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Getting Ready to Transition to Medicare? Then It’s Time to Re-Visit Your ABCs … and LMNs

Getting Ready to Transition to Medicare? Then It’s Time to Re-Visit Your ABCs … and LMNs

Transitioning from an employer-provided plan to Medicare, the federal health insurance program for those 65 and older and certain younger people with disabilities, can provide a tremendous sense of security though it can also feel a little daunting. But demystifying this vital benefit doesn’t have to be an impossible task. In fact, it can be as easy as (re)learning your ABCs. Here’s a quick rundown on the basics of Medicare and its various parts if you’re about to become eligible. 

The ABCs and Ds of Medicare 

Unlike the private insurance you may be accustomed to, Medicare coverage is composed of four main parts, each labeled with a letter 

  • Part A (Hospital Insurance): Covers inpatient hospital care, skilled nursing facility care, hospice care and some limited home health care services. Most individuals premiums are covered by the Medicare taxes either they or their spouse have paid. 

  • Part B (Medical Insurance): Covers medically necessary services, such as doctor visits, outpatient care, medical supplies and many preventive services. Part B requires a monthly premium, which is usually deducted from Social Security benefits. 

  • Part C (Medicare Advantage): Offered by private Medicare-approved insurers, these plans combine Part A and Part B benefits and can include additional services like vision, dental and prescription drug coverage. They often have lower out-of-pocket costs but can come with network restrictions and requirements regarding your health care. 

  • Part D (Prescription Drug Coverage): Covers prescription medications and is available as a stand-alone plan or as part of Medicare Advantage. The monthly premiums and drugs covered can vary by plan, so it's crucial to choose a plan that suits your needs. 

Don’t Fall into the Gap (plus a few more letters to consider) 

Just as your private insurance may have had limitations, restrictions or exclusions, it’s important to get the lay of the land regarding what is — and isn’t covered by Medicare. Luckily, though, you have some flexibility when it comes to dealing with any coverage shortfalls. Medigap policies, also known as Medicare Supplement Insurance, are offered by private insurance companies and can help cover costs that Original Medicare does not, including copayments, coinsurance and deductibles (filling coverage “gaps”). There are 10 standardized Medigap plans available, each named with a letter (A, B, C, D, F, G, K, L, M and N) and offering different levels of coverage. Not all plans, however, are offered in every state, and they’re not compatible with Medicare Advantage. Carefully compare Medigap plans and choose the one that best aligns with your health care needs and budget. 

Important Enrollment Periods  

When you’re getting ready to change from private health insurance over to Medicare, there are specific periods for enrollment that you need to observe to avoid costly penalties and coverage gaps: 

  • Initial Enrollment Period (IEP): A seven-month enrollment window begins three months before you turn 65, includes your birth month and ends three months afterward.  

  • General Enrollment Period (GEP): If you miss your IEP, you can still sign up for Part A and/or Part B between January 1 and March 31, with coverage starting on July 1. However, you want to avoid this as you may face lifetime late-enrollment penalties. 

  • Open Enrollment Period (OEP): Between October 15 and December 7 each year, you can make changes to your Medicare coverage, such as switching from Original Medicare to a Medicare Advantage plan. 

Maximize Medicare Benefits by Choosing Wisely 

Selecting the right Medicare coverage is essential to maximize benefits and minimize your out-of-pocket costs. Carefully evaluate your health care needs, budget and lifestyle as well as any program costs, covered services and restrictions when making your decision. How you handle your initial enrollment can have long-term consequences, so consider consulting a qualified Medicare consultant if you’re unsure what to do. They can help guide you through the important decisions you’ll face during the enrollment process and answer additional questions you may have as you make this important transition in your health care coverage. 


You’re Behind on Your Retirement Savings — Now What?

You’re Behind on Your Retirement Savings — Now What?

Are you looking to secure a comfortable retirement but dealing with a 401(k) balance that’s behind schedule? Whether youre just starting out or have been steadily contributing without hitting your savings goals, there are ways to give your balance a boost even if youre nearing retirement age. With some smart strategies, you can fortify your 401(k) and make steady progress on securing a sound financial future.   

Crank up Contributions 

In 2023, you can contribute up to $22,500 to your 401(k). For those 50 and older, the maximum allowance increases to $30,000that’s an additional $7,500 for “catch-up” contributions, which can help older workers fill any retirement fund gaps. But if maxing out all at once isnt in your budget, increase contributions annually by 1% until you hit your limit. And if your employer provides a match, try to increase your contributions to qualify for the maximum match as quickly as you can.  

Supplement Your Savings 

Amplifying your savings by funding some additional types of accounts can provide an extra cushion to help you retire comfortably. A health savings account (HSA), for example, can be a great way to supplement your retirement savings because it comes with a triple tax advantage: Contributions are made on a pre-tax basis, the interest and earnings are not taxed and withdrawals for qualified medical expenses are also tax-free. For additional retirement funds beyond annual 401(k) limits, you can also consider opening a traditional or Roth IRA especially if you have a side hustle or part-time job to help fund contributions. 

Ferret out Found Money 

If youve changed jobs and left your 401(k) behind, tracking down those funds and rolling them into your current plan could give you a more complete picture of your retirement savings. Even if you dont have contact information for your old plan sponsor, you still may be in luck. The Secure Act 2.0 of 2022 establishes plans for a future government-maintained “lost and found” database for retirement plans to help workers find and access their old accounts. 

Rethink Your Retirement Residence 

If youre significantly behind on retirement savings, you may need to rethink your plans a little. Maybe a waterfront beach house isnt in the cards, but a cozy condo thats a short drive to the boardwalk may still be within reach. It might be necessary to adjust your goals and expectations a bit to align with your current financial situation. But if youre dead set on your destination, you could also plan to work a little longer or bring in some extra income to make your retirement dreams a reality. 

Plan for Tomorrow, but Remember to Enjoy Today 

Regardless of how you try to increase your savings, its important that your strategy is something you can stick with and appropriate for your retirement time horizon. Avoid making excessively risky investments in an attempt to make up for a late start or insufficient contributions. Also, keep quality of life in mind youre trying to retire comfortably, but enjoying life now matters too. Pick areas in your budget to pull back, but dont cut back on all the things you like doing.  

A trusted financial professional can help you home in on a personalized approach that works for you and your goals. Your golden years will be here before you know it, so get your retirement plan on track today. 


Understanding Your Social Security Benefits

Understanding Your Social Security Benefits

Have you looked into your Social Security benefits and decided it was just too confusing to deal with right now? You wouldn’t be alone. It involves a lot of numbers and calculations, and not surprisingly there are some pretty detailed rules. But Social Security plays an important part in most people’s retirement plan, so we’ve done a little simplifying to help you understand your options and how it all works.

Accessing your account information online. The amount of the benefit you get each month is determined by a formula based on your work history and how much you’ve contributed to the fund (spousal benefits may be calculated differently). So how do you know what the amount will be? To find your personal benefits, you need to create an account on the Social Security Administration (SSA) website. The SSA has access to your records and can calculate your exact benefit.

What is your full retirement age? While we tend to think of retirement age as 65, what is known as your “full retirement age” according to the U.S. government is different and depends on the year you were born. The SSA website has an informative chart that enables you to easily determine your full retirement age. But as an example, for those born before 1955, full benefits begin when they turn 66 (which would have occurred by 2020). For those born in 1955, that changes to 66 and 2 months, then 66 and 4 months if you were born in 1956 and so on. If you were born in or after 1960, your full retirement age is 67. Keep in mind that, although changes in the full retirement age don’t happen often and are generally phased in gradually, they can occur.

The impact of accelerating vs. delaying benefits. The earliest most people can begin receiving benefits is age 62, but your benefits will be lower if you begin receiving them before your full retirement age (there are different rules for other Social Security benefits, such as those for disability or survivors). Monthly benefits are reduced by a percentage for each month between your actual retirement date and your full retirement date.

If you start receiving benefits at your full retirement age, your monthly benefit will be larger than if you elect to receive benefits earlier. And if you wait beyond full retirement age, the monthly benefits are even higher. Once you reach 70, however, your monthly benefit stays the same, and there are no more increases except for the annual cost of living increases that all recipients get.

To find out how much your payments will be depending on when you elect to start receiving benefits, go to the SSA’s online calculation tool. The calculator will use your date of birth and desired retirement age to show the effect of your retirement choice on the benefit you receive.

A very personal choice. The decision of whether to begin receiving your benefits before or after full retirement age rests on your own individual circumstances. There are some who advocate taking benefits somewhat earlier than full retirement, arguing that — depending on your health history and life expectancy — you could receive more in total benefits by filing for them earlier.

If you expect to live into your late 80s, or 90s, then delaying the payments may make sense. Or, perhaps you have a spouse or other family member who requires special care. What is the value of being able to “throttle back” and devote more time to them as opposed to working to full retirement age or beyond? There is no right answer for everyone when it comes to making this important decision. 

For help with Social Security retirement planning, talk with a financial professional who knows the system and the rules. Then do what’s best for you and your family.


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