Would you like to keep your retirement health insurance costs as low as possible? Make sure you understand Medicare part B and pay attention to two key details as you plan your retirement income.
What is Medicare part B? When you retire, you will generally use part B when you go to the doctor, receive outpatient care, or pay for preventative services. Most retired people will use part B far more regularly than part A, which covers hospital visits and inpatient care. Unlike part A, which is free, you pay a premium for part B. The standard premium in 2021 is $148.50 monthly. The premium is higher if you miss deadlines or if your retirement income exceeds certain thresholds.
- Deadlines: Generally, you should sign up for part B in your initial enrollment period. If you miss your enrollment, you are penalized 10% for each 12-month period you could have had part B but didn’t sign up. This penalty is permanent, and it keeps increasing the longer you go without part B coverage.
- Income in retirement: A high income may increase your premiums. If your modified adjusted gross income 2 years ago exceeds a certain amount, you pay an additional premium called IRMAA. Depending on MAGI, IRMAA could more than triple your monthly premiums.
How should you plan ahead? It is a good idea to start planning your healthcare coverage at least a year before you turn 65, regardless of when you plan to retire. Medicare insurers will shower you with marketing mail and advertising at this time, and the noise can be overwhelming. Talk to a financial advisor who has your back to make sure you have a clear view of your financial big picture as you make a plan.
You can learn more details about part B costs here: https://www.medicare.gov/your-medicare-costs/part-b-costs
Thanks for reading.
