Are you approaching retirement? If so, you have some big decisions in your near future, such as when to file for Social Security or how much to take in annual withdrawals from your savings. You’ll also need to decide what type of Medicare coverage you want in retirement.
Medicare is a valuable resource for retirees. When it was first introduced, it only covered hospitalizations and limited types of skilled nursing. Over time, though, other types of coverage have been added. Today, Medicare is a robust insurance program for retirees.
You might be confused and challenged by the broad range of coverage options. After all, it’s impossible to predict your future health care needs. Fortunately, Medicare offers an annual enrollment window so you can make changes to your coverage as needed.
Below are descriptions of the four main components of the Medicare program. The more informed you are about your choices, the better you will be able to select the coverage mix that’s right for you. Your financial professional can also help you develop a health care strategy as part of a comprehensive retirement plan.
Part A, also known as Original Medicare, was the first type of Medicare coverage to be introduced. You are automatically enrolled in Part A when you file for Social Security benefits. You don’t pay any premiums for this coverage, as it is funded by the Medicare payroll tax.
Medicare Part A covers hospitalizations, emergency services, hospice and limited forms of skilled nursing care. It’s important to note that skilled nursing care isn’t the same as long-term care. For Medicare purposes, skilled nursing care refers to treatment directly related to a hospitalization or other ailment. It doesn’t refer to long-term assistance with things like bathing, eating and mobility.
While Part A can be helpful in the event of an emergency, it only provides partial coverage. You are likely to have a copay for most treatments. Also, Part A often only provides temporary coverage. If you are hospitalized or need skilled nursing for several months, it’s possible your copay could increase significantly.
Part B is also automatically applied when you enroll in Social Security, but you can opt out of the coverage if you want. Part B is partially funded by the payroll tax, but it also has a monthly premium in addition to copays and deductibles. The premium for Part B depends on your income level.
Many retirees choose to stay in Part B, as it covers a wide range of important services. Part B provides insurance protection for doctor visits, supplies and medical equipment, ambulance transportation and a limited selection of prescription drugs.
Part C, commonly known as Medicare Advantage, is a unique program that allows retirees to purchase Medicare coverage directly from private insurers. These policies usually include all the protection of parts A and B, plus enhanced protection for other services, such as dental, vision and physical therapy.
You may also find that Medicare Advantage policies have more flexibility when it comes to cost. You may be able to find a low-premium, high-deductible plan. Or, conversely, you may prefer to pay a higher premium but have lower out-of-pocket exposure. Medicare Advantage offers a broad menu so you can find the policy that’s right for you.
Part D, the most recent addition to the Medicare menu, provides coverage for prescription drug costs. It’s an optional form of coverage and comes with a monthly premium. Medicare offers a wide range of Part D plans, all with different premiums, copays and deductibles. Review your options and choose the one that best fits your prescription drug needs.
Ready to develop your health care funding strategy? Let’s talk about it. Contact us today at Benefit Resource Partners. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
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