Upon turning 65, you become eligible for the U.S. federal health insurance plan Medicare. Typically, most folks will want to apply a few months before your birthday. While Medicare can save you money on healthcare, there’s are a lot of differences between it and regular health insurance. That’s why you should be ready for your health coverage change significantly.
The Four Parts of Medicare
Medicare is broken down into four parts – A, B, C, and D. Each part grants different types of coverage. Medicare generally will not cover all of your expenses when it comes to health care. That’s why many retirees opt to obtain additional coverage. We’ll get to this in a moment though.
Medicare Parts A & B
Your coverage will start with Medicare parts A and B. Part A, which is free for most who enroll is often referred to as hospital insurance. Part B, which costs a monthly premium, covers additional medical services, including some preventative care.
These two parts make up what’s commonly referred to as Original Medicare. On average, this will usually cover about half of your health care expenses. Just as you would with a regular insurance plan, you’ll still have co-pays, deductibles, coinsurance expenses, and prescription costs.
This is where the next parts come in.
Medicare Parts C & D
These two parts offer you the ability to purchase additional coverage. Part C is private insurance called a Medicare Advantage Plan (or sometimes a Medicare Health Plan). Medicare part D is prescription drug coverage and is often included with a Part C plan.
Medicare Part C essentially includes A, and B, and often D in a single plan that often includes extra coverage. Depending on the plan it might cover services including dental, vision, and hearing.
Alternatively, part D can be added alone to your basic benefits from parts A and B.
When you enroll in Medicare, you’ll have to decide between Original Medicare or choosing a Medicare Advantage Plan. This will all depend on your budget, your care providers, and how much traveling you do.
Part A, as we mentioned, typically does not have a monthly premium. Part B will cost the standard premium of around $122 a month. However, those with an individual adjusted gross income of over $85,000 will have to pay more. Part D is also means-tested, so your income will affect the cost. As for part C, the premiums vary based on the different available plans.
If you decide to stick with Original Medicare as opposed to an Advantage Plan, you may want additional supplemental coverage. Premiums for Medicare Supplement policies, which are sometimes called “Medigap policies,” also vary from plan to plan.