For the “when to apply” question I consulted http://www.medicare.gov/Publications/Pubs/pdf/11219.pdf
If I’m reading this correctly, Paul can apply for Medicare parts A (Hospital Insurance) and B (Medical Insurance) without penalty during the eight months starting when his coverage through my employment terminates.
According to https://questions.medicare.gov/app/answers/detail/a_id/2306/~/2011-part-b-premium-amounts-for-persons-with-higher-income-levels, Paul’s monthly Medicare Part B premium would be $161.50 in 2011.
From what I have read, it appears that the Medicare Supplement Plan my company offers retirees eligible for Medicare replaces Medicare Parts C and D. It also appears to be pretty good:
- The plan supplements coverage for expenses of health care services and supplies covered under Medicare Part A and Part B. Medicare Part A and Part B provide your primary health care coverage.
- The plan has a $500 annual deductible per person, which is also the annual out-of pocket maximum. This means that $500 per person is the most you pay out of pocket in a calendar year for services and supplies covered by Medicare Part A and Part B.
- Prescription drugs are covered separately. Expenses paid for prescription drugs (including copays) are not applied to the $500 deductible or the $500 out-of-pocket maximum. However, prescription drugs ARE covered J
That’s approximately $15,000 a year. We can only assume the costs will rise – both next year when this really happens, and every year after that. Paul has challenged me to come up with a way to earn that $15,000 during retirement. The gauntlet has been thrown.