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Understanding Medicare Coverage

Medicare is an often confusing, although necessary, element of retirement planning. Leveraging Medicare for health coverage can help to lower your health insurance and medical expenses, while also providing varying levels of coverage throughout your retirement. However, it’s important to understand how Medicare works, and how it will impact you during this next phase of your life. Let’s dig into Medicare basics, and frequently asked questions our team hears that will help you make empowered decisions about your healthcare. 

The Basics

When it comes to Medicare, first thing’s first – you need to understand the basics about when and how to enroll, and what types of coverage are available to you. 

When Can You Enroll?

You are eligible to enroll in Medicare Parts A and B during a specific window of time-related to your age. From 3 months before turning age 65, the month of your birthday, to 3 months after you turn age 65, you are eligible to enroll. This period is called the Initial Enrollment Period. 

If, for some reason, you choose to not enroll in Medicare during the 7-month enrollment window surrounding your 65th birthday, you still can choose to enroll during the General Enrollment Period, which is between January 1 – March 31 each year. There are also special circumstances that may make you eligible for a unique enrollment period, such as:

  1. You’re still employed and on a group health insurance plan when your Initial Enrollment Period begins. 
  2. You’re on a group health insurance plan through your spouse’s employer when your Initial Enrollment Period begins. 

Keep in mind that if you are receiving Social Security benefits at the time of your 65th birthday, you will be automatically enrolled in Part A. 

What Are The Types of Medicare?

Medicare consists of four parts – A, B, C, and D. Let’s look at each part individually to understand which you may need during retirement. 

Part A – Hospital & Emergency Coverage

Part A is what you are automatically enrolled in when you apply for Medicare. It covers hospital stays, hospice, and (in some cases) temporary skilled nursing care. Most people don’t have to pay a premium for Medicare Part A. 

Part B – Doctor & Outpatient Coverage

Think of this as your “bread and butter” coverage option. It covers doctor’s visits, lab work, outpatient treatment, and other care that was likely covered under whatever insurance you had through your employer. Just like standard group insurance, Medicare Part B comes with a monthly premium and copays. Each year, the government sets both of these. For 2021, the monthly copay is $148.50 for Medicare Part B (for incomes lower than $88,000 per year), the annual fee is $203, and copays are 20%. If you are receiving Social Security, premiums are taken directly from your benefits. 

Part C – Medicare Advantage

Medicare Advantage is a private insurance alternative to standard Medicare. It offers a range of benefits depending on which insurer you select that may include prescription drug coverage, vision and hearing care, and maximum out-of-pocket spending. You do still have to enroll in Part A and B before enrolling in Medicare Advantage. 

Part D – Prescription Drug Coverage

Like Part C, Part D is sold through private insurers. Part D plans come with premiums, annual deductibles, and copays. It’s important to check with your private insurer to ensure that the Part D plan you’re considering covers your specific prescription needs at an affordable rate. 

Will Your Doctor Accept Medicare?

As is the case with all health insurance, not all providers accept Medicare. You may want to check with your preferred providers to see what types of insurance coverage they accept before enrolling. Alternatively, you can search through to find providers

Frequently Asked Questions

Medicare can be bewildering for retirees looking for insurance coverage. Going beyond the basics of what Medicare is, it’s also important to determine which type of coverage is right for you, and what type of benefits you can expect after you’ve enrolled. 

Do I Need Part C and D?

You can’t have both Medicare Part C and D, because there’s overlap in coverage. When enrolling, you need to determine whether “Original Medicare” (Parts A, B, and D) or “Medicare Advantage” (Part C) is right for your unique needs. 

What is Medigap Coverage?

Medigap insurance is private health insurance purchased alongside Original Medicare to provide extra benefits that you may need. The truth is that Original Medicare may not cover all of your health insurance needs, and Medigap policies can help pick up extra costs leftover from Original Medicare such as copays and deductibles. Keep in mind that Medigap policies require you to enroll 6 months from the 1st day of your birthday month (when you turn 65). 

Does Medicare Cover Expenses While I Travel Abroad?

Medicare has “limited coverage” (per outside of the U.S. If you plan to travel abroad in retirement, it’s wise to look into additional coverage that will protect you while you’re away. Some Medigap plans, for example, offer international coverage. 

Do I Have to Use Medicare?

No, you don’t! Although most people enroll in Part A when they’re eligible (because of the low or no cost), you can continue to use group health insurance through your or a spouse’s employer, or seek out private insurance options that are a fit for you if Medicare doesn’t meet your needs. 

Need Help?

Health insurance coverage is a key component of retirement planning. Don’t try to make these decisions alone! Speaking with your financial planning team can help you navigate the insurance maze to determine a solution that’s best for you.