Top 5 things you need to know about Medicare before you retire

Information and resources to help you plan

If you don’t know everything about Medicare, don’t worry—you’re not alone! In fact, nearly half of workers near retirement age have little to no knowledge of what Medicare is and how it works.

Here’s the thing, though: Understanding Medicare’s costs and coverage is critical when you’re planning for your healthcare costs in retirement. While U.S. citizens and permanent residents aged 65 or older qualify to receive health insurance through Medicare, the program doesn’t cover all medical expenses. For instance, Medicare doesn’t cover most long-term care expenses.

Here are five key pieces of information you can use to begin building your knowledge, plus a list of resources to help you research further.

1. Medicare coverage includes two primary “parts”

  • Part A, which is known as hospital insurance, covers the cost of care you receive after being admitted to a hospital, skilled nursing home or hospice. It also covers certain kinds of home health care. Most people don’t have to pay any monthly premium for Part A, so it’s typically a good idea to sign up as soon as you become eligible—even if you continue to have access to health insurance through your employer.
  • Part B, known as medical insurance, covers both medically necessary and preventive care. Everybody pays a monthly premium for Part B, but if you have health insurance through an employer you can wait to sign up until you retire.

2. There are two ways to get coverage – Original Medicare and Medicare Advantage

  • Original Medicare. This insurance comes directly from the government and includes Part A and Part B. The coverage you get from Original Medicare is exactly the same for each person who enrolls, and there’s no waiting period before the coverage kicks in. There also are no limits for pre-existing conditions. If you have Original Medicare, you don’t need referrals to see specialists and you can see any doctor you want.
  • Medicare Advantage, also known as Medicare Part C. This insurance, which is provided by private companies that contract with Medicare, provides all the benefits covered by Part A and Part B. Medicare Advantage plans may also offer additional coverage that Original Medicare does not. For example, most offer prescription drug coverage (Medicare Part D). Medicare Advantage plans can help reduce out-of-pocket expenses compared to Original Medicare. Since they usually include Part D, they also can save you an extra enrollment step.

3. There are only certain times when people can enroll in Medicare.

The seven-month initial enrollment period usually begins three months before the month of your 65th birthday and ends three months after your birth month. For instance, if you were born in April, your enrollment period would run from January through July. If you don’t enroll in Part B during this period, you may end up paying a late-enrollment penalty (unless you’re applying late because you had employer health insurance, in which case Medicare lets you enroll penalty-free.

4. You may want to consider Medicare add-ons such as prescription drug coverage or Medigap

  • Prescription drug coverage (Medicare Part D) is offered by private companies. You’ll pay a monthly premium for Part D.
  • Medicare Supplement Insurance (Medigap) picks up where Medicare leaves off. Medigap helps pay for expenses Medicare doesn’t cover, such as deductibles and copayments. For example, Medicare Part B only covers 80% of the cost of an outpatient procedure, so a Medigap plan can help cover the rest.

5. Understand the costs you’ll face

  • Part A: If you or a spouse paid Medicare taxes for a certain amount of time while working, there will be no monthly premiums.
  • Part B: The standard monthly premium is $135.50 per month (or higher, depending on your income—see below for details).

Medicare chart

  • Part D: The monthly premium varies by plan and depends on your level of income

Medicare resources

The official US government site for Medicare:

To apply for Medicare:

Learn about different types of Medicare Advantage Plans:

Access your personal Medicare information:

Centers for Medicare and Medicaid Services:

State Health Insurance Assistance Programs (SHIP):

Get help by phone: 1-800-MEDICARE

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