A person is eligible for Medicare when they turn 65 years old, which may also be when they retire. There are several Medicare plans, and the choice of which one to enroll in may depend on a person’s healthcare needs.
Medicare is also available to a person younger than 65, under certain conditions. However, older adults have different health concerns and needs, so finding the right plan is an individual choice.
This article discusses 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 is the United States federal government program that provides healthcare coverage to citizens and permanent legal residents of the U.S. A combination of income streams, including Social Security, Medicare taxes, and Medicare premiums, fund the program.
A person may be eligible for Medicare if they are:
- at age 65 years
- under 65 years and living with a disability
- at any age with end stage renal disease or permanent kidney failure needing dialysis or transplant
In addition, a person must be a U.S. citizen or permanent legal resident for at least 5 years and have paid at least 10 years of contributing payments to Social Security benefits.
Medicare Part C, or Medicare Advantage, offers the benefits of original Medicare together with additional coverage, such as vision, hearing, and dental. Some Advantage plans include coverage for drug prescriptions.
Medicare Part D is for prescription drug coverage.
Medicare supplement insurance, known as Medigap, covers some out-of-pocket costs, such as copays, coinsurances, and deductibles. There are 10 Medigap plans: A, B, C, D, F, G, K, L, M, and N. In some states, plans F and G are available as high deductible plans.
Depending on the policy, a Medigap plan may offer coverage for the following items:
- Part A and Part B out-of-pocket expenses
- skilled nursing facility care coinsurance
- foreign travel
A person may receive automatic enrollment in original Medicare (Part A and Part B), or they may have to enroll during specific periods.
The Medicare enrollment periods include:
- initial enrollment period (IEP)
- general enrollment period (GEP)
- open enrollment period (OEP)
- special enrollment period (SEP)
The four enrollment periods offer a person the opportunity to take different actions, including signing up for original Medicare (Parts A and B), switching plans, or joining new ones.
A person who receives automatic enrollment into Medicare will get a “Welcome to Medicare” pack approximately 3 months before coverage begins.
In general, a person who gets Railroad Retirement Board or Social Security benefits is automatically enrolled in Medicare. Otherwise, a person can enroll for Medicare at a Social Security office or online.
A person can first enroll during their IEP that begins 3 months before they turn 65, includes their birth month, and ends 3 months later. If a person chooses not to enroll during their IEP, they may have to pay a late enrollment penalty.
A person can also choose to enroll in a Medicare Advantage and Medicare Part D during their IEP. A person can use this online tool to find Medicare plans in their area.
After the IEP has passed, a person can enroll during the GEP, which runs from January 1 to March 31 every year. However, they may have to pay a late enrollment penalty.
The OEP, or the annual enrollment period, runs from October 15 to December 7 each year. A person can make changes to their healthcare coverage during this time.
Changes may include switching from original Medicare to an Advantage plan, switching between Advantage plans, or dropping Part D prescription drug coverage.
If a person qualifies for a SEP, they can make certain changes to their Medicare coverage.
For example, a person or their spouse with insurance cover from a union or group health plan may be eligible for a SEP.
The SEP for original Medicare is for 8 months, including the month after the end of a person’s group health plan or a person’s employment.
A person can use this online tool to find out if they qualify for a SEP.
In some cases, a person may have retired before they reached 65 years of age. They may be eligible for Medicare if they have a disability, end stage renal disease, or permanent kidney failure needing dialysis or transplant.
Disability and Medicare
A person who has a disability and is under 65 years of age may receive automatic enrollment in original Medicare (Parts A and B) if they fulfill the following conditions:
- they have received disability benefits from Social Security for 24 months or longer
- they have received certain disability benefits from the RRB for 24 months or longer
If a person qualifies for Medicare, they will get a Medicare card in the mail 3 months before their 25th month of disability.
ESRD and Medicare
A person with end stage renal disease (ESRD) can get Medicare at any age if their kidneys no longer work, they need regular dialysis, or they have had a kidney transplant.
In addition, a person, their spouse, or dependent child, must also meet one of the following conditions:
- have worked the required amount of time under Social Security, the Railroad Retirement Board (RRB), or as a U.S. government employee
- getting or be eligible for Social Security or Railroad Retirement benefits
A person can contact the Social Security Administration at 1-800-772-1213 for more information. If a person gets RRB benefits, they can contact 1-877-772-5772 for more information.
If a person is 65 or older and has group health insurance through an employer or is married and has health insurance provided by their spouse’s employer, Medicare coordinates the coverage.
First, Medicare calls each coverage type (Medicare, employer-provided insurance, private insurance) a payer.
If a person has more than one payer, Medicare determines which health insurance is responsible for initial bill payment and designates that health insurance as the primary payer.
After the primary payer has paid its portion of a Medicare bill, it sends the bill with the outstanding amount to the second payer.
If a person has three health plans, the second payer will pay the portion they owe and then pass the bill to the third payer.
A person can get more information from the Benefits Coordination & Recovery Center at 1-855-798-2627.
Basic costs for Medicare in 2021 are shown in the table below.
|Part A premium||Part A is premium-free if a person has worked for 40 quarters over their lifetime and paid taxes to Medicare. If a person worked 30–39 quarters during their lifetime, their monthly premium for 2021 is $259. Those who did not work for at least 30 quarters pay $471 per month for Part A in 2021.|
|Part A deductible||In 2021, the deductible is $1,484.00 for each benefit period|
|Part A coinsurance||Coinsurance in 2021 is a follows:|
$0 for days 1 to 60 in each benefit period
$371 per day for days 61-90 of each benefit period
$742 per day for days 91 onward
There are 60 lifetime reserve days during a person’s lifetime, beyond which a person is responsible for all costs.
|Part B premium||The basic monthly premium in 2021 is $148.50, although this may increase depending on a person’s income.|
|Part B deductible||The deductible in 2021 is $203.|
|Part B coinsurance||For most services, there is a 20% of Medicare-approved charges.|
|Medicare Advantage (Part C) premium||Costs vary between plans.|
|Part D premium||Costs vary between plans.|
When a person retires, they may be eligible for Medicare, depending in part on their age and other health conditions. Also, a person younger than 65 may qualify for Medicare if they meet certain requirements.