s too late to realize that perhaps those risky investments were not the gold mines they thought they were. The preservation phase does not mean that we have to eliminate the potential for growth but it should however greatly reduce if not eliminate any potential for catastrophic losses. Many advisers say that investments always come back if you’re patient enough to wait but most of us don’t have an extra 10-15 years to spare just to make our money back. Those who had expectations of retiring could now have to work an additional 5-10 years or even until they die just to be able to pay the bills.
The final phase, distribution can take place at retirement or upon your death. If you want to start enjoying your ‘golden years’ and draw money out of your accounts that you’ve accumulated over your lifetime, it is important to get with a professional to understand how to provide a lifetime income can that will allow you to maintain your lifestyle without worrying about running out of money. The other distribution method is when you die. How will your assets be passed on to your beneficiaries and what it will be used for.
We don’t need to have these figured out right away but it is undeniably important to at least understand what you need to be planning for. Brainstorming with a trusted retirement specialist from the day you get your first job to the day you die will ensure that you protect yourself and your family against the unexpected.