Will Medicare Coverage Be Enough?
When I work with pre-retirees, I find that one question consistently comes up:
What does Medicare cover, exactly?
There’s an assumption that Medicare will cover everything that the healthcare coverage from your pre-retirement employer covers. Unfortunately, this isn’t true. Medicare is broken into four separate parts - A, B, C, and D. Each part covers a different set of medical expenses you may face during retirement.
What Does Medicare Cover?
Traditional Medicare is comprised of Medicare Part A and B. Medicare Part A is for:
Hospital services
Skilled nursing facilities
Hospice care
However, Medicare Part A coverage might come with specific copays that you’ll owe out-of-pocket for medical services, or a small premium (depending on your income). It’s also important to note that you’ll have to make sure you go to approved professionals, and approved facilities to receive coverage.
Medicare Part B covers:
Doctor’s services
Preventative care
This means that any preventative screenings, vaccinations, ECGs, necessary medical equipment, and some prescriptions (diabetes, eyewear) are typically covered.
Non-traditional Medicare includes Medicare Part C and D. Medicare Part C consists of supplemental coverage like prescription drug coverage, or dental care. Medicare Part D goes above and beyond covering additional prescription drugs that aren’t necessarily generic.
This may sound like Medicare covers just about everything a retiree might need. However, this isn’t necessarily the case.
What Doesn’t Medicare Cover?
There are a few key things that aren’t covered by Medicare:
Long term care
Dental care
Eye exams
Hearing aids
Wellness-oriented care (think: acupuncture, etc.)
Although smaller expenses, such as an acupuncture appointment, or standard teeth cleanings, might be easy to cover with the retirement nest egg you’ve built up, that won’t be the case for all of your medical expenses that aren’t covered by Medicare.
Long term care, for example, is a pricey expense that isn’t covered by Medicare. The average cost of long-term care is $225/day for a semi-private room in a care facility. Recent reports have shown that the average stay in an assisted living center is 29 months. Those expenses can really add up! To offset these costs that aren’t covered by traditional Medicare, many retirees look to HSA (Health Savings Account) funds that they’ve grown over the course of their careers or long-term care insurance.
Resources
Medicare.gov has a fantastic library of resources and forms in their Help Center. They offer tools for finding doctors, facilities, and other medical professionals that fall under their coverage umbrella, how to replace your Medicare card or report it lost, and resources for reporting Medicare fraud.
AARP also offers several excellent resources for better understanding Medicare. Finally, for additional information on Medicare Benefits, you can head to the Social Security website.
Answers to Other Common Medicare Questions
There are a few common questions that I hear again and again about Medicare. Let’s go over them together:
Q: When do I enroll in Medicare?
A: Medicare Open Enrollment runs from mid-October through early-December each year.
Q: I don’t plan on a traditional retirement - can I still enroll?
A: Unless you’re still receiving health insurance from your employer, you must enroll in Medicare Parts A and B by age 65.
Q: Can I still contribute to my HSA after I retire to cover extra expenses?
A: Yes, you can! Your HSA is owned by you - not your employer. So, you can keep contributing throughout retirement to cover medical expenses if you so choose.
Q: Is there a penalty for not signing up?
A: If you don’t enroll in Medicare Part B coverage when you’re supposed to, you’ll owe a 10% penalty for every year you failed to enroll.
Have Questions? Contact Me Today!
I’d love to help you build a strategy for covering your medical expenses throughout your retirement. Between savings and insurance, we can put together an ideal plan that fits your unique needs. Ready to get started? Let’s chat. Contact me by clicking here.