Baby Boomers own a lot of small businesses.
In fact, according to the US Census Bureau, over half of small business owners are over 55 years of age. That means that right now millions of them are being bombarded with ads and mail about Medicare plans because we are smack dab in the middle of the annual period to enroll in Medicare or change your plan between Oct.15 to Dec. 7.
So listen up: If you’re a small business owner, whether you’re approaching the age you can sign up for Medicare – 65 – or already on Medicare, now’s the time to think about your choice of Medicare plans and think carefully.
This choice can cost you or save you thousands, maybe tens of thousands, of dollars.
For context, it helps to understand that health insurance for small business owners – and their staff – is jaw-droppingly expensive. Before the Affordable Health Care Act was passed (Obamacare), small business owners over the ages of 50, even 40, were charged such high premiums that it was clear the insurance companies didn’t want us.
Personally, I went without health insurance until my mid-forties. Yes, I know it was stupid, but running a business was expensive. Once I hit 50, the premiums were always over a thousand dollars a month and then over $1,500 a month for lousy coverage.
The ACA changed that. Somewhat. Now, a 55-year-old in California making $50,000 a year can get a “Silver” plan for only $321 a month, and someone making $150,000 a year would pay only $856 for that plan.
If you think the word “only” shouldn’t apply for a monthly premium that high, believe me many older small business owners consider that a bargain.
That’s why many small business owners are thrilled when they qualify for Medicare. It’s about the only benefit of getting older. But it’s a big one.
Yet it can also be confusing. There’s all kinds of terms that sound the same – Medicare, Medigap, Medicare Advantage, Supplemental plans, and on and on.
Let’s start with the basics.
The government program that provides coverage for basic health care. There are different parts to this Original Medicare:
- Part A covers the really expensive stuff: hospitals, skilled nursing, surgery
- Part B covers preventative care, doctor visits, lab tests and so on.
- Part D covers prescription costs.
But Medicare doesn’t cover all the costs – you’ll still pay around 80% of your health care costs, which can be substantial. You’ll also pay the government a premium for Part B. You can choose whether to buy Part D for additional cost.
Medigap or Supplement Insurance
Original Medicare still leaves significant costs and gaps in your coverage, so you can purchase a supplemental plan to lower your out-of-pocket expenses.
There are a number of different plans to choose from, some that cover virtually all of your expenses. Of course, the cost of your premiums increase as your coverage increases. There’s a good chart on the government’s website that compares the features of the different Supplement plans.