February 14, 2014

What Baby Boomers Need to Know About Medicare

Mary MahoneyBY Mary Mahoney

J. Robinson Group Blog

If you are a baby boomer approaching 65 years of age and looking forward to Medicare, you are not alone. The number of Americans entering this rite of passage will grow from 50.7 million in 2012 to 81 million in 2030 and will represent 45 percent of the U.S. population by 2015.

Medicare is the federal health insurance program for people 65 or older and the primary source of health care coverage for American retirees. It also pays for the health care of anyone on dialysis for permanent kidney failure, victims of ALS (Lou Gehrig’s disease) and the disabled.

For those approaching 65, it is important to learn the basics of Medicare and how to choose the plan best for your needs. That’s right: there are choices to be made. Medicare is not cut and dried. You can find many plan finders and calculators online including Medicare.gov.

Why is Medicare so important?  At a time when medical advancements enable Americans to live much longer, we are much less healthy than prior generations and rising health-care costs soon will account for a bigger percentage of the average retirement budgets than food.

“As baby boomers approach retirement age, they are expected to completely change the face of the U.S. health-care system, mainly due to their additional medical needs, compared to previous generations,” said the Huffington Post .

Financial Advisor magazine reports that just 35 percent of 401(k) retirement plan participants ages 50 to 64 believe they’ll have enough money to pay for health care in retirement.

Indeed, a couple retiring in 2013 is expected to need $220,000 to cover health-care costs during their retirement (17 years for men, 20 years for women, on average), not including nursing home or long‐term care.

The National Council on Aging website is a great first stop for basic information on how to start your Medicare journey. Don’t miss the graphic article “Follow Your Path to Medicare” and “7 Common Questions (and Answers!) About Medicare.”

The first thing to know is that there is a seven-month period in which to enroll in Medicare, beginning three months before the month you turn 65, including the month you turn 65 and ending three months after the month you turn 65.

Learning the “parts” to Medicare is important so you can choose a plan to best fit your needs. Part A is free and covers inpatient hospital care, skilled nursing facility care, home health care and hospice care. Part B is not free. It covers outpatient health care. Part D is not free, either. It covers prescription drug coverage. Seniors who want Parts B and D must pay a monthly premium. The good news is that there is no annual limit on out-of-pocket expenses.

Premiums for Medicare Part B will stay at $104.90 a month for 2014, the same as in 2013, and the deductible will remain at $147, according to the Center for Medicare Services.

Medicare Part C is known as Medicare Advantage or Medicare Health Plans on the Medicare.gov site. These are private plans run through Medicare that, by law, must at least be “equivalent” to regular Part A and Part B coverage but may cover additional things such as routine eye and dental care, hearing aids, wellness programs and physical therapy. CNN Money goes into more detail about Part C in its Ultimate Guide to Retirement, which is also worth investigating.

Baby boomers may be concerned about the ongoing Congressional debate over Medicare spending in relation to controlling the federal budget deficit. Medicare currently consumes 12 percent of the federal budget and is growing. There is a silver lining, of sorts, in the increasing demand for senior health-care services. That demand is expected to create 5.6 million new health-care jobs by 2020 in areas including pharmaceutical and medicine manufacturing, nursing care facilities, community care facilities for the elderly and home healthcare service – boosting the economy all around.

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