Most Americans retire between the age of 62 and 65. At/after this age, one’s health starts getting deteriorated significantly. After all, health declines with age.
It is, therefore, necessary for those going into retirement to obtain appropriate and pocket-friendly healthcare coverage.
For those aged 65 and above the Medicare program is suitable because it will make health insurance cheaper. What’s more, even those with pre-existing conditions are eligible.
Here are a few other things worth knowing about Medicare and retirement:
Parts Of Medicare
The Medicare program comprises of 4 parts;
- Hospital (Part A) which pays for seniors’ care either in hospitals, skilled nursing facilities, nursing homes and even certain types of home health care services.
- Medical (Part B) which covers preventive services for common diseases, inpatient and outpatient physician services and in some situations outpatient prescription drugs.
- Medicare Advantage (Part C) better known as MA plans are offerings from private entities. They are if two types; Health Maintenance Organization (HMO) and Preferred Provider Organization (PPO) plans.
One advantage of MA plans is that the offer surplus services such as vision, dental, hearing aids and wellness services all of which are essential during old age. Seniors who use MA plans often ignore Part A, B and sometimes even D coverage.
- Prescription Drugs (Part D) uses a list called a formulary to provide prescription drugs. Every list has a similar Medicare prescription drug plan with medicinal products in each plan placed in rows.
Retirees who choose to ignore the MA plans can instead, purchase a Medigap plan. As a standard, there are ten different policies in every Medigap plan.
Aside from variety, seniors in retirement also get to benefit from many out-of-pocket costs similar to those in traditional Medicare.
Unfortunately, Medigap plans do not include Part D coverage, and because of this, those purchasing Medigap plans may also get Plan D coverage separately. However, it is important to note that open enrollment for Medigap starts on the month one turns 65 and is enrolled in Plan B coverage.
It is a one-time enrollment period that ends after six months. After the lapse of the enrollment period, some could find themselves paying higher premiums.
i. All the four different parts of Medicare start enrolling people three months before 65th birthday month and three months after the birthday month. It is known as the initial enrollment period In total; the enrollment runs for seven months.
Alternatively, people can enroll in the four programs every year from January 1st to March 31st. In this case, the coverage starts on the first day of July. It is much better to sign up for the programs during this period as doing so after could result in the payment of higher premiums.
ii. However, if one does not enroll in the initial enrollment period, he or she may receive a Special Enrollment Period (SEP) particularly if they are still under cover of a group health plan by their 65th birthday.
Based on the SEP, one is required to enroll in Medicare, not more than eight months after the end of the group health plan or the employment it is based on.
The SEP does not apply to individuals whose health plan or employment ends before the initial enrollment period ends.
iii. Medicare Advantage (including prescription drug coverage) also has an open enrollment period every year between October 15th and December 7th. Those wishing to revert to traditional Medicare can do so between January 1st and February 14th every year.
Things to Keep In Mind
i. It is important to find out if employer coverage will continue even into retirement. As a matter of fact, companies are not mandated to provide retiree coverage and can, therefore, cancel the coverage, raise the premiums or even change the benefits.
ii. Those plotting their retirement may also find out what happens to their retiree coverage once they qualify for Medicare. For example, individuals who are eligible for Medicare are often required to take up Plans A and B to get full benefits from the retiree coverage.
iii. Medicare normally pays first before any other coverage. Because of this, most retiree policies require people to have enrolled in Part A and B. It is, therefore, wise to check on the costs and coverage of Medicare before enrolling.
iv. Those who choose to go back to work after retirement and are still eligible for group health plan coverage should make sure to check with the relevant department to avoid lapses or even overlaps in the coverage.