Budgeting for Healthcare
Budgeting for healthcare expenses in retirement is complicated. Your dealing with known and unknown factors in budgeting for payment of healthcare service. For these reasons it is necessary to have tools to assist in budgeting. The downloadable worksheet can help. Additional aides can be found further down in this article.
Medicare
If you are not retired the Centers for Medicare & Medicaid Services (CMS) will contact you that you can begin Medicare enrollment three months prior to your 65th birthday . If you are married be aware there is no family plan under Medicare. Your spouse will need a private healthcare policy until they reach age 65. Your spouse will have their own Medicare coverage when they reach age 65.
Help is available to assist you. The website WWW.MEDICARE.GOV is extremely helpful. It is recommended that you create a user account as soon as it is possible. The website provides valuable information about getting started along with help to select an appropriate Part D prescription drug plan for you and an appropriate MediGap plan if you choose Original Medicare rather than Medicare Advantage. Help with choosing an appropriate Advantage Plan is also available. You can benefit from reading this article on the steps Medicare.Gov says to take when preparing to be part of Medicare.
This link from the Medicare website can help you to get your possible costs for healthcare coverage. http://go.medicare.gov/medicare-coverage-options From there you can review prescription drug and MediGap plans to get accurate cost information. No user account is required to get the range of costs.
Deductibles and Co-Pays
Understanding the mechanisms for paying for healthcare expenses in retirement is very confusing for many retirees and soon to be Medicare eligible individuals. Part of the issue preparing a healthcare budget worksheet involve the terms Deductible and Co-Pay. These are out-of-pocket costs on top of the insurance premiums you pay for healthcare services. The Downloadable Worksheet has rows to account for deductibles and co-pays.
Deductible: A health insurance deductible is the amount of money you pay out of pocket for healthcare services covered under your insurance plan before your plan begins to pay benefits for eligible expenses.
Co-Pay: A co-pay is a fixed out-of-pocket amount paid by an insured for covered services. It is a standard part of many health insurance plans. Insurance providers often charge co-pays for services such as doctor visits or prescription drugs. Co-Pays are a specified dollar amount rather than a percentage of the bill.
Example Case
John has Original Medicare and a Part D Drug plan that cost $28 per month. It has an annual $450 deductible and a co-pay of $20 per prescription. John takes two medication that he refills every 90 days. One medication cost $150 each time it is refilled and a second medication that cost $50 each time it is refilled. John must pay $450 out of pocket before his plan will pay for a portion of the drug costs.
John fills both prescriptions in January for a total cost of $200, which he pays for out of his pocket. He refills them again in April and pays another $200 out of pocket and still has $50 of out-of-pocket expense to pay. John refills the two prescriptions in July. John will pay $70 out of pocket for his two prescriptions, $50 to meet the annual deductible and $20 for the co-payment on the second prescription. When John refills his prescriptions in October his co-pay will be $40 out of pocket, $20 for each prescription. In this example John’s annual expense for his drug plan premiums, deductible, and co-pay equals $896.
MediGap or Medicare Supplement
A MediGap or Medicare supplement works like the drug prescription process described above. An office visit to a doctor is processed in the following manner. The fee is submitted to Medicare Plan B for payment. Medicare Part B pays only a portion of the fee. If you have a MediGap supplement the fee for the office visit is processed for paying a portion of what Medicare Plan B did not pay. Any unpaid portion of the fee becomes your responsibility. The amounts you will pay out of pocket will be based on the policy’s annual deductible and co-pay. It is important to find a MediGap plan option or Medicare Advantage plan that has reasonable premium cost and fits your health situation.