Retirement Planning – Your Guide To Medicare

One of the biggest calculations men 50 and over will have to make as we approach retirement is what to do about healthcare. In a CNBC article, a couple retiring at 65 in 2019 can expect to spend over $285,000 throughout their retirement, with the expenditure growth forecast to grow by 5.5% through 2026. One resource we have in our retirement toolkit is the government program: Medicare.

With retirement looming in 10 to 15 years and considering increasing costs, inflation, and a tumultuous national healthcare outlook, knowing what to expect can make this planning much easier to manage. As with other retirement planning, the best thing you can do is educate yourself now on medical necessities so you can make an informed decision later.

First to recap – what is Medicare?

Medicare is a federal government health insurance plan that is available for people aged 65 and over OR under 65 and receiving Social Security Disability Insurance or End-Stage Renal Disability. For the most part, it is used to cover those individuals who have crossed over into retirement age and need healthcare coverage. Thus, once you become eligible, you should enroll and select your coverage.

That said, be thoughtful about how you choose your coverage. Your selection of benefits can impact out-of-pocket costs and the ability to choose where you receive your care. And remember that some things are not covered by Medicare such as dental, vision procedures like exams, OTC medicines and long-term care may require separate insurances.

FYI – Medicare vs. Medicaid

While they may seem similar, Medicare and Medicaid serve very different purposes. They’re both government programs that help provide health insurance. However, Medicare is a program that you become eligible for at age 65 (and a few exceptions for those under age 65).

Medicaid is a public assistance healthcare program largely based on financial need. You may qualify for Medicaid based on four factors: income, household size, disability, and family status. For example, pregnant women, parents of sick children, disabled individuals, low-income families or teenagers living alone are all among the individuals who can apply for Medicaid because they may qualify.

What to know about Medicare

Healthcare can be a lot to take on even in the best of conditions. If you feel like you spent the last 40 years trying to grasp the coverage you currently have and now and it’s changing, then it’s natural to feel overwhelmed. That said, there’s a variety of moving pieces when it comes to retirement and healthcare. Use the suggestions below to prepare yourself:

• Don’t wait.

Waiting until you’re already 65 to think about Medicare means you’re (unfortunately) a bit behind the eight ball. You want to make sure that you’re able to get out and in front of the numerous decisions you need to make regarding your health. For example, which doctors will be covered under your new plans? What about prescription drugs? How much will your premiums and deductibles be? How will your new health insurance apply to travel? These are crucial questions to ask because other factors in your life will be changing as well. If you plan to do a big road trip or travel abroad once you’re retired, you already want to have your ducks in a row with healthcare.

• Opt into coverage (if necessary).

You may start your Medicare program even if you don’t retire at 65, but it’s conditional and comes with reductions to your long-term benefits. (Read more here.) The decision may then to delay your coverage until you’re ready for your social security payments. It’s important to call your Social Security office and discuss your decision with them and ensure that you’re good to go. You can also read up on our associated blog; Social Security – What You Should Know Pre-Retirement.

• Know these dates.

The best way to stay informed about anything is to know when the information will be available. Luckily, you already have the dates at your disposal.

1. 1. October 1: Information about the upcoming year becomes available.
   2. October 15 – December 7: Open Enrollment begins. During this time, you can change your Medicare health coverage and prescription drug plans.
   3. January 1: Any changes you made to your health coverage becomes active during open enrollment becomes active

• Understand the choices.

Once you start talking to anyone about Medicare, you’re going to start hearing a lot of lingo: “Original Medicare,” “Medicare Part A,” “Medicare Part B,” and so on. Seriously, it’s enough to make your head spin. But you can start your research well before you need it and know exactly what you want and before the time comes. We’ve included the common terms you will come across:

1. 1. 1. Medicare Part A = Hospital Insurance: Covers inpatient care in hospitals with no monthly premium if you qualify and have paid social security for 10 years. There is a yearly deductible and once met, days 1-60 in the hospital are 100 percent covered. Beyond that, you must pay an amount set by Medicare.
      2. Medicare Part B = Medical Insurance: Covers doctor’s services, hospital outpatient care, and home health care. Premiums depend on your annual income. After the yearly deductible is met, Part B pays 80 percent, you pay 20 percent. Medicare pays 100 percent of preventive care
      3. Original Medicare = Medicare Parts A and B
      4. Medicare Part C = Medicare Advantage Plans: Private alternative to Original Medicare. Offer the same services as Parts A and B and often prescription drugs, vision, and hearing as well. Costs vary depending on the private insurance company offering it.
      5. Medicare Part D = Prescription Drug Plans: Several plans offered. Cost of plans and medications vary.
      6. Medicare Gap Insurance = Supplemental Insurance: Insurance sold by private companies that can help cover the cost of expenses like medical service copays and excess hospitalization that wouldn’t be covered by Original Medicare. (We’ll be covering additional Medicare insurances in another blog)

Final thoughts

Retirement planning needs to start now, before you have to use it! And taking advantage of every solution is not just a smart move, but it may also mean the difference between an enjoyable retirement and a stressful one. Sure, taking the step into this next phase of our lives can be overwhelming, but we’ll help get your the tools you need to do it well. As always, if you don’t see something here you want, please reach out to Glen directly through our Contact page or leave a comment below. We read each and every one. All the best ~ Glen.