Medicare Basics for New Retirees

This article was graciously written by Danielle Kunkle Roberts, Co-owner, Boomer Benefits

(4 Minute Read)

Turning 65 can be a truly exciting time in your life. Retirement is on the horizon for many people and they look forward to enjoying hobbies and vacations and spending time with family.

One thing that’s not always so fun about turning 65, however, is trying to learn Medicare. With 4 parts and dozens of supplemental and drug options, it’s easy to get confused and overwhelmed by all the choices.

Something we’ve learned is that it’s important to start with the basics. Once you learn and understand what your Original Medicare covers, it’s easier to grasp the supplemental choices.

Medicare Starts with the Parts: A and B

Medicare has four parts, but only two of them serve as the foundation of your coverage. We call these two parts Original Medicare. It includes Part A hospital insurance and Part B outpatient insurance.

Part A covers your room and board in the hospital, as well as skilled nursing, blood transfusions, and hospice. Part B covers nearly everything else that’s medically necessary, such as doctor visits, preventive care, lab-work, medical equipment and supplies, surgeries and more.

Part A will cost you nothing if you and a spouse have worked at least ten years in the U.S. Part B is based on your household income (see chart here), but starts at around $134/month for most people.

Just like other insurance coverage that you have had in the past, you will be responsible for some costs when you use the insurance too. For example, both Part A and B have a deductible that you must satisfy up front before your benefits begin. Long hospital stays may also incur daily copays.

On your Part B outpatient series, Medicare covers 80% of the cost of your services. The rest is left for you to pay, and it can be significant for expensive things like CT scans, surgeries or chemotherapy.

To cover all these gaps in Medicare, many people purchase additional coverage from private insurance companies. There are two primary ways to fill in the gaps: Medicare Supplements and Medicare Advantage plans.

Medicare Supplements

Medicare supplements are policies that pay after Medicare to cover some of the cost-sharing items that you would normally be responsible for. There are ten standardized options to choose from in most states. You can choose coverage that covers all or most of the gaps, or you can choose lighter coverage that just helps protect you from catastrophic spending.

Medicare itself determines which claims are paid. If it approves a claim, it will pay its share and send the rest on to your Medigap company. You can see any provider in the nation that accepts Medicare, which makes the coverage very easy to use both at home and while traveling in the U.S.

Medigap plans do not cover retail prescription drugs though. You can purchase a standalone Part D drug plan to go alongside your coverage. This will give you access to prescriptions at significantly lower prices than you would have without coverage.

Medicare Advantage Plans

If Medigap plans fall outside of your budget, you can consider a Medicare Advantage plan. Also called Medicare Part C plans, Medicare Advantage plans are private health insurance policies that pay instead of Medicare. Premiums are typically much lower than Medigap plan premiums, but you will get your Part A and B services from the plan’s local network of providers.

Some plans are HMO-based and require you to only seek treatment inside the network. Care outside the network is not covered except in emergencies. Other plans such as PPO plan options, allow you to treat both in and outside of the network, but you’ll pay substantially higher costs for out of network services.

Many Medicare Advantage plans also include a built-in Part D drug plan. This can be very convenient since you will have just one card that you use both for medical and for pharmacy needs.

Choosing the right coverage is important so that your medical needs are met, and you have the peace of mind you need to enjoy your retirement years. It’s important to research your options early so that you choose something that fits during your Medicare initial enrollment window.

For additional information about Medicare, you can visit the Medicare website here.

Danielle Kunkle is a Medicare insurance expert, and founding partner at Boomer Benefits. Her team helps Baby Boomers navigate their entry into Medicare in 47 states. Connect with her on Facebook.

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