Our Blog

Written by Thomas M. Geier, CPA, CFP®, PFS

The Medicare Act of 1965 was passed by Congress with the goal of helping elderly people on fixed income be able to afford health care. As people retired, they no longer had the benefit of employer-sponsored medical care. At that age, and with many health issues already present, most could not get or afford individual policies. So unfortunately, many of these individuals drained their retirement savings to pay medical expenses, leaving them dependent simply on social security to fund their retirement years.


What Is Medicare Part A?

Medicare Part A, or the Hospital Insurance Tax as it sometimes called, is funded by payroll taxes. A flat rate of 2.9% is imposed on wages through payroll tax deductions. Half is paid by the employee and half by the employer. (High income earners are subject to an additional 0.9%) Self-employed people pay both halves, as they are both the employer and the employee. Benefits paid by Part A are mainly for hospital expenses. Medicare Part A benefits are considered an “entitlement,” as individuals pay into the system throughout their earnings years and therefore are “entitled” to receive benefits during retirement. At age 65, as long as you have worked for at least 40 quarters of Medicare-covered employment, you would be eligible for Part A benefits.

What Is Medicare Part B?

Medicare Part B is designed, in general, to help cover non-hospital related medical expenses. It is financed through monthly premiums that people enrolled in Part B pay and through payments from the federal government. Currently, about 25% of the cost of Medicare B is financed by enrollee payments, with the remaining 75% paid by the federal government. The Part B premium starts at $134 per month in 2017 and increases based on income.

Social Security & Medicare

Social Security is a separate program from Medicare. You do not need to file for Social Security in order to obtain Medicare benefits. You can receive Medicare at age 65, and delay Social Security filing until later if desired. In addition, the option is available to file for Social Security early at age 62, but your eligibility for Medicare is not available until age 65. Once eligible, Medicare coverage is obtainable without regard to your medical condition.

Medicare does not cover all of your medical expenses. Some medical procedures and hospital stays are considered ineligible for reimbursement. In addition, there are deductibles and coinsurance amounts to consider. Hospital stays become more expensive after 60 days.

Since 1965, Medicare has been amended many times by Congress. Medicare Supplement plans, Medicare Advantage, and Medicare Part D (prescription drug benefit) were introduced or amended. The Affordable Care Act also had some effects on Medicare. It is important to stay abreast of these changes so that you can best avail yourself of these benefits. An excellent resource is the www.Medicare.gov site. Their pamphlet, Medicare Basics, provides a valuable summary.

Choose Geier Asset Management to Discuss Retirement Benefits

In addition, we, at Geier Asset Management, are also available to assist you on a personal basis to discuss your own family circumstances. We can discuss the many options available for retirees and prospective retires to best utilize the Medicare program. Contact Geier Asset Management to learn more.

© Geier Asset Management, Inc. June 2017. Thomas M. Geier is a Vice President of Geier Asset Management, Inc., a Registered Investment Advisor. The above blog reflects the opinions of Mr. Geier and not necessarily the firm. Any advice given is general in nature and investors must consider their own individual circumstances. Past performance is no indicator of future performance. The firm makes no warranties or representations of any kind relating to the accuracy or timeliness of the information provided.