Most retirees are worried about their healthcare costs in retirement. Unfortunately, many do not plan for these expenses due to the overwhelming amount of information about healthcare.
Unfortunately, many people do not plan on their healthcare expenses in retirement. They often find that their actual spending on these expenses is significantly different from their projected budget. To help people understand their current expenditures, the US Bureau of Labor Statistics conducts regular surveys about Americans' healthcare costs.
According to the data collected by the Bureau of Labor Statistics, the average consumer over 65 years old reports that they have a total annual budget of $6,724 for healthcare services. Some of the services they cover include: insurance premiums, Medicare Part D and Part B, prescription drugs, and medical supplies.
U.S. Bureau of Labor Statistics Consumer Expenditure Survey, 2017-2018.
Medicare is a government health insurance program for people who are 65 years old and older. It also covers disability benefits.
Medicare is a federal program that provides healthcare coverage to people aged 65 and older and those with certain types of disabilities and illnesses. It does so by controlling the medical costs that individuals encounter as they get older. However, its benefits don't cover everything.
What is Medicare?
Medicare is composed of four parts: Part A, Part B, Part C, and Part D. Each of these plans provides specific coverage and has varying cost.
- Part A covers hospital care and related services.
- Part B covers doctor appointments and outpatient medical care.
- Part C covers the same benefits of Parts A and B but is offered by private insurers.
- Part D covers prescription drugs.
Here's what you should know about Medicare coverage and some of the expenses that come with it.
If you are 65 years old and have been a US citizen or legal permanent resident for five years, then you are automatically eligible for Medicare. It also covers some people with a disability who are under the age of 65. Usually, people with disability insurance can get in touch with Medicare after two years.
People with end-stage renal disease, also known as kidney failure, are automatically enrolled in Medicare when they sign up. Also, people with amyotrophic lateral sclerosis, also known as Lou Gehrig's disease, are entitled to benefits when they start their disability.
Important Medicare Enrollment Dates:
Understanding Initial and Special enrollment dates, and requirements for each, is important.
The dates that are important for people who are planning on signing up for Medicare are typically the same as those for other healthcare plans. They help prevent late enrollment penalties and coverage delays. If you are already eligible for Medicare, then you have a seven-month initial enrollment period.
You can sign up for Medicare during the 7-month period that starts three months before you turn 65 and ends three months after you reach the age of 65. This includes the month you turned 65 and the month you turned 65.
If you were not able to sign up for Medicare when you first became eligible, then you can still sign up during the General Open Enrollment Period, which lasts from January 1 to March 31. This period provides people with the opportunity to sign up for their coverage before it starts on July 1. If you have a late enrollment penalty, it's a permanent penalty that will keep your premiums the same regardless of whether or not you have insurance.
Here is an example:
When John retired from his job at 64, he decided not to continue his health insurance coverage. He knew that he would eventually be able to sign up for Medicare, and he was still very healthy when he turned 65. However, when he turned 67, he was more of a risk and decided to enroll in Medicare.
Two years after he became eligible, John was surprised to learn that he had a late enrollment penalty. He was required to pay a 20% penalty, as well as a 10% increase on his annual premium.
If you are still working and have health insurance through an employer-sponsored plan, then the recommended enrollment dates for Medicare may not apply to you. For instance, if you are still able to work and have a company-sponsored plan that provides coverage for you at age 65, then you might not need to enroll in Medicare right away.
If your company's health insurance plan ends, then you may be subject to a special enrollment period. This is because, if you have a long-term disability or are covered under a COBRA program, then you might not be able to keep up with the changes in the healthcare industry.
Although COBRA is not considered to be part of the end of your company's healthcare coverage, it may still be required to enroll in Medicare if you are still eligible. This is because some employer-sponsored plans require people to sign up for Medicare when they are initially eligible. You should speak with your company's benefits representative to determine if this is a requirement.
If you are a group retiree who is still working and have health insurance through an employer-sponsored plan, then you might be able to lose some or all of your medical coverage for yourself and your family if you choose a new Medicare Part D plan.
Medicare is a type of healthcare system that is managed by the federal government. It provides people with the opportunity to see a doctor that accepts their Medicare assignment.
Medicare Part A (hospital insurance)
Medicare Part A covers the cost of nursing home care, inpatient care, and other types of healthcare services. It does not provide coverage for long-term care or custodial care.
In addition to providing coverage for healthcare services, Medicare Part A also has a deductible that is set at $2,560 in 2022. This means that patients must pay a portion of the bill. For instance, if a person goes to the hospital for the first 60 days, then they will not have to pay a co-insurance fee. However, they will typically pay around $400 a day for the rest of their stay.
Most people don't pay premiums for Medicare Part A if they or their spouse paid Medicare taxes for at least 10 years
If you are one of the millions of people who are affected by the payroll taxes that are included in the Medicare taxes, then you might be able to qualify for a free premium-free Medicare Part A. However, this type of healthcare insurance is still available to some people with a high monthly premium.
Medicare Part A: If it's free, why not take it?
If you're still working and have been with the same company for 10 years, then you might be able to receive a free Medicare Part A. This type of healthcare insurance covers the cost of in-patient care and hospital bills.
If you're still working and have group health insurance through your company, then you might be able to receive a free Medicare Part A. This type of healthcare insurance can help you lower your out-of-pocket costs and provide you with better coverage.
But as with so many aspects of Medicare, there are caveats, exceptions, and potential pitfalls.
One of the most common exceptions to this rule is if your spouse or employer has more than 20 workers. If it doesn't make financial sense for you to sign up for Medicare, then you can still keep working and have group health insurance.
If your spouse's or employer has fewer than 20 workers, then you must enroll in Medicare at the age of 65. Medicare is your primary insurance. It will pay the first bill, and the employer will then pick up the rest. This means that if the health insurance policy is not included in a multiemployer group plan, then the employer will pay the difference.
If you're still working and have a Health Savings Account (HSA), then you might be able to keep contributing to it, but Medicare doesn't allow people to make contributions to this type of account. To avoid a tax penalty, you should stop making these contributions at least six months before you start signing up for Medicare.
If you're not signing up for Medicare at the age of 65 and are still working, then you might be subject to a penalty. This is because if you're not signing up for Medicare before your employer's health insurance ends, then you might end up with a gap in your coverage.
Before you start signing up for Medicare, make sure that you have a good understanding of how your group health insurance will cover you once you reach the age of 65.
Medicare Part B (medical insurance)
Medicare Part B provides various types of healthcare services, such as doctor visits and supplies. It also covers the cost of various types of healthcare services, such as mental health coverage and durable medical equipment.
Medicare Part B's monthly premium is set at $170.10 in 2022. For single people with an adjusted gross income of over $91,000, and married couples with an adjusted gross income of over $182,000, the monthly premium is higher.
In 2022, the Medicare Part B deductible will be set at $233. This means that patients will have to pay a portion of the bill for healthcare services. After that, they will typically pay around 20% of the approved amount for supplies and services.
The Medicare Part B penalty
If you don't have group health insurance coverage through an employer, then you will most likely be penalized for not signing up for Medicare Part B at the age of 65. This penalty will be charged monthly for the rest of your life.
If you have group health insurance through your job, then you might be able to avoid the penalty for not signing up for Medicare Part B at the age of 65. You must sign up for this type of healthcare insurance within eight months from the end of your current coverage.
Should you sign up for Medicare if you're 65 and still working?
If you are 65 or older, and you have group health insurance through your job, then it's possible that you should sign up for Medicare now. It can lower your out-of-pocket costs and provide you with better coverage.
Due to the increasing number of people who are working, the number of people who are 65 or older is expected to reach 30.2% in 2026.
Medicare is a complicated program, and there are a lot of factors that you should be aware of to avoid unexpected expenses and late-enrollment penalties. This guide will help working individuals understand when and how to enroll in Medicare.
This section is for married couples who have health insurance through their employers. If one of the partners has group coverage, then this information applies to both when they turn 65.
The cost equation: Will Medicare save you money?
If your company requires you to pay a portion of the premium for your group health insurance, then you might be able to find Medicare more affordable. It can also help you lower your out-of-pocket costs. Before you start signing up for Medicare, make sure that you compare the costs of your current plan with the benefits it provides.
Medicare Part B: Delay to avoid premiums
If you're 65 or older and still have health insurance through your company, then you might want to delay signing up for Medicare Part B. This type of healthcare insurance covers the cost of doctor visits and other outpatient services. Unlike Medicare Part A, this type of insurance is not free.
As with Part A, your circumstances can influence your decision, and there are pitfalls to avoid:
If you're still working and have health insurance through your company, then you might want to delay signing up for Medicare Part B. This type of healthcare insurance covers the cost of doctor visits and other outpatient services. If you fail to sign up for Medicare within eight months, then your premiums could go up for the rest of your life.
If you have an HSA and would like to continue contributing to it, then you must stop making contributions to it and sign up for Medicare Part B. You must also stop making these contributions at least six months before you start signing up for this type of insurance.
If your spouse's or employer has fewer than 20 workers, then you must sign up for Medicare at the age of 65. This rule applies if the health insurance policy is not included in a multiemployer group plan.
If your spouse's or employer has more than 20 workers, then you don't have to sign up for Medicare at the age of 65. However, you still must sign up for Medicare once your employer's health insurance ends.
If you're planning on delaying your Medicare Part B enrollment, then make sure that you speak with your spouse's benefits administrator about how this will affect your group insurance.
Special situations: Previous employers, military, vets
If you have health benefits that are provided through a military service program, such as CHAMPVA or TRICARE, then you should also consider enrolling in Medicare when you reach the age of 65.
If you have health insurance from past employers, such as your former spouses or employer's retirement or COBRA coverage, then you must enroll in Medicare Part A and B when you reach 65. It's complicated, so get all the advice you need.
The enrollment process for Medicare is complex and rife with exceptions. If you don't follow the rules, then you could end up paying a high price for not signing up. Before you decide to delay or enroll in Medicare, make sure that you speak with the benefits administrator of your former employer.
Medicare Advantage (Medicare Part C)
Medicare Advantage is a type of healthcare insurance that provides the same benefits as those provided by Medicare Part A and B. However, it does come with a separate premium that you have to pay. This type of insurance is commonly offered at $0 premiums.
In addition to providing the same benefits as those provided by Medicare, Medicare Advantage plans also come with additional coverage options. These include dental and vision care.
In 2022, you could expect to pay around $7,550 out of pocket for a Medicare Advantage plan. These types of plans are typically preferred provider organizations (PPOs) or health maintenance organizations (HMOs). They only provide coverage in certain areas and require referrals and pre-authorization.
Medicare Part D (prescription drugs)
Part D of Medicare allows people to get covered for the cost of prescription drugs. These plans are typically offered by private insurance companies and have a monthly premium of around $33. Higher income beneficiaries pay more.
If you don't sign up for Medicare Part D when you're first eligible, then you could be facing a late penalty. This is a 1% of the national base premium, which is around $33.37 monthly in 2022. The late penalty is multiplied by the number of months that you've been missing out on coverage.
Medigap (Medicare Supplement Insurance)
A Medicare supplement insurance policy is an additional type of healthcare insurance that can be purchased from a private insurance company. It can help pay the cost of certain services that are not covered by Medicare Part A and B. For instance, if you travel outside the US, a Medigap policy might not cover long-term care or certain types of prescription drugs.
In most states, there are 10 different types of Medicare supplement insurance policies that you can choose from. However, if you have Medicare Part A and B, then a Medicare Advantage plan is not compatible with a Medigap policy.
Enrolling in Medicare
If you're 65 years old and receive Social Security benefits, then you'll automatically be enrolled in Medicare when you turn 65. Part A covers hospital expenses, while Part B provides doctor visits.
If you're not receiving Social Security, then you can still sign up for Medicare by visiting the Social Security Administration's website. You can do this during the seven-month window that's available for new enrollees. This allows people to avoid long waiting times and penalties.
You can also sign up for a Medicare supplement insurance policy during the six-month period that's available for new enrollees. If you're interested in a policy, then you'll need to make sure that the private insurance company that provides it will take you.
Medicare enrollment periods
If you're already enrolled in Social Security and have a disability, then you'll automatically be enrolled in Medicare when you turn 65. However, it's up to you to sign up for Medicare on your own.
- If you're not on the automatic roll, then you'll have a seven-month initial enrollment period that starts three months before your 65th birthday and ends two months after your birthday. This period includes the four months that you'll have before and two months that you'll have after your birthday.
- If you don't sign up for Medicare during the initial enrollment period, then you'll have to wait for the general enrollment period, which lasts from January 1 to March 31. If you have late penalties, then you'll have to pay them before your coverage begins on July 1.
- You can also sign up for a Medicare health insurance policy during the special enrollment period, which lasts from January 1 to March 31. This is a special period for people who have specific life events that cause them to change their coverage.
If you would like to change your coverage for Medicare later, then you can do so during the annual open enrollment period that's available from October 15 to December 7 each year. If you have a Medicare Advantage plan, then you can change it during the open enrollment period that's available from January 1 to March 31.
How to enroll in Medicare
If you're enrolling yourself, you can sign up in one of three ways:
- Apply for Medicare online at Social Security's site.
- Call Social Security at 800-772-1213.
- Contact your local Social Security office.
The process for applying for Medicare online usually takes around 10 minutes. However, if you're planning on visiting an office, make sure that you have a mask and prepare for the weather. Social Security offices have been reopened, and they ask that you come in without assistance. If you can't make an appointment online, you can always call to check if there are available in-person appointments.
What Medicare doesn't cover
Common expenses that Medicare doesn't cover (and that are excluded in the Medicare law) include:
- Hearing aids and exams for fitting them.
- Eye exams and eyeglasses.
- Most dental care.
- Most foot care, unless related to diabetes or medically necessary due to injury or disease.
- Medical care overseas.
- Cosmetic surgery.
- Massage therapy.
One of the biggest expenses that Medicare doesn't cover is long-term care, which is also known as custodial care. Medicaid, the federal health insurance program for low-income individuals, covers this type of care.
Medicare vs. Medicaid
Medicare is a type of insurance program that's mainly for people who are over 65. It's also available for people with certain illnesses and disabilities. Unlike other federal programs, it doesn't require people to pay for certain medical expenses.
Medicaid is a federal-state program that's for low-income individuals. It doesn't require people to pay for certain medical expenses. It serves people of all ages, and it can vary depending on the state.