The World of Medicare - What to Know Right Now

As we get older, the idea of retirement begins to creep into our minds. You may have noticed that you have been paying Medicare taxes your entire life. Medicare is the federal health insurance program best known for those age 65 and older.  

While primary for people who are older, there are three ways to access Medicare:

• People who are 65 or older
• Certain younger people with disabilities
• People with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD)

Despite paying taxes for Medicare, many people are unaware of how it works and what it covers. It's essential to understand the nuances of this insurance behemoth as you plan for retirement. Here's what you need to know about Medicare as you approach age 65.

Diversity of Plans

Medicare may sound like a monolithic entity, especially in matters of public policy. There are large deductibles, and most people also purchase a Medicare supplement to cover those deductibles. If you enroll in a Medicare Advantage Plan, you may have different rules and coverages. 

Medicare is divided into three major parts:

Medicare Part A 

Part A is your hospital insurance. It will cover your inpatient hospital stays, a limited amount of care in a skilled nursing facility, critical access hospitals, hospice care, and some limited in-home care.

Generally, there is no charge for Medicare Part A as long as you or your spouse have paid Medicare taxes for a certain amount of time while you were working. 

Medicare Part B 

Part B is akin to medical insurance. It covers certain doctors' services, outpatient care, medical supplies, and preventive services. Doctors must participate in the Medicare program to be covered. 

Part B covers both medically necessary services and preventive services (like flu shots). All the services and related supplies required to diagnose and treat your health issue are covered as long as it meets accepted standards of medical practice. 

Coverage includes ambulance services, durable medical equipment, and mental health services. 

You usually enroll in Part B at age 65; however, some people continue their employer's health coverage, which serves as their Part B until they retire. 

You pay a premium for your Part D that is based on your income. The premium is usually automatically deducted from your social security check, federal pension, or railroad retirement pension. Otherwise, you will receive a bill.

You can see what the federal government charges you for Part B by clicking here.

Medicare Part D – Drug Coverage

Part D is your optional prescription drug coverage. You can enroll in this program. Since the cost of prescription drugs can be very expensive, this could be essential coverage.

While Medicare drug coverage is optional, it is offered to everyone eligible for Medicare. If you decline coverage when you first enroll in Medicare and don't have other creditable prescription drug coverage (like from an employer or union), you may pay a late fee. 

Several insurance companies offer Part D coverage, and they have various costs and coverage options. The Medicare website can help you find the coverage you desire.

Medicare is Not Completely "Free"

Part A is 'free' if you had been working long enough to pay in the system. You must have worked at least 40 calendar quarters in any job where you paid Social Security taxes in the United States to qualify for Part A.

You will pay for your Part B, Part D (if you elect), and a Medicare supplement premium that pays for the deductibles. 

It would be best if you estimated these costs as it affects your retirement planning. If you know you'll still pay small premiums or prescription charges even under Medicare; you must shape your retirement portfolio with the appropriate budgeting.

Long-Term Care is Not Covered by Medicare or Supplements

Plus, understanding that long-term health care, which includes custodial care in-home or in an assisted living facility, memory care facility, and nursing home, is not covered outside a limited amount of skilled services, is important. 

You will either pay out-of-pocket for these services or your family will be placed into the role of being your caregiver.

Homebound Status: What is it and How Can it Help?

People who have difficulty leaving their homes without the help of other people may qualify for this important benefit. 

Those who have homebound status can obtain some forms of care and financial assistance from Medicare. Qualification does consider financial assets or military history. But having a homebound status can decrease the burden on family members.

You can learn more and discover if you or a loved one qualify for homebound status. 

Medicare Supplements

Medicare Supplements will pay for the copayments, coinsurance, and

deductibles that come with Medicare. Keep in mind that a Medicare supplement is different from a Medicare Advantage Plan. 

You purchase a supplement directly from an insurance company. If you have a spouse, each of you will need your own supplement coverage. These policies are standardized by law. Medicare supplements are guaranteed renewable no matter what changes you may have with your health or how old you get. The insurance company cannot cancel your policy as long as you pay the premium. 

You do not have to purchase Part D and your supplement from the same insurance company. Even if you do, they are separate policies and would be billed separately. 

The Medicare website - www.medicare.gov is a great place to start your research. You can also seek help from a Medicare professional to review your options.

However, be sure to speak with a Long-Term Care Insurance specialist in seeking help with long-term care. Generally, people purchase long-term care benefits in their 50s as opposed to waiting to age 65. 

Long-Term Care Insurance is medically underwritten and not guaranteed like Medicare. This means to need to start researching long-term care when you are younger and enjoy better health. Premiums are also based on your initial age when you apply for coverage. Long-Term Care Insurance is also guaranteed renewable for life.