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Medicare Basics for 2022

D Kelly-Dohse 2014
Denise Kelly-Dohse, CFP®
Vice President, Wealth Advisor
[email protected]
(585) 419-0670 x50619

Medicare is the federal health insurance program that was signed into law in 1965. It was created for people over age 65 and certain young people with disabilities. Open enrollment for Medicare runs annually from October 15th to December 7th. During the enrollment period you have the opportunity to select your health care plans that will take effect on January 1st for the next calendar year.

Medicare begins the month you turn 65 or after being on disability for 2 years. Some people who are working can delay Medicare. If you are turning 65, Medicare becomes effective the first day of your birth month; if you turn 65 on the 1st of the month, it starts the month prior. If you are collecting Social Security, you will be automatically enrolled. If not, you have 7 months to apply: 3 months before your birthday, your birthday month or the 3 months following.

Medicare is made up of various parts.

  • A and B are considered original, or government, Medicare. They come from Social Security Administration.
  • Part A covers hospital services and is free for anyone who has worked ten years or more or whose spouse has worked ten years or more.
  • Part B covers medical care and has a premium. Most people are paying $148.50 a month in 2021, but this premium will go up in 2022. Singles who make more than $88,000 and married couples who make more than $176,000 will pay more for their Part B, based on a sliding scale.
  • Part D helps cover prescription drugs and premiums, copayments, and coinsurance costs vary by plan.
  • Medigap plans, Part D, and Part C plans are offered by private insurance companies, not by Medicare.

Medicare can get confusing if you’re still working and covered by other plans.

  • If you are still working and have employer group health insurance, and your employer has more than 20 employees, and the coverage is considered “creditable,” it is your choice whether to take Medicare or not.
  • If you have a qualified employer plan and would like to keep contributing to your HSA, you should not take any part of Medicare. You cannot contribute to an HSA on Medicare A or B.
  • If you want to contribute to an HSA, you should also delay applying for Social Security benefits because once you do, you are automatically enrolled in Part A.

So now that you have applied for Medicare and received your red, white, and blue card, what’s next? At this point, you want to understand your coverage and what deductibles and coinsurance you have, and if you need additional coverage. There are a few options that may be of interest to you.

Medigap plans do just as the name implies. They fill in all, or some, of the gaps left by Medicare. There are 10 different plans, each one covering different gaps in Medicare, labeled with letters A-N. Premiums vary between companies but plans are standardized and benefits remain the same.

Medigap plans do not have drug coverage, so you must also purchase a standalone prescription drug plan to avoid a penalty for not having drug coverage. It is important to note that the penalty applies for the rest of your life, so it is important to avoid incurring. Keep in mind that Medigap plans do not cover any expenses related to vision, dental or hearing, and most do not have additional benefits, such as fitness or transportation.

The second option is a Medicare Advantage Plan, called Part C. They are more like a box of benefits instead of a “Part” as they combine Parts A, B, and usually Part D into one plan. The premiums for Medicare Advantage plans range from $0 per month to over $200 per month. These plans are subsidized by the government, so don’t assume that a low-priced plan is a bad plan. When you are on an Advantage Plan, you will have co-pays and co-insurance amounts for any medical services and these will vary by plan. Medicare Advantage plans may also give you extra perks, like vision, hearing, dental, a fitness membership, acupuncture, and meals after a hospital stay. Some plans have a Part B giveback, which means that they give you some of your Part B premium back. Extra benefits vary by plan and may cost a higher, or additional, premium.

Navigating supplemental plans can be challenging. They change annually and during the open enrollment period, you have an opportunity to revisit the plans. Any changes in your health, prescription drugs, or lifestyle may mean you want to adjust the type of plan you choose. Consulting with an expert at CNB Wealth Management can help ensure you are enrolled in the plan that meets your needs.

This material is provided for general information purposes only. Investments and insurance products are not FDIC insured, not bank deposits, not obligations of, or guaranteed by Canandaigua National Bank & Trust or any of its affiliates. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please consult your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.