Have you ever thought about what you’ll do for medical insurance when you retire? Medicare might be a great option for you. And since open enrollment is right around the corner, let’s cover some frequently asked questions you might have if you’re retired (or nearing retirement) and thinking about health insurance for your future.
What is Medicare?
Medicare is a type of health insurance provided by the United States federal government. There are two different types of Medicare: Original Medicare and Medicare Advantage.
Original Medicare includes three part: Part A (hospital insurance) and Part B (medical insurance), with the option to add Part D (prescription coverage). Part A covers things like in-patient hospital stays, hospice, nursing facility care, and “some home health care.”1 Part B covers things like doctor’s office visits, preventative care, and outpatient services. Part D is coverage for prescription and pharmacy services like medicine and vaccines.
Medicare Advantage (also known as “Part C” or “MA”) is often provided by private companies in collaboration with Medicare. The benefit of Medicare Advantage is that it covers all three parts (hospital insurance, medical insurance, and prescription services). Not only that, it sometimes includes extra benefits like dental, hearing, and vision.
How does medicare work?
Like most health insurance plans, Medicare includes an annual deductible, co-pays or coinsurance, and a monthly premium. If you enroll in the original form of Medicare, you’ll pay a specific deductible before Medicare kicks in to pay their part. Once you meet your deductible, you’ll then pay a percentage of the cost of services (coinsurance) or a specific dollar amount (copayment).
ORIGINAL MEDICARE
For most, there’s no premium for Part A. But if you’re in need of inpatient care at a hospital, you’ll pay a deductible of $1,556 per 60-day stay before Medicare kicks in to pay the rest.2 If you end up staying in the hospital for more than 60 days, you’ll pay a specific amount per day. Just note that there’s no out-of-pocket max with this kind of plan. If you have more than one inpatient hospital stay at least 60 days apart, you’ll have to pay the deductible again. If you have Part B, you’ll pay an annual deductible of $233 along with a premium of at least $170 per month (depending on your income).3
If you want even more payment coverage on the Original plan, you have the option to purchase a Medicare Supplement Insurance (Medigap). Medigap offsets your Medicare costs by helping you pay deductibles, copayments, and premiums.
MEDICARE ADVANTAGE
If you choose to enroll in a Medicare Advantage plan, your premiums, deductibles, and copays will be different depending on the type of plan or provider you have. You can find cost estimates for MA plans by visiting Medicare.gov.
Am I eligible for Medicare?
If you are 65 years old (or turning 65 in the next three months), Medicare may be your right next step on your retirement planning journey. Turning 65 years old isn’t the only eligibility factor though. If you have a disability, you may also be eligible for Medicare along with those who have End-Stage Renal Disease.
When does open enrollment begin?
Initial enrollment for Medicare begins three months before you turn 65, the month of your 65th birthday, and three months after your birthday. Otherwise, general or open enrollment begins in January and runs through March 31st every year.
If you sign up for Medicare coverage before you turn 65, you should expect coverage to begin the month of your birthday. If you’re enrolling during the general open enrollment period, you should expect coverage to kick in about a month after you sign up.
Can I enroll in Medicare if I’m still working?
We understand that not everyone wants to retire at 65. Maybe you love your job or maybe you still have a retirement goal you’re working toward. That’s ok! And if that’s you, there’s good news: you can still enroll in Medicare…but only if you meet a few requirements:
- As always, you have to be at least 65 years old (or older) to be considered for this type of medical insurance.
- You’re self-employed.
- Your employer has less than 20 employees.
If any of these things are true for you (or your spouse), Medicare might be a great option for health insurance. But if you or your spouse are still working for a company with a group health insurance plan, you should wait until you stop working or the plan ends to enroll. For more information on Medicare, check out Medicare.gov. For additional options and counsel on health insurance plans, connect with a SageSpring advisor today.
