Ways To Pay For Health Care During Retirement
For many Americans, there are two main ways for them to sustain their health care costs while in retirement already, and they are: Through Medicare and staying in their employer’s medical plan.
USING MEDICARE FOR HEALTH CARE DURING RETIREMENT
Americans credit Medicare to be a service just available anytime in retirement. Some also believe that it is free and should cover all medical needs completely. But that is not true. And here’s why:
1. Medicare has enrollment dates. Enrollment in this product is not automatic. Some rules apply, and delay on abiding on it costs you penalties. Usually, how it works is a seven-month enrollment period apples for them to know whether you are eligible, and that happens at exactly the day you turn age 65 years old. If, at that time, you failed to sign up, there is a late enrollment penalty imposed already. An open enrollment period every year allows you to change your health care plan choices.
2. Free Medicare is a wrong notion. Like any insurance, you pay deductibles, coinsurance, premiums, and copayments. Medicare has four parts, each offering different coverages. These are:
a. Part A covers mainly your hospitalization, skilled nursing facility and nursing home care, hospice, and home health services. Usually, if you were able to pay Medicare taxes back when you were still working, you are no longer required to pay premiums monthly.
b. Part B usually takes credit on covering lab tests, surgeries, and doctor visits that include preventive care and supplies necessary to treat a disease or condition, and there are some prescriptions covered too.
c. Part C is the Medicare Advantage Plan that is usually offered by private companies. With additional premiums, required copays that depends on your service provider. But this plan typically already covers Part A through B with added services like dental or vision care benefits.
d. Part D is known as the Medicare Prescription Drug Coverage plan. This part is usually offered only by private companies, and your premium is charged based on your income and the plan you picked.
3. Medicare does not cover all medical costs. Lastly, it’s wrong to assume and give Medicare credit for covering all medical costs-because it won’t. Medicare doesn’t cover your dental care, long-term care, dentures, acupuncture, cosmetic surgery, hearing aids, or exams to fit hearing aids.
USING AN EMPLOYER’S PLAN
If you are currently availing of your employer’s medical plan coverage, it is best to check the inclusions in your present plan. Also, try to widen your knowledge about the full extent of what Medicare can cover. It is safe to compare the current coverage you have with the maximum care there is available now so you can assess whether there is a need to get other inclusions or the primary insurance plan to get you covered. Most of all, get to know how you will be able to retain the coverage until retirement. Watch out for necessary enrollments.
Some important questions you might want to ask:
· Do you plan to work past 65? Because you can defer enrolling in Medicare at exactly 65 and avoid the penalty fee. All you have to do is contact Medicare on your own when you turn 65.
· How will your employer coverage work with Medicare? It might require you to sign up for any part or Part A. Coordinating benefits with an employer’s coverage can help you in a way that you will no longer buy Medicare Parts B, C and/or D, for as long as you stay under your employer’s insurance plan.
· How much are you paying under your employer’s or retiree coverage? Would Medicare be better, if the option is given, or is there a need to add a less expensive supplemental policy?
CONSIDER LONG-TERM CARE
Long-term care could be something you might want to consider. Medicare usually covers care for long-term hospital stays, skilled nursing care, and home health services that include physical therapy, speech services, and hospice. But the thing about Medicare is it does not cover custodial care or what they call daily living services.
However, having long-term care coverage provides assistance with basic personal tasks of everyday life, which is often referred to as Activities of Daily Living or ADLs. To be specific, it includes daily activities such as eating, bathing, dressing, toileting, mobility, and grooming. It is essential for many insurance companies that they consider this service because clients look to services like this. And as early as now, it should be known that this service comes in rich premiums.
While for sure your family and some friends might volunteer for some of the long-term services, you might want to consider coming up with a plan to be able to afford it when you retire. Here are some you can do:
· Long-term care insurance
· Social Security and/or defined benefit payments
· Life insurance
· Reverse mortgage
You may want to consult your financial advisor to guide you through these options.
Based on Materials from Smart About Money