To Liz, please:This year, I intend to retire. Can I return to traditional Medicare without incurring a penalty if I select a Medicare Advantage Plan?
Answer: You won’t be charged more by Medicare, but you won’t always have the right to apply for a Medigap supplemental policy. You may have to pay much more for this crucial extra coverage if you decide to switch after the first 12 months.
In summary, Medicare Advantage plans provide a comprehensive substitute for traditional Medicare.
Medicare Advantage plans may provide coverage for things like dental, vision, and hearing care that traditional Medicare does not. For a small or nonexistent monthly cost, many consumers enjoy that their Advantage plans appear to cover more than basic Medicare.
However, private insurers, who usually have networks of healthcare providers, provide Medicare Advantage plans. These networks and other advantages may vary from year to year. You usually pay extra, often much more, if you receive care outside of the networks. Medicare Advantage plans have a reputation for being excellent when you’re healthy, but if you get sick, they might not be so fantastic.
Benefits under original Medicare are unchanged, and you can use any Medicare-accepting provider—the great majority do. However, there are substantial gaps in original Medicare coverage, so you will need a Medigap plan from a commercial insurer.
Insurers must offer you a Medigap policy and are not allowed to charge you more depending on your health status if you choose original Medicare when you are first eligible. Without a guaranteed problem, an insurer may charge you significantly more or decline to give you a Medigap policy.
If you purchase a Medicare Advantage plan when you first qualify for Medicare but change your mind within a year to original Medicare, you also have guaranteed issue rights.
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To Liz, please:I didn’t begin receiving Social Security until I was 70. At full retirement age, my wife, the lower earner, took a spousal benefit. I am aware that she will be entitled to my benefit upon my death. I am aware, though, that she does not receive my present benefit; rather, she receives the amount I would have if I had begun receiving Social Security at the age at which I would have reached full retirement. How can I calculate that sum?
No, you don’t have to. The amount that you would have received at full retirement age was the basis for your wife’s present spousal benefit. If you pass away first, she will receive her survivor benefit, which is 100% of your present benefit. You maximized your own advantage by waiting, which also increased the survivor benefit she might enjoy in the years to come.
Spousal and survivor benefits regulations are often confused. Despite being based on the same thing—the earnings history of the higher or primary earner, which is you—they are computed according to different guidelines.
Liz Weston, a Certified Financial Planner, writes a column for NerdWallet about personal finance.She can be contacted by phone at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or via the atasklizweston.com contact form.
