I’d like to share with you the considerations one must make as they work Medicare into their retirement planning when they turn age 65, but first, let me explain Medicare and the supplemental coverage available in a nutshell. This will help you understand the timing and necessity for each:
Original Medicare: Original Medicare is a government health insurance program for individuals who are 65 years or older, or those who qualify due to certain disabilities. It consists of two parts:
- Medicare Part A (Hospital Insurance):
- Part A helps cover inpatient hospital care, skilled nursing facility care, hospice care, and some home health care services.
- Most people do not have to pay a premium for Part A since they have paid Medicare taxes while working. Medicare Part A will start automatically when you turn 65.
- Medicare Part B (Medical Insurance):
- Part B helps cover medically necessary services like doctor’s visits, outpatient care, preventive services, and some medical supplies. There is a monthly premium for Part B that is typically deducted from your Social Security benefits.
Medicare Supplements (Medigap): Medigap plans are private insurance policies designed to work alongside Original Medicare.
- They help cover the “gaps” in coverage that Original Medicare doesn’t pay for, such as deductibles, copayments, and coinsurance.
- Medigap plans are standardized, meaning they offer the same basic benefits but may vary in cost depending on the insurance company.
- You need to have Original Medicare to be eligible for a Medigap plan.
Prescription Drug Plans (Part D): Medicare Part D is a standalone prescription drug coverage plan offered by private insurance companies approved by Medicare.
- Part D plans help pay for prescription medications. These plans have a monthly premium and may include deductibles, copayments, and coinsurance.
- It’s important to note that if you have a Medigap plan, it doesn’t include prescription drug coverage, so you’ll need to enroll in a separate Part D plan.
Medicare Advantage (Part C): Medicare Advantage plans, also known as Medicare Part C, are offered by private insurance companies approved by Medicare.
- These plans combine the coverage of Original Medicare (Parts A and B) with additional benefits, such as prescription drug coverage (Part D), vision, dental, and sometimes even fitness programs.
- Medicare Advantage have networks of healthcare providers, and you may need to use their preferred doctors or hospitals to receive full benefits.
- These plans usually require you to pay a monthly premium, however, some entice you with very low monthly premiums.
When applying for Medicare, you can choose between Original Medicare (Parts A and B) or opt for a Medicare Advantage plan (Part C). If you select Original Medicare, you can also consider enrolling in a Medigap plan to help with out-of-pocket costs. Additionally, if you require prescription drug coverage, you may want to enroll in a Part D plan.
It’s important to carefully compare and evaluate your options based on your individual healthcare needs, preferred doctors and hospitals, prescription medications, and budget before making a decision. You can find more information and apply for Medicare online at the official Medicare website or seek assistance from a licensed insurance broker specializing in Medicare.