Retirement And Medicare, Part Two
Following up on part one of our guide to retirement and Medicare, this article will be looking at the second two parts of Medicare coverage: parts C and D. As a refresher, Medicare parts A and B primarily cover hospital visits, routine medical services, and basic medical equipment.
What About Prescription Drugs?
Medicare prescription drug coverage is an optional benefit. Medicare offers prescription drug coverage to everyone with Medicare through private insurance companies. This is called Medicare Part D.
If you decide not to get Medicare drug coverage when you’re first eligible, you’ll likely pay a late enrollment penalty if you join later. The penalty is based upon a formula and the dollar amount is fairly modest (think $10-$20/year). However, it is a permanent penalty so it’s probably wise to acquire the coverage upfront and avoid penalties.
To get Medicare drug coverage, you must join a plan approved by Medicare that offers Medicare drug coverage. Each plan can vary in cost and drugs covered. As a point of reference, last year the national average Part D monthly premium was $34. The highest deductible a plan could charge for Part D last year was $405.
Vision And Dental Coverage
We’ve talked about Medicare Parts A, B, and D, and yet no mention of coverage for vision and or dental. That’s were Medicare Part C comes into play. Whereas Medicare Parts A and B are administered by the federal government, Medicare Part C is coverage from plans offered through private insurance companies (i.e. United Health, Blue Cross, etc.). This is also known as Medicare Advantage or Medicare Health Plans.
Medicare Part C plans, by law, are required to provide coverage and pay for the same health care services as Original Medicare. However, in addition to these services, Part C plans may also offer additional coverage for dental care and vision including eye exams, prescription glasses and contact lenses.
These plans often bundle prescription drug coverage as well. Under “Original Medicare” (Part A/B), you are covered to go to nearly all doctors and hospitals in the country. On the other hand, Medicare Part C Plans will likely restrict the choice of doctors and hospitals you can visit to a geographical area. So, if as a retiree you plan to travel the country often, Part C may raise concerns if you need to see a physician while out of your network.
There are other benefits to Part C, including caps on your out of pocket expenses, which is not a feature of Original Medicare. What’s important to know is that even if you use a private insurer you continue to be a part of the Medicare system, with the same coverage, rights, and protections as those in original Medicare plans. Further, your selection of Part C is temporary, meaning you have the option (usually annually during open enrollment) to switch back to Original Medicare if you choose.
Medicare Part C monthly premiums can range from as little as $30 to over $200. If you decide to use a Medicare Part C plan, you still have to opt into Medicare A/B and pay your Part B premiums.
How To Choose Coverage
As you can see, there are a lot of choices to be made when it comes to Medicare. Integrating Medicare into your retirement budget requires careful planning to balance your health needs versus your budget constraints.
From a financial standpoint only, if you are worried about Medicare costs and how they will impact your retirement budget, you should speak with a knowledgeable financial planner to discuss your concerns and see which options will work best for you.
At Miles Brown Asset Management, we have extensive experience helping pre and post-retirees integrate Medicare into their retirement budgets. To learn more, please contact us or request a free financial planning consultation today.
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