Medicare is a federal health insurance program, primarily for people who are 65 years and older. Medicare has four parts, plus some alternatives, each of which has a different purpose:
All Medicare policies are individual, so you and your spouse will sign up separately.
Medicare Part A and B are often referred to as “Traditional” or “Original” Medicare. For most seniors and situations, the cost is standardized:
You need to enroll in both Part A and Part B to have access to other Medicare options, such as Part D and Medicare Supplement Insurance (Medigap).
You’re eligible to enroll in Medicare during a seven-month window:
If you’re enrolled in Social Security before age 65, you’ll be enrolled in Parts A and B automatically.
Late enrollment incurs penalties and permanently higher premiums.
If you’re still working, you have the option to enroll as you turn 65, and you’ll also have another eight-month enrollment window after you stop working.
You can’t purchase both Medicare Part C and Medigap. You’ll need to choose the option that best fits your needs. Here’s how they compare.
Medicare C (aka Medicare Advantage)
If you sign up for Medicare Part C, review your coverage annually. Coverage, benefits and costs of Medicare Part C plans change each year. Reviewing your plan could save you money, help you find a better coverage fit — or both.
Medigap (aka Medicare Supplement Insurance)
It may not be advantageous to switch plans when enrolled in Medigap. During the initial enrollment period for Medigap, you’ll receive guaranteed issue:
In most instances, if you later switch, you’ll no longer receive this protection, meaning that changing Medigap plans could cost you money.
Medicare Part A and Part B do not provide coverage for prescription drugs. To add coverage, many people join a prescription drug plan (PDP) or enroll in a Medicare Part C plan that includes Part D (MA-PD).
The 4 types of Medicare are:
Medicare doesn’t cover most dental care services but may pay dental costs for procedures required to complete other medical treatment. If you need to have emergency or complicated dental procedures, Medicare Part A (hospital insurance) may pay for related hospital stays, though typically not for the specific dental procedures. Some Medicare Advantage plans (Part C) offer forms of dental coverage as part of their plans.
Medicare Part A doesn’t require a monthly premium for most enrollees. However, if you paid Medicare taxes for less than 30 quarters of your working life, the current standard Part A premium is $499 per month. If you paid Medicare taxes for 30-39 quarters, the current standard Part A premium is $274 per month.
In addition, all beneficiaries will be subject to a $1,556 deductible for each benefit period. A benefit period is defined as beginning the day you enter the hospital or facility and ends after you have not needed inpatient care for 60 days in a row. A daily coinsurance cost of $389 or more per day applies if inpatient hospital or skilled nursing stays last beyond 60 days.
Medicare Part A helps cover:
The monthly premium cost for Medicare Part B is based on your annual income and typically increases every year. The current base monthly premium cost for Part B coverage is $170.10. However, if your annual income in 2020 (used to determine your 2022 Medicare Part B premium) exceeded $91,000 (single tax filer or married filing separate) or $182,000 (married filing jointly), your premium will be higher. At those thresholds and beyond, the monthly Medicare Part B premium in 2022 ranges from $238.10 to $578.30. In addition, there is an annual deductible of $233 for all enrollees.
Medicare Part B, the medical insurance portion of Medicare coverage, helps meet the costs of medically necessary doctor’s services, outpatient care, home health services, durable medical equipment and mental health services. It also covers other medical services, including many preventive services.
Healthcare can be one of your largest expenses as you get older. Are you ready for healthcare costs in retirement?