3 Things to Know About Healthcare in Retirement

Congratulations!  You have reached a milestone in your life; AARP’s mailing list.  There are scarier things than being on a mailing list; and, entering the world of Medicare is close to the top of that list.  You are being inundated with mailers, phone calls, and TV and radio ads.  The government has tried to help simplify the process by dividing Medicare into four “Parts” and then allowing you to buy Plans.  If you do not sign up when you should, you get a fine for the rest of your life.  This leads to not only confusion but also fear when planning. To help set your mind at ease, here are three things to think about as you approach your big decision.

1. Alphabet Soup

It is important to understand what Medicare is and how it works.  Medicare has four “Parts” – each with their own purpose. These plans are designed to help cover major medical expenses like inpatient care in hospitals, skilled nursing facilities, hospice and home health care doctors’ services, outpatient care and other medically necessary services.  While all very similar, some types of plans are managed by private insurance companies approved by Medicare. These plans have discretion to assign their own copays, deductibles and coinsurance.  Drug coverage is a separate plan provided by private Medicare-approved companies, and you must pay a monthly premium.

2. When to sign up?

65 years is the official Medicare age although the age may be a little higher in some instances.  The answer to this question largely depends on whether or not you have health insurance through your employer.  It is possible for you to have Medicare and your employer-based health insurance at the same time.  Your employer cannot force you off the group plan because you have turned 65.  Now, maybe those Millennials are not so bad and you decide to work a few more years.  You can choose to stay on your employer’s health plan and not be penalized for signing up for Medicare.  When you do finally decide to hang it up, you will have a “Special Enrollment Period” and not be penalized for a late entry.

3. Who’s on First?

Do you need a “Medi-Gap” plan or want a “Supplement”?  The truth is… they are the same thing.  You must first be enrolled in Medicare to be eligible for Medicare supplement plans. Medicare Supplements are plans designed by the federal government to fill in the “gaps” that the Medicare plans you choose do not cover such as the deductible, copays and coinsurance.  Each Supplement is designed to cover different aspects of Medicare thereby establishing different price points for consumers.  Make no mistake; Medicare is very different than a Supplement.  The main reason for getting a supplement is to control your monthly costs.  When you are on a fixed income, it is easier to budget for a known expense rather than address big spikes in expenses due to health related issues that may arise throughout the year.  Medicare Supplements are sold by private insurance carriers, and can be purchased through a local broker.

This information may provide some clarity and set your mind at ease. However, keep in mind this is a general overview of the program and will not answer all your questions.  Like a puzzle, Medicare can offer great coverage when all the pieces are put together in the right way. Before committing to your unique plan design, it is worthwhile to consult with a knowledgeable provider.