Frequently Asked Questions: Health Insurance In Retirement

Frequently Asked Questions: Health Insurance In Retirement

May 22 2017

As you approach 65, you’ll likely have questions about your health insurance options in retirement, including Medicare benefits.

Original Medicare — or health insurance offered by the federal government for individuals 65 and older — takes care of only 80 percent of your medical costs.

This helps contribute to the affordability of health insurance in retirement, but you may be asking yourself when you need to enroll in Original Medicare and how to secure additional coverage if 80 percent is not sufficient to meet your needs.

Here are some answers to frequently asked questions to help make your decision about Medicare health insurance easier.

When do I need to enroll?

Knowing what resources are available and what options you have in advance will help you prepare for a relaxing and healthy retirement.

To start, determine if you’re going to need different health insurance after you turn 65.

At this age, you’re typically eligible for Medicare Part A at no charge if you paid into the Medicare program through your taxes for at least 10 years. You’re also eligible for Part B as long as you’re a citizen or permanent resident of the United States.

If you have individual health plan benefits, or if you plan to retire and will no longer receive benefits under an employer group plan, you’ll want to start looking at your Medicare options around your 65th birthday. You have a seven month period that starts three months before the month you turn 65 and concludes three months following.

However, if you have health benefits through an employer plan and you plan to continue working, you may still be eligible to receive benefits through that plan after you turn 65. Since you do pay a premium for Part B, you’ll only want to enroll in that plan when you need it.

When you’re ready to retire, you’ll have an eight month Special Enrollment Period (SEP) to sign up for Part A and/or Part B that starts at one of these times (whichever happens first):

  • The month after your employment ends
  • The month after group health plan insurance based on current employment ends

These rules are guidelines for the majority that receive benefits through Medicare, although, there are other enrollment scenarios. You can learn more and use this free resource to plan for your retirement.

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How do I enroll in Original Medicare?

If you’re already receiving benefits from Social Security, you’ll automatically be enrolled in Original Medicare (Parts A and B) on the first day of the month you turn 65. You don’t need to do anything additional. Just watch for your Medicare card to come in the mail.

If you’re not already receiving Social Security benefits, you can enroll in Parts A and B by visiting ssa.gov or by calling 1.800.772.1213 (TTY 1.800.325.0778). It may be best to enroll during the three months before your birthday to prevent any delays in Part B coverage, unless you’re still working.

Is Original Medicare sufficient for my needs or do I need additional coverage?

Since Original Medicare (Parts A and B) only covers about 80 percent of medical expenses, it may benefit you to explore supplemental coverage options.

A Medicare Advantage plan, also known as Medicare Part C, is offered through private insurance companies. The plan operates similar to an individual or employer HMO or PPO plan, which may feel most familiar to you. Many of these plans offer additional benefits such as gym memberships and prescription drug coverage (MAPD plans). With a Medicare Advantage Plan, you’ll have a monthly premium in addition to your Plan B premium but it could be as low as $0 and your out-of-pocket expenses may be lowered, and you’ll have predictable copayments and often smaller deductibles.

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If a Medicare Advantage plan isn’t right for you, a Medigap plan is another option. Medigap plans also help cover costs that Original Medicare doesn’t cover, reducing out of pocket expenses significantly. However, with a Medigap plan, the trade off for paying less for out-of-pocket health expenses is higher monthly premiums. Medigap plans don’t include prescription drug coverage, so you’ll need to purchase a separate Part D prescription drug plan.

It’s important to remember that you can only enroll in one of these type of plans. Medigap and Medicare Advantage do not work together.

If you’re approaching 65, getting ready to retire, or both, there is a lot to consider for your health and future. Knowing what resources are available and what options you have in advance will help you prepare for a relaxing and healthy retirement.

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