Retirement Health
We all hope to retire in good health. However, most of us have aged with an accumulation of habits, some good and some bad. Personally, I had bad knee joints that I eventually had replaced.
There will be more medical appointments in your retirement for a variety of preventative reasons and for treatments of things not functioning well.
To protect your financial welfare, you must carry adequate insurance, like you did before you retire.
You have options. I will introduce you to some of them. But, when your time to get coverage arrives, be sure to discuss your options with a good independent insurance agent.
Medicare
Medicare Part A is for hospital coverage. It is free if you worked and paid Medicare taxes for at least 10 years. It also covers skilled nursing facilities and hospice.
Medicare Part B (medical insurance) is for services from doctors and other health care providers, outpatient care, home health care, durable medical equipment, and some preventative services.
You will pay a monthly premium for Part B. The exact amount depends on your income level. That premium is deducted from your Social Security benefits.
Medicare Part C (Medicare Advantage) is an alternative to Parts A and B that bundles several coverage types, including Parts A, B, and usually D. It may also include vision, hearing, and dental insurance.
Medicare Part D is prescription drug coverage. It helps to cover prescription drug costs. You must sign up for Part A and Part B before enrolling in Part D.
Medicare Is 80% Good
Remember the F.I.C.A. (Federal Insurance Contributions Act) deductions on your paycheck? Those proceeds go to your future Social Security and Medicare benefits.
You paid for your Medicare Part A, which becomes available to you at age 65. You pay an additional premium for Part B when you start drawing Social Security after age 65.
The problem is that both Part A and Part B only cover 80% of eligible medical expenses.
Are you prepared to cover the remaining 20% of your eligible medical costs?
Supplement 20%
You can protect your retirement savings by paying for supplemental health coverage, known as Medigap insurance, to cover that uncovered difference.
Medigap insurance policies are sold by private insurance companies. These standardized plans vary by premium and letter (e.g. Plan F, G, or N) but offer the exact same core benefits regardless of the insurer.
Key features:
- Standardized – Same letter (A-N) same coverage.
- No network restrictions – Any doctor or specialist who accepts Medicare.
- Guaranteed Renewable – Automatically renews if you pay the premiums, even if you develop new health conditions.
- Not covered – Prescription drugs (Part D), vision, dental, hearing aids, or long-term care.
Plan for a Plan
The most popular Medigap plans are Plan G, Plan F, and Plan N.
Your choice of plan will depend on what mix of premium cost and deductible exposure works for you.
Plan G has a higher premium but a low out-of-pocket deductible. Currently, the annual deductible is $283.
Plan F is only available to those who were eligible for Medicare before January 1, 2020. It is known as the most comprehensive Medigap policy available. However, this plan is being phased out.
Plan N has lower premiums but includes copayments for doctors and ER visits.
A New Option
Medicare Part C, commonly known as Medicare Advantage, is an alternative to Original Medicare provided by private insurance companies. It bundles your Part A (hospital) and Part B (medical) coverage into a single plan and usually includes Part D (prescription drugs) along with extra perks like vision, dental, and fitness.
Part C represents the transfer of Medicare management responsibility from the government to private insurance companies. The insurance companies directly manage your Medicare benefits through contracts with Medicare.
You need to discuss with your insurance agent details in the rules surrounding Part C. This is an evolving transition, and improvements are being debated or implemented.
In general, there are two types of managed care plans under Part C, an HMO (Health Maintenance Organization), a managed care plan, and a PPO (Preferred Provider Organization), meaning you generally use a specific network of doctors.
Plans must set an annual out-of-pocket maximum, protecting you from unlimited costs.
Medicare Advantage plans must provide all the medical services covered by Original Medicare. In addition, many plans offer supplemental benefits, such as:
- Prescription drug coverage.
- Routine dental, vision and hearing aid.
- Health and wellness programs.
- Allowances for over-the-counter medical products.
Because these plans are run by private companies, costs vary widely depending on the provider and the plan you choose.
Plus, you are still required to continue paying your monthly Part B premium to Medicare.
Caution: If you have Medicare Part C and decide to change back to Original Medicare, you might be blocked due to health changes. Check with your agent to verify any concerns.
It Costs to Retire Early
You become eligible to enroll in Medicare Part A and Part B at age 65. However, you must start the process three months before your 65th birthday or face a premium penalty.
If you decide to take an early retirement at age 62 to start Social Security benefits, you will not have coverage under Medicare Part A or Part B. You must buy private health insurance coverage until you reach age 65. That could be costly.
Remember, if you delay taking Social Security benefits, they will grow by 8% each year until you start your benefits. Those can be very meaningful numbers if you live 20 to 40 years after your retirement!
A Health Insured Retirement
Health insurance coverage is more important than before you retire because you are more likely to need it.
You now have a sense of your options for health insurance coverage after you retire. Seek out a good insurance agent who can explain the differences in the types of plans available to you and the premium costs for each.
Plan to study and research your options before deciding. You have the option to change plans each year during the annual open enrollment period, October 15 through December 7.
Most of us in retirement just want to enjoy our retirement activities. But our bodies remind us that we can no longer do things like we could when we were much younger.
Do take care of yourself. Eat well. Take vitamins. Exercise. And pray that your Plan D covers most of your prescription costs!
Make good choices for your supplemental Medigap coverages and you can have a health insured retirement!