Navigating Medicare

Two of my lunch buddies have recently gone through the harrowing experience of signing up for Medicare. Medicare is a nice benefit, but there are some important things to know before signing up. We’ll go through some key terms and decision points.

Health Insurance

Annual health insurance enrollment has always been a stressful time for me. When I was working, there was always a PPO, EPO, HMO, and other options to choose from. Way too much reading and comparison and then I had to guess what health problems I might have in the coming year to figure out which plan would be the most cost effective. This got much less stressful when my company offered a High Deductible Health Plan (HDHP) with a Health Savings Account (HSA). The saving and investing opportunities with an HSA more than offset any potential missteps in choosing a plan (for me). Read more here.

After I retired in 2019 at age 56, the stress started again. I had to find private insurance and I was comparing gold, silver and bronze plans across several insurance providers looking for the best deal. Yuck. No fun and quite expensive.

Medicare

However, once we hit age 65, we’re eligible for medicare. This should be easy, right?

Yes and No. It should save us some money, but it’s not as easy as it should be.

Medicare has Part A, B, C, D, Medigap and other components we need to know about. Let’s dive in.

Signing up

We become eligible to sign-up for Medicare 3 months prior to our 65th birthday. If we don’t sign-up in the 3 months before we turn 65 or within the 3 months after, we may pay a penalty. This is true even if we continue to work past 65. Be sure to sigh up when you turn 65.

Medicare v. Medicaid

Medicare is a health insurance option available to individuals age 65 and older and those with certain health conditions and disabilities. A couple of key items here:

1. Individual – this is a plan for a person, not a family. If our spouse is younger, we will still need to buy coverage for them until they turn 65 and are eligible.
2. Health conditions – it is possible that we may qualify before 65 if we have ALS, ESRD or other serious conditions.

Medicare is similar to Medicaid and is available to some low income individuals. And just to make it more confusing, one could be eligible for both plans, in which case medicare is the primary insurance and medicaid acts as a supplement.

Original Medicare

If you do some reading, you’ll likely come across the term original medicare. Original medicare refers to medicare parts A & B.

Part A

Medicare Part A is hospital insurance. It covers:

• Inpatient Hospital Care
• Skilled Nursing Facility Care
• Behavioral and Mental Health
• Hospice Care
• Home Health Services
• Nursing Home Care

Medicare part A has no premium as long us we have the required work history. It is funded via payroll tax. Part A has an annual deductible of $1,632 and may also have a coinsurance payment depending on the services provided.

Part B

Medicare Part B is Health Insurance. It covers:

• Medically necessary procedures to diagnose or treat a medical condition
• Preventative Care
• Ambulance Services
• Clinical Research
• Durable Medical Equipment
• Limited Outpatient Prescription Drugs
• Mental Health and Substance use Disorders
• Oxygen Equipment and Accessories

The base premium for Medicare Part B is $174.70 per month but is adjusted up for high income earners. See details from Nerdwallet here.

Part B has a $240 per year deductible and a 20% co-pay.

Not Covered

Sticking with Original Medicare – Parts A & B, what is not covered?

• Long-term care (also called custodial care)
• Most dental care
• Eye exams (for prescription glasses)
• Dentures
• Most cosmetic surgery  
• Massage therapy
• Routine physical exams
• Hearing aids and exams for fitting them. For more on hearing aids, read here.
• Concierge care (also called concierge medicine, retainer-based medicine, boutique medicine, platinum practice, or direct care)
• Covered items or services you get from an opt-out doctor or other provider (except in the case of an emergency or urgent need)

Supplemental Coverage

We may find ourselves in the position where we need more coverage than Original Medicare provides. You will notice that while Part B covers limited prescriptions – very limited – general prescription coverage is noticeably absent. We may need that.

The supplemental coverages are private insurance plans that offer additional benefits and services. They are not part of the overall government offering, however, the government must approve the plans and they are available on medicare.gov.

Part C – Medicare Advantage

Part C, or Medicare Advantage is an insurance policy that we can obtain in addition to Parts A & B. We still need to sign-up for A & B, but we then go to private insurance companies to obtain Part C coverage. Part C may cover items like (depending on the coverage you select):

• Prescription Drugs
• Vision
• Dental
• Hearing

Part D – Prescription Drug

Part D allows us to only opt for drug coverage and not the other coverages of a Part C – Medicare Advantage plan. Again, it is a private insurance and it is offered on medicare.gov. We must sign up for parts A & B before enrolling in Part D.

More info on available plans at ssa.gov.

Medigap

Medigap is medicare supplemental insurance. It helps us pay some of the out of pocket costs like deductibles and copays. Read more here.

Part F

Medicare Part F was a supplemental plan – another version of Medigap with some additional benefits. It is no longer available.

What if I’m out of the Country?

From what I’ve read, Medicare typically does not cover us internationally. That’s a bummer. We may need to get private travel insurance if we are leaving the country. I’ll do some more reading here and update the post.

Wrap-Up

Now it all makes sense – right?

The big take-away is that we need to sign up when we’re 65. We are eligible to sign-up 3 months before our 65th birthday and must sign-up prior to 3 months after our 65th birthday, else we could pay penalties.

Next, consider additional coverages. We’ll likely need prescription coverage, but do we need dental, vision, hearing as well? We’ll likely want a Part D or a Part C plan.

Do we need help with premiums, copays and deductibles? If so, a medigap plan may be right for us.

And if you really want to be smart, start saving now. Medical costs will be a big part of our retirement. Read more here at nerdwallet. Putting money away now, and maybe switching to a high deductible plan with an HSA may better position us for healthcare expenses in retirement.

For additional reading, AARP is a great resource for medicare and for all things retirement.

This seems to be a good start, but there is probably more. I’ll continue reading and update the post. Let me know if you have questions.

Update: 11/15/2024

I was reading Clark Howard’s website this morning and he had a more detailed discussion of Medicare & Medicare Advantage. If you are interested in further reading, check it out here.