The Basics of Medicare
- November 3, 2020
- Healthcare and Medicare
Medicare is the U.S.’s national insurance program for adults. According to the 2019 Medicare Trustees Report, Medicare provided health insurance for over 59.9 million individuals—more than 52 million people aged 65 and older and about 8 million younger people. What does Medicare cover and how does it work?
How much Medicare costs depends on your income. Medicare covers around half of the healthcare expenses of those enrolled. And, many enrollees cover most of the remaining costs by taking additional private insurance and/or by joining a public Part C or Part D Medicare health plan.
There are four parts to Medicare:
- Part A helps cover hospital stays, home health care, skilled nursing, and hospice.
- Part B helps cover doctor visits, outpatient procedures, and some preventative care.
- Part C, also called Medicare Advantage plans, is private supplemental insurance that covers costs Parts A and B don’t, such as dental and vision
- Part D helps cover prescription drug costs.
Traditional Medicare (Parts A and B) does not cover Prescription drugs, hearing aids, dental, vision deductibles and co-pays, or care outside of the U.S. A Medicare beneficiary must enroll in Parts A and B first before they can receive Part C.
What can you do during Open Enrollment Season?
Every year, Medicare’s open enrollment period is October 15 – December 7. During this period, you can:
- Switch from Original Medicare to Medicare Advantage
- Switch your Medicare Advantage Plan
- Change your Part D Prescription Drug Plan
How much does Medicare cost?
Most people don’t pay Part A premiums because they paid Medicare taxes when they worked. If you’re not entitled to Medicare Part A, you’ll pay a premium of up to $458 per month. The standard monthly Part B premium in 2020 is $144.60, but can be higher depending on your income and when you signed up for Part B. For example, if your income as a couple filing jointly is between $218,000 and $272,00, you would pay $289 per month, per person
We’re living longer, and that means many people retiring today will spend more of their retirement savings on healthcare costs. Medicare premiums have been on the rise, and this trend may continue. We could also see radical changes to the Medicare program and our healthcare system in the next few years.
How and when you start receiving Medicare benefits depends on your individual situation. If you plan on continuing working after you turn 65 and you are not drawing Social Security benefits, you may be able to delay Medicare benefits. But, you will need to consult with your financial professional to determine the best choice for your individual situation.