Healthcare costs during retirement can be staggering. It is estimated that an average healthy couple retiring in 2022 at the age of 65 can expect to spend around $315,000 on retirement healthcare costs.
Don't want to shoulder all of those costs yourself? Medicare is the best to help mitigate the effects healthcare expenses have on your retirement savings.
What is Medicare?
Medicare is a federal government health insurance program for people 65 and above. There are exceptions, though. People with disability and those with End-Stage Renal Disease can enroll in the program before they clock 65.
What does Medicare cover, and how much does it cost?
There are different parts of Medicare - Part A, Part B, Part C, Part D, and Medigap.
Part A
Medicare Part A covers inpatient hospital care, home health care, and skilled nursing facility care. Part A is free if you have been paying medical taxes for at least 10 years.
Part B
It covers outpatient services, preventive services, ambulance services, durable medical equipment, and home health care. Part B's monthly premium in 2022 was $170.10. Medicare Part A and B are called Medicare Original.
Part C
Medicare Part C is also called Medicare Advantage (MA). The plans are sold through private insurance companies and replace the benefits of Medicare Original. In addition, MA plans offer added benefits not offered by Part A and B. Costs of Part C vary from plan to plan.
Part D
Part C covers the cost of prescription drugs. How much you pay for Part D depends on factors, including the medication type, whether your pharmacy is in-network or out-of-network, income, and the kind of plan.
Medigap
Also offered through private insurance companies, Medigap helps pay for out-of-pocket expenses in Original Medicare.
Check our parts of Medicare for a more comprehensive read.
What if I don't sign up for Medicare when I'm eligible?
The decision to enroll or not is yours to make. However, if you don't sign up the first time you become eligible, you could face long-lasting and, in some cases, permanent penalties.
Even if you're retired, and your former employer provides a retiree health plan, you must sign up for Medicare. That's because Medicare and retiree plans work together as primary and secondary coverage. Also, if your company has less than 20 employees, you must enroll in Medicare Part A and B.
In some instances, however, you can delay enrolling in Medicare without penalties. If you're working past age 65 and are employed by a large company (20 employees and above) offering employment coverage, you can delay Medicare enrollment. We recommend signing up for Part A, as it's premium-free.
Should I enroll in Medicare?
Yes and no.
Individual circumstances differ from person to person. However, you may have to cover all your health and medical expenses on your own if you don't sign up when you should. On the other hand, you can also decide to delay enrollment.
Why not discuss this with our independent Medicare agent today? We'll analyze your unique situation and guide you in making the right decision for FREE. Get Medicare guidance now.