People may be enrolled in Medicare automatically when they turn 65 years old, or they may have the option of enrolling for Medicare during their Special Enrollment Period (SEP) if they retire after that.
Medicare is a federally run and funded health insurance plan that helps provide healthcare benefits for those ages 65 and older.
Everyone ages 65 and older is eligible, regardless of their income level or any preexisting medical conditions.
This article explores Medicare for retirement, how Medicare works, enrollment, costs, and compares options.
Glossary of Medicare terms
We may use a few terms in this article that can be helpful to understand when selecting the best insurance plan:
- Out-of-pocket costs: An out-of-pocket cost is the amount a person must pay for medical care when Medicare does not pay the total cost or offer coverage. These costs can include deductibles, coinsurance, copayments, and premiums.
- Deductible: This is an annual amount a person must spend out of pocket within a certain period before an insurer starts to fund their treatments.
- Coinsurance: This is the percentage of treatment costs that a person must self-fund. For Medicare Part B, this is 20%.
- Copayment: This is a fixed dollar amount a person with insurance pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
According to the Social Security Administration (SSA), the typical retirement age in the United States ranges from ages 65 to 67 years, depending on when a person was born.
If a person is going to get Social Security retirement or disability benefits at least 4 months before they turn 65, they will automatically get Original Medicare (Parts A and B) when they turn 65. Typically, they will receive a “Welcome to Medicare” pack that contains their Medicare card around 3 months before the start of their coverage.
If a person is waiting until they turn 65 or older to collect Social Security benefits, they will need to contact the SSA to enroll in Medicare.
How to enroll
People can apply for Medicare in person at a Social Security office or online.
Enrollment first takes place within the Initial Enrollment Period (IEP) that starts 3 months before a person’s 65th birth month. The period ends 3 months after a person’s 65th birth month. If enrollment does not take place during these 7 months, a late enrollment penalty may apply.
Otherwise, a person can sign up during the General Enrollment Period (GEP) from January 1 to March 31 every year, but most will have to pay a late enrollment penalty.
Medicare Advantage and Part D
Medicare Advantage and Medicare Part D are optional programs. They are available to everyone during their IEP.
A person who does not purchase Part D during the IEP may have to pay a late enrollment penalty.
An individual can find Part D and Medicare Advantage policies in their area using the online tool, Find a Medicare plan.
Medigap
A good time to buy Medicare supplement insurance (Medigap) is during Medigap Open Enrollment. The Medigap Open Enrollment Period runs for 6 months, beginning the month a person turns 65 and has enrolled in Medicare Part B. Delayed enrollment may mean an individual is no longer eligible for a Medigap policy.
Medicare resources
For more resources to help guide you through the complex world of medical insurance, visit our Medicare hub.
A person retiring after age 65 may have the option of enrolling for Medicare during their SEP. A person may not have to pay a late enrollment penalty if they qualify, such as if a group plan still provides coverage.
Group Plans
A person’s employer or union may offer medical insurance and it is usually possible to have both a group plan and a Medicare plan at the same time. Having both will mean that one plan will become the primary payer and the other the secondary payer. The “coordination of benefits” rule will decide this.
The primary payer will cover eligible costs up to the plan coverage limits, and the secondary payer will cover eligible costs not covered by the primary payer. The secondary payer may not always pay all of the remaining costs.
Retiree insurance
An individual may receive health insurance from a former employer. This is sometimes known as retiree insurance.
If a person has retiree insurance and is eligible for Medicare, costs will usually be covered by Medicare first. The insurer providing the retiree coverage would then become the secondary payer.
For in-person advice and help on Medicare insurance plans, a person can visit the State Health Insurance Assistance Program website to find their nearest office.
Medicare comes in different parts, each offering various aspects of coverage for medical care.
Original Medicare comprises Parts A and B. Part A covers inpatient care and Part B helps pay for outpatient services.
Part C is known as Medicare Advantage. Medicare Advantage plans usually combine Parts A, B, and D together under one policy. Part D covers prescription medication.
Medicare supplement insurance is called Medigap. These plans help cover out-of-pocket expenses.
Medicare Parts A and B offer standard benefits to everyone. Private insurance companies offer Medicare Advantage plans, Medicare Part D, and Medigap policies, and benefits may vary.
All Medicare Advantage plans must offer the same benefits found in Medicare Parts A and B, but private insurance companies can choose to add extra benefits. These may include coverage for:
- vision
- hearing
- dental treatment
Medicare will generally cover the cost for providers who accept assignment. This means the provider accepts the Medicare-approved amount as full payment for care.
There are several different types of Medigap policies, but all must follow federal and state laws. Benefits may include coverage for:
- Part A and Part B out-of-pocket expenses
- skilled nursing facility care coinsurance
- blood
- foreign travel
As of January 1, 2020, Medigap policy will only cover the Medicare Part B deductible in certain circumstances.
There are basic costs for Medicare that include the following:
| Part A premium | premium-free if a person has worked for 40 quarters over their lifetime and paid taxes to Medicare $278 or $505 monthly premium for those not eligible for premium-free, depending on individual circumstances |
| Part A deductible | $1,632.00 for each benefit period |
| Part A inpatient stay | $0 for days 1 to 60 in each benefit period $408 per day for days 61 to 90 of each benefit period $816 per day for days 91 to 150 all costs after day 150 60 lifetime reserve days can be used in a person’s lifetime (beyond lifetime reserve days, a person is responsible for all costs) |
| Part B premium | standard monthly premium of $174.70 premium can be higher depending on income |
| Part B deductible | $240 per year |
| Part B coinsurance | 20% of Medicare-approved charges for most services |
| Medicare Advantage (Part C) premium | varies by plan |
| Part D premium | varies by plan |
People ages over 65 years have more options for support, such as:
- Supplemental Security Income (SSI): This is a federal income program to help people who are disabled or have limited resources. It helps them pay for food, clothing, and housing.
- Extra Help: This helps pay Medicare prescription drug costs for people with limited resources.
- Programs of All-Inclusive Care for the Elderly (PACE): This helps pay for healthcare in the community combining the resources of Medicare and Medicaid. To be eligible, a person must have Medicare, Medicaid, or both.
Older adults may look into Medicare for retirement planning. A person who is 65 years or older is eligible for Medicare.
Retiring after age 65 may mean that a person has both a Medicare plan and a plan through their former employer. In these cases, Medicare becomes either the primary or secondary payer.
If a person’s Medicare enrollment takes place within a SEP, late enrollment penalties are not usually applied.
Extra support may be available to those with specific health conditions or limited resources.