A significant number of business owners are approaching the age that they can start receiving Medicare. 64% of all business owners are 40 years or older, and nearly half of all business owners are over 55. So if you’re reading this article, it’s likely that Medicare coverage is on your mind.
As a business owner, you’re more than aware of staff benefits and how they’re one of the best ways to attract and retain prospective employees. But this article is about your own health.
Why Business Owners Should Care About Medicare Coverage
It’s no secret that health insurance for small business owners and their staff is very expensive, and before the Affordable Healthcare Act passed, those over 40 had to deal with eye-watering high premiums. Many business owners don’t even have insurance because of this expense.
In the past, 50-year-old business owners had to pay thousands a month for the worst coverage. Now, it’s about $900 for a silver plan if the owner makes about $150,000 per year, which is a massive bargain in comparison. But once they qualify for Medicare, that cost goes to 0, right?
Not exactly. Medicare doesn’t cover everything. As an older professional, you may need coverage that isn’t in Original Medicare, but understanding Medicare and what it covers, and what it costs is incredibly confusing. However, this knowledge can save you thousands.
What Business Owners Should Know About Medicare
Business owners have a lot on their plate. Flipping through Medicare manuals can be a real chore, too. Our article should help you understand what Medicare is and what it isn’t quickly.
What Medicare Covers for the Average American
The government program “Medicare” provides coverage for basic health care for people over the age of 65. Some professionals may qualify for Medicare before 65 if they have a disability, end-stage renal disease, or ALS. Medicare is separated into 4 parts: Part A, B, C, and D.
Medicare covers Part A, B, and D. Medicare Part A is free if you or your partner paid Medicare payroll taxes for 10 years. Part B has an average monthly premium of $180.00, whereas Part D premiums average $35 for a total average monthly payment of $215.
However, many business owners won’t get a bill from Medicare because they get the premiums deducted from their Railroad Retirement Board, Social Security, or other Retirement checks.
Part A, B, and D are also called “Original Medicare,” which covers:
- Part A: Hospitals, skilled nursing, surgery
- Part B: Preventative care, lab tests, doctors visit
- Part D: Medications (only for specific people who qualify. Otherwise, it’s extra)
As stated, Medicare doesn’t cover everything. For that, you’ll need supplemental coverage.
What Medicare Doesn’t Cover for the Average American
The biggest thing that confuses business owners is that Medicare covers everything they need, but they instantly understand that it doesn’t once they get a hefty bill in the mail. You worked hard to build your business, and you won’t want that to go toward your medical costs.
Here’s what Medicare doesn’t cover for the average American:
- Long-term care (short-term care is covered)
- Many mental health services
- Eye exams for prescription glasses
- Cosmetic surgery (including dental cosmetic surgery)
- Massage therapy
- Dentures and some other dental procedures
- Hearing exams and hearing aids
- Concierge care
- Anything you opted out on
But how can business owners get the coverage they need? Through supplemental insurance (Medigap) or Medicare Advantage. There are a few things you should know about both options.
What Medigap (Supplemental Insurance) Is and Isn’t
Medigap or supplemental insurance is offered by private insurance companies and provides standardized benefits not found in Original Medicare. You have up to 10 different Medigap policies to choose from: A, B, C, D, F, G, K, L, M, and N. These cover anything and everything.
Business owners have to pick which Medigap policy they want based on their needs. This handy chart from Medicare.gov gives a better breakdown of what is and isn’t included.
What Medicare Advantage Is and Isn’t
Medicare Advantage, sometimes called “Part C” or “MA Plans,” are offered by private insurance companies approved by Medicare. When you join a Medicare Advantage Plan, it will provide for all of your Medicare Part A and Part B. This is different from a Medigap coverage policy.
While there are many different Medicare Advantage plans, know that you’ll need extra private insurance to cover Part C and beyond if you need it (and you likely will for Part D, at the least).
The Difference Between Medigap and Medicare Advantage
There are several differences between Medigap and Medicare Advantage, although they look similar at first glance. If you’re a business owner, you should get to know these differences.
Here are the major differences between Medigap and Medicare Advantage
- Premiums are higher in Medigap plans (some Advantage Plans have no premiums).
- Medicare Advantage plans come with more out-of-pocket expenses.
- Medigap plans work in any state, whereas Medicare Advantage only works in your state.
- Medicare Advantage plans require a provider network, whereas Medigap doesn’t.
- Medicare Advantage usually includes Part D, whereas Medigap typically doesn’t.
As a rule, if you have more medical needs, purchase a Medigap plan. If you don’t plan on traveling or you have fewer healthcare needs, then Medicare Advantage will work just fine.
In Conclusion on Medicare Coverage…
Whether you decide to retire at 65 or continue working, having an intimate knowledge of Medicare can really cut down your expenses and aid in your estate planning. Don’t leave Medicare as an after, though. Research the plans available to save money right away.
