Understanding Medicare and Your Retirement Insurance
When you’re retired and on a retirement budget, there are a lot of choices to make – and one of the most important ones is what type of Medicare policy to choose.
Deciphering the rules and regulations of Medicare can be difficult at best. Following are some tips to help you understand Medicare’s basics and how you can make the most of your retirement savings and retirement insurance options.
What is Medicare?
Medicare is health insurance provided by the federal government for people age 65 or older and those with certain disabilities.
There are four parts to Medicare. They include:
Medicare Part A
(Hospital Insurance)
- Helps cover inpatient care in hospitals (includes critical access hospitals, inpatient rehabilitation facilities, and long-term care hospitals).
- Helps cover skilled nursing facility (not custodial or long-term care), hospice, and home health care services.
Medicare Part B
(Medical Insurance)
- Helps cover doctor services and outpatient care.
- Helps cover some preventive services to help maintain a person’s health and to keep certain illnesses from getting worse.
- Generally pays 80% of the Medicare-approved amount for covered services
Medicare Part C
(Medicare Advantage Plans)
- A way to get Medicare benefits through private companies approved by and under contract with Medicare.
- Includes Part A, Part B, and usually other benefits Medicare doesn’t cover. Most plans also provide prescription drug coverage.
Medicare Part D
(Prescription Drug Coverage)
- Run by private companies approved by Medicare, which can either be Medicare Advantage Plans or separate Medicare Prescription Drug Plans.
- Helps cover the cost of prescription drugs.
- Each plan can vary in cost and drugs covered.
Under Medicare recipients receive certain medical services and supplies in hospitals, doctors’ offices, and other health care settings. Services are either covered under Medicare Part A (Hospital Insurance) or Medicare Part B (Medical Insurance).
Deciphering the Alphabet Soup: What is Part A and Part B?
Medicare Part A and Part B is what is referred to as “original” Medicare. Part A helps cover the costs of inpatient hospital care, inpatient skilled nursing facility (not custodial or long-term care), hospice care and home health care services. Part A is generally premium-free if you or your spouse paid Medicare taxes during your years of employment.
When you have Part B coverage, it helps to pay services such as doctors’ visits, outpatient care, home health provisions, and other medical services, as well as some preventive services. However, note that Part B requires a standard premium payment.
One thing to keep in mind is that if you refuse to enroll in Medicare Part B at age 65 and then later change your decision, you’ll be charged 10% higher premiums for each year you were not enrolled in the program
What is Part C?
Medicare Part C is also known as a Medicare Advantage plan. If you enroll in one of these plans, you will generally get all your Medicare-covered health care through that plan, including prescription drug coverage.
If you choose to join a Medicare Advantage plan, you first need to be enrolled in Part A and Part B. This usually requires you to pay a monthly premium (in addition to your Part B premium) and a copayment or coinsurance for covered services.
What is Part D?
Medicare Part D provides prescription drug coverage. These plans are available through Medicare-contracted private companies. If you don’t currently have creditable prescription drug coverage, you may want to consider enrolling in Medicare Part D as soon as you are eligible. The downside of deciding to join later is that you may have to pay a late enrollment penalty.
Making the most of your retirement insurance and retirement savings is what it’s all about. Understanding how Medicare benefits fit into your life can make retirement planning that much easier.
