A note on insurance
The information on this website may assist you in making personal decisions about insurance, but it is not intended to provide advice regarding the purchase or use of any insurance or insurance products.
Healthline Media does not transact the business of insurance in any manner and is not licensed as an insurance company or producer in any U.S. jurisdiction. Healthline Media does not recommend or endorse any third parties that may transact the business of insurance.
When a person retires, part of their retirement plan may include looking at Medicare options and deciding which is best for their needs.
Medicare is a federally run and funded health insurance plan that helps provide health care benefits for those aged 65 and older.
Everyone aged 65 and older is eligible, regardless of their income level or any preexisting medical conditions.
In this article, we discuss Medicare for retirement, how Medicare works, enrollment, costs, and a comparison of different options.
We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:
- Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
- Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this comes to 20%.
- Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
Medicare comes in different parts, each offering various aspects of coverage for medical care.
Original Medicare are comprised of 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 have standard benefits offered to everyone. Private insurance companies offer Medicare Advantage plans, Medicare Part D, and Medigap policies, and as such, 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:
- 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
- foreign travel
As of January 1, 2020, apart from special cases, no Medigap policy can cover the Medicare Part B deductible.
Individuals who receive Social Security or Railroad Retirement Board benefits will automatically be enrolled in Medicare. Typically, a “Welcome to Medicare” pack is mailed around three months before the start of a person’s coverage.
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.
When a person does not purchase Part D during the IEP, they 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.
A good time to buy Medicare supplement insurance (Medigap) is during Medigap Open Enrollment. The Medigap Open Enrollment Period runs for six 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.
A person retiring after the age of 65 may have the option of enrolling for Medicare during their Special Enrollment Period (SEP). A person may not have to pay a late enrollment penalty if they qualify, such as if a group plan still provides coverage.
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.
An individual may receive health insurance from a former employer, and 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.
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|
$505 monthly premium for those not eligible for premium-free
|Part A deductible||$1,632.00 for each benefit period|
|Part A coinsurance||$0 for days 1 to 60 in each benefit period|
$408 per day for days 61-90 of each benefit period
$816 per day for days 91 onward
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 aged over 65 years have more options for support.
- Supplemental Security Income (SSI): a federal income program to help people who are disabled or have limited resources. It helps people pay for food, clothing, and housing.
- Extra Help: helps pay Medicare prescription drug costs for people with limited resources.
- Programs of All-Inclusive Care for the Elderly (PACE): 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 aged 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.
Should a person’s enrollment with Medicare take place within a Special Enrollment Period, late enrollment penalties are not usually applied.
Extra support may be available to those with specific health conditions or limited resources.