2 Ways To Pay for Health Care During Retirement
It’s important to continue your healthcare coverage even in retirement. The initial thought would be it’s going to be difficult given that you don’t have any source of income anymore. It’s nice to have an investment early in life, but what if you don’t? How will you pay for your healthcare expenses? You’ll be surprised to learn that your health care needs can actually be paid off in a few different ways. Generally, you’ll have two options here and we’ll discuss the details on each one so you know the best options you have.
1. Using Medicare
It’s true that Medicare can help you shoulder the expenses of healthcare service to some degree but it cannot cover all of your healthcare costs. This is contrary to what most people think; that Medicare can be used anytime in retirement for free and you don’t need to worry about additional charges. However, that’s not true. Do note that rules and penalties apply to Medicare enrollment and it’s not automatic. The window is usually seven months and when you don’t sign up during that period, a late enrollment penalty applies. You can apply for Medicare at your local Social Security Office, its website, or via phone.
Just like any insurance, Medicare is not free like we previously mentioned. There are premiums, deductibles, coinsurance, and copayments for any standard healthcare plan. We’ll break down to you the four different parts of Medicare according to its coverage.
Medicare Part A covers hospitalization, nursing facility, nursing home care, hospice, and home health services. The good thing is that there are no monthly premiums if you had been paying Medicare through your taxes while you were still working. In the Medicare Part A inpatient hospital deductible, the beneficiary will need to pay $1,408 when admitted. There’s no coinsurance payment within 60 days and the beneficiary will only start paying $352 per day for the 61st through the 90th day in a benefit period. For lifetime reserve days, it’s $704 per day according to CMS. In skilled nursing facilities, the coinsurance starts on day 21 through 100 is $176.
Meanwhile, Medicare Part B covers laboratory tests, surgeries, and doctor visits – that include preventive care. This also covers supplies needed to treat a medical condition, even prescription medicines, too. The monthly premiums you pay for this is based on income. Again, just like any insurance, this has an annual deductible and a copay, which is usually 20 percent.
The Medicare Advantage Plan is offered by private companies and this is Medicare Part C. There are additional charges to your premiums and the co-pay will depend on the plan your company has chosen. The coverage is usually a combination of Part A and Part B, and any additional services like dental or vision care benefits. Please note that Medigap cannot be used together with Part C insurance plans.
Lastly, Part D is known as the Medicare Prescription Drug Coverage plan. These insurance plans are offered by private companies and they often charge premiums based on your income and chosen plan. In any plan you choose, do note that not all medical costs will be shouldered by your Medicare plan. These costs can be long-term care, routine dental care, dentures, cosmetic surgery, acupuncture, and hearing examinations.
2. Using an Employer’s Plan
If you plan on working past the age of 65, then you may delay enrolling in Medicare. Use a Special Enrollment Period after you retire to avoid any penalties. If you have a healthcare plan through an employer, then you’ll have to explore how Medicare would work together with the existing plan. Proper coordination will save you from buying additional insurance as long as you remain under your employer’s health care plan.
You also have to weigh in the cost of your employer’s coverage and Medicare. There are instances that it’s economical to use Medicare plus a supplemental policy.
Overall, the healthcare plan that you buy depends on your income and the different healthcare services that you foresee you’ll be needing.
Based on materials from Smart About Money
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