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With Medicare’s open enrollment period fast approaching, millions of Americans aged 65 and over will be enrolling in the federal Medicare program – and many will have misconceptions about it.
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Registration for 2022 begins October 15 and ends December 7, according to the Medicare.gov website. Registrants are encouraged to carefully review their current Medicare coverage, if applicable, and note any upcoming changes in their costs or benefits.
One change is that the average premium for Medicare Advantage plans will be lower in 2022 at $ 19 per month, down from $ 21.22 in 2021, the Centers for Medicare & Medicaid Services recently announced. Medicare Advantage, also known as Part C, covers the same medical services as Parts A and B, with most plans also covering prescription drugs, according to the AARP.
If this is your first time signing up, the main thing you need to know is that whichever plan you choose, you will be paying for it. The biggest misconception about Medicare is that it’s free, said Rhian Horgan, founder and CEO of the Retirement Planning Platform. Money and former head of alternative investment strategies at JPMorgan.
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“The combination of advertisements offering $ 0 premium plans and decades of paying Medicare taxes while working leads many consumers to expect Medicare to be free,” Horgan told GOBankingRates in an email. “The reality is that someone who turns 65 in 2021 will likely pay over $ 500 a month after you factor in supplemental plan, drug plan, out-of-pocket expenses, and coinsurance.”
This is why it is important for consumers to differentiate between “zero premium” and “zero cost”.
“A plan may have a zero monthly premium, but if you have to go to the doctor, it’s very unlikely that that plan will actually be zero once you factor in the deductibles, outlay, and coinsurance,” said Horgan.
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It aims to help retirees avoid these issues with Silvur, which bills itself as the first and only app dedicated to helping baby boomers achieve their retirement goals. The platform’s retirement school offers a variety of courses on health insurance and retirement planning. Silvur’s Kindle eBook, “Medicare for Beginners: A Guide to Coverage and Costs,” is due out later this week.
Another misconception, Horgan said, is that your location doesn’t impact your health insurance costs. She notes that Medicare Parts A and B are federally priced, which means all consumers pay the same price no matter where they live in the United States. But supplemental plans and Part D (prescription drug plans) are priced locally. This can lead to very different costs, depending on where you live.
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Horgan points out that the cost of a “full” health insurance plan – Parts A, B, D and supplements plus estimated out-of-pocket expenses – can vary widely by state. For example, the average cost is almost 50% higher in Connecticut than in Hawaii, Horgan said.
“But before you pack your bags for Hawaii, make sure you factor in all of your expenses and taxes,” she said. “Hawaii may have lower health insurance costs, but it also has one of the highest costs of living and a high tax rate (11%), which means it doesn’t may not be really budget friendly for retirees. “
Silvur is designed to customize costs based on a registrant’s current or future postal code. This can help ensure that retirement budgets take into account the full cost of health care in retirement.
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