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Medicare Planning

Medicare Planning

August 18, 2020

Medicare is important to understand and plan for in retirement. Medicare is the national health insurance program to which all Social Security recipients who are either over 65 years of age or permanently disabled are eligible. Coverage under Medicare is similar to that provided by private insurance companies: it pays a portion of the cost of medical care. Often, deductibles and co-insurance (partial payment of initial and subsequent costs) are required of the beneficiary.

In general, as long as you have worked at least 40 quarters (ten years) and are age 65, you are eligible for a premium-free portion of Medicare, referred to as Part A. Your part A benefits will include inpatient hospital care, limited time in a skilled nursing care facility, limited home health services, and hospice care. As you can see, Part A coverage is very limited and most will make the decision to add on parts B-D, Below we will discuss the differences between these options. 

How do I sign up for benefits?
If you are already collecting benefits from Social Security at age 65 you will automatically be enrolled in Medicare Part A & B. If you are not collecting social security benefits at that time, you can either go to the social security website, call social security, or apply at their office in person.

Here is a brief description of Parts B, C, and D:

Part B: 
Medicare part B broadly covers medically necessary services & preventative care services. This includes things like clinical research, ambulance services, mental health care, durable medical equipment, and limited outpatient prescription drugs. If you don't sign up for Part B initially, you may have to pay a late enrollment penalty of 10% of your premium per 12 month period you could have had Part B but didn't sign up. 

Part C (or Medicare Advantage plan): 
This is an all-in-one alternative to original Medicare. These policies are through private insurers that bundle Part A, B, and D together on one policy.     

Part D:
These policies cover prescription drugs, although the drugs covered and the amount you need to pay out of pocket for your prescription can vary between policies. Just like Part B, if you do not sign up for Part D when you are first eligible to begin Medicare benefits, you may have to pay a penalty.