A Thorough Understanding of Medicare: Essential for Smart Retirement

Few government programs will mean more to future retirees than Medicare – and few are more misunderstood. Every time we think “everybody understand Medicare,” we’re reminded in one of our AgingOptions seminars or on our weekly radio program that there are countless numbers of people out there approaching retirement with no basic knowledge of what Medicare is and what it does. For that reason, we think it’s good to revisit some of the basics, which is why we bring this very recent article from the financial website Motley Fool to your attention.

The editors of Motley Fool probably posted this article after realizing, just as we have, that there’s a lot of misinformation out there. The article is called “The Many Parts of Medicare – and Which Ones You Might Need.” It starts out with the fundamental fact that “Medicare isn’t just one insurance plan – there are actually several different parts, each of which provides different types of coverage.” Let’s walk through the Motley Fool article and see what they have to say. (If you already have a solid understanding of the Medicare program but have friends or loved ones who don’t, this article might be a good place to help them get their bearings.)

Medicare came into being in July of 1965 when President Lyndon Johnson signed the law that created both Medicare and Medicaid. Today well over 50 million people rely on this essential program to cover all or part of their medical expenses. Still, as the Motley Fool article states, “Medicare is a lot more complicated than you may realize,” having expanded through the years from the original two parts, Part A and Part B, into other parts that cover “a plethora of additional services.”  But because medical expenses can create such a burden for the majority of retirees, and because maintaining your good health is the single most important decision you can make in retirement, you can’t afford to remain ignorant about Medicare. “Understanding each part of Medicare,” writes the Motley Fool, “can help you make smart healthcare decisions during retirement.”

Part A: Your Medicare insurance begins with Part A, which covers any hospital stay as well as hospice services.  If you are ever sent to a nursing home for rehabilitation, these costs – up to a maximum of 100 days – will also be covered (for the most part) under Part A. But this rehabilitative coverage only applies if you qualify, so don’t count on coverage unless you were admitted to the hospital for the required length of time and sent to the nursing home based on a doctor’s recommendation. Everyone who enrolls in Medicare is signed up for Part A by default, says the Motley Fool article, and there’s no charge for this part of Medicare if you or your spouse earned enough during your working life to qualify for Social Security.

Part B:  This part of Medicare provides non-hospital-related coverage, including services that are considered “medically necessary,” such as seeing your doctor when you’re sick, along with those that are “preventative” like physicals and lab tests. “As with Part A,” writes the Motley Fool, “everyone who signs up for Medicare gets Part B by default.” However, Part B always comes with a premium, based partly on your income. In 2017, Part B premiums start at $134 per month and top out at just below $430 per month for high income individuals.  Generally your Part B premiums are paid directly out of your monthly Social Security benefits.

Part C: Here’s where it gets a bit more complicated. Medicare Part C is also known by the common term “Medicare Advantage.” These plans are optional, offered by private insurance carriers to those enrollees who want more than minimal health insurance. These Medicare Advantage plans take the place of Parts A and B, and the government requires that they cover all the Part A and B healthcare expenses plus additional services (such as dental and vision coverage) which vary from plan to plan. You can find out more and compare plans at the official Medicare website.

Part D: Part D is for prescription drugs only, and since some Medicare Advantage plans also cover prescriptions you may decide you don’t need Part D. But your prescription needs may change over time, and these plans vary widely in how much they cover, so you’ll need some good advice before you opt out of Medicare Part D.

Medigap: Finally there are plans called “Medigap plans,” which are an alternative to the Part C Medicare Advantage plans. Medigap plans work in harmony with Parts A and B to cover healthcare expenses that aren’t included under original Medicare, and they must adhere to guidelines for coverage set by the federal government. There are ten different levels of coverage, and those providing more coverage also tend to have higher premiums. “But,” writes the Motley Fool article, “Medigap policies are offered by private companies, (so) the premiums can vary quite a bit, even between policies using the same plan template. Since policies under the same plan must have exactly the same coverage, it just makes sense to pick the one that’s cheaper.”

Remember, none of these plans covers long term care in a nursing home or other care facility, except for relatively short periods of rehabilitation. This is another area where you’re going to need some sound advice, because no one wants to be a burden to their loved ones as they age. We also want remind you that your medical decisions really need to be made in conjunction with all your other retirement-related planning: financial, housing, legal and family. The only type of retirement plan we know of that weaves all these key elements together into a sound retirement strategy is a LifePlan from AgingOptions.

We invite you to invest just a few hours and find out more about this retirement planning breakthrough. Join Rajiv Nagaich of AgingOptions at a free LifePlanning Seminar soon. These highly popular, information-packed sessions are held throughout the region. You’ll find dates, times, and locations here: then register online or give our office a call.

Don’t go into retirement unprepared. Face the future with confidence, armed with your AgingOptions LifePlan.

(originally reported at www.fool.com)

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Posted in Articles, Health, Medicare, News, Retirement.

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