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Financial Literacy for Medicare

April 03, 2024

April is Financial Literacy Month.  I’ve made it a priority to continue to add resources for my clients to handle issues related to financial planning.  One of the biggest issues, and costs, we face in retirement is proper health care planning.  While I’m well versed in Life Insurance and Long-Term Care, I don’t think I was up to par in my knowledge of Medicare.  Given that doctors visits, procedures and prescriptions are typically the second largest retirement expense after taxes, I wanted to find someone who I could partner with to help clients gain clarity in that area of retirement.  I’m excited to announce our newest resource, NJ Life and Health Insurance Group is here to help you with your Medicare plans.  The rest of this blog will be dedicated to some basic facts and some misconceptions often related to the Medicare process.  It may not be incredibly exciting like my other blogs (right?), but it may save you a lot of money which is pretty interesting!

  1. The more you make, the more you pay.

Although we all contribute to Medicare throughout our work life, it will still cost you money once you are enrolled and active.  While Medicare Part A has no cost and covers hospital expenses, Medicare Part B has a base rate of $174.70 per person, per month and may increase with higher income brackets.  This is known as the Income-Related Monthly Adjustment Amount (IRMAA) and can cause Part B premiums as high as $594 per month.  IRMAA also applies to Part D (prescription drug coverage) and can add as much as $81 per month to your premium. Here is a great breakdown of the income brackets and associated premiums.

2024 Medicare Costs.


  1. Medicare gives you great access, but potentially big out of pocket costs.

With a few exceptions, you can see almost any doctor or visit almost any hospital across the country.  There is little in the way of referrals and prior authorizations needed.  If something is deemed medically necessary, you can get it done with little pushback.  However, with that freedom comes costs.  Original Medicare has no out-of-pocket- maximum to cap your expenses and Part B brings a 20% services charge.  This may not be a big deal for a primary care visit, but if you have open heart surgery you will certainly notice that 20% bill sent your way. That’s why looking at supplement plans to cover those costs is extremely important.


  1. Medicare Supplement plans

You will hear many names for these plans, so I want the next couple of paragraphs to be crystal clear.  When you purchase A and B you have the ability to add a supplement policy, also known as Medigap.  Medigap provides the out-of-pocket cap that I described above.  There are also additional supplements that can be purchased with the most common being Plan G and Plan N.  Plan G caps ALL of your hospital and medical costs at $240 per year.  Plan N has the same maximum out of pocket for slightly lower premiums, but also tacks on co-pays for various visits and Part B excess charges.


Choosing the proper Medicare supplement is paramount to keeping you on track in your retirement plan as it removes a lot of the variability that may present itself during health issues.  And while purchasing a higher premium plan may sting a little, similar to life insurance, I look at these plans not for the base cost but for the ability to prevent the disaster for your plan. 



  1. Beware of Medicare ADVANTAGE plans.

We have all seen these infomercials on daytime and late night tv.  What I didn’t realize is this is a privatized version of Original Medicare.  So, while these advantage plans offer premiums of close to zero, often you pay for expenses a la carte as they arise.  They do offer out-of-pocket caps of around $4,000-$10,000, however, that is a huge variability in your planning depending on what your monthly retirement budget looks like.  More importantly, due to it being a private structure, Medicare Advantage plans don’t follow the same rules as Original Medicare.  They require referrals which can lead to delays in critical services.  They can deny claims that you and your doctor feel were medically necessary based on their own judgement.  For example, if you have to go through cancer treatments on your doctor’s advice that cost $50,000 you should only be responsible for your out-of-pocket max.  But if the Advantage plan disagrees with your doctor’s treatment plan, then the decision becomes yours and you may be on the hook for a hefty bill.


Medicare and that associated coverages are a very complicated topic.  One made even worse trying to deal with government red tape, understanding private vs. original and trying to decipher what seems like a different language in terms of costs.  Having added NJ Life and Health Insurance Group as a partner of Birds Eye Wealth Planning, I feel like we have added another tool to solidify your overall financial plan and prevent any unforeseen disasters when it comes to health care.  Please do not hesitate to reach out to them or to me if you have any additional questions.  Feel free to share this with anyone you think may benefit.


NJ Life and Health can be reached at their Toms River office at 848-226-6897