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By Candace Scholz, CFP®, MS, MHA
One of the most important decisions most retirees will make is what to do about Medicare, the government-sponsored healthcare program for persons age 65 and older. This is so for many reasons, but perhaps the most urgent one is the peace of mind that comes from knowing that your medical and other healthcare needs are covered during your retirement. After all, concern about healthcare costs consistently ranks among the top worries of those approaching retirement.
Basically, Medicare consists of four parts:
In addition to these aspects, you will also hear a lot about “Medigap” or Medicare supplement plans. Private insurers—not the government — offer these, combining aspects of Parts A and B, and we’ll say more about them below.
You should sign up for Medicare during your initial enrollment period, which begins three months before your 65th birthday and extends three months afterward. If you fail to sign up during this period, you could be subject to penalties later, when you do sign up. There is an exception to this rule for persons 65 or older who have “creditable coverage” that offers the same or better benefits than Medicare, usually from an employer with 20 or more employees or various government-sponsored plans.
Should you consider Medicare Advantage or Medigap coverage instead of Medicare? Well, that depends on the plan you’re looking at and your personal circumstances. For one thing, in order to obtain a Medigap plan, you must be enrolled in Medicare Parts A and B. Remember, this is a program offered by private insurers, and though it must meet certain government-required standards, you will pay a monthly premium for the plan. What most Medigap plans offer in addition to Medicare is coverage of co-payments, deductibles, length-of-stay charges, and other out-of-pocket costs not covered by Medicare, which can easily add up to several thousand dollars per year, in some cases. Medigap typically does not cover prescription drug costs.
For any of the non-government plans above requiring a premium—Part C (Medicare Advantage), Part D, and Medigap—it is important for you to compare plans and benefits before you sign up (you don’t have a choice about your Part B and D premium; the government establishes it according to your income). You’ll also want to check with your primary care physician to make sure that they accept Medicare (93% of them do). If you are considering Medicare Advantage, you’ll also want to make sure your doctor is “in-network” for your particular plan; not all of them are.
Aspen Wealth Management wants you to have all the information you need to make informed decisions about your healthcare costs in retirement—including the right choices about Medicare. To learn more, be sure to watch our free webinar, “Medicare Made Easy: Preparing for Healthcare Costs in Retirement. Aspen Senior Wealth Advisor Jim Davis, CFP®, along with Aspen’s Director of Financial Planning, Candace Scholz, CFP®, MS, MHA, provide additional information about the various parts of Medicare, both those sponsored directly by the government and those provided by independent insurance companies. You can watch the webinar by clicking here.
And as always, if you have questions about Medicare, other health insurance plans, or any other important financial matter, please reach out to us; Aspen Wealth Management is here to help.