Do You Need Health Insurance If You Have Medicare?
If you are approaching age 65 or perhaps considering retirement soon, you no doubt are working on your future budget and planning for basic needs including health insurance. You may be familiar with Medicare if you’ve set up plans for your parents or have started researching your own plans. However you may discover Medicare options today are a bit more complex and customizable than they were with the original Medicare plan. Where do you begin?
In addition, not everyone knows that Medicare requires that you meet deductibles (certain amounts of money spent before the insurance kicks in) as well as pay co-payments (money due when visiting a doctor). Also, not all health care services are covered by Medicare, so you may need to allot additional funds in your future budget to purchase supplemental private insurance.
What is Medicare?
Medicare is the federal health insurance program for people who are 65 or older, certain younger people with disabilities, and people with permanent kidney failure. Medicare is compromised of four “parts” that cover a range of medical services:
- Medicare Part A (Hospital Insurance): Covers hospital stays, care in a skilled nursing facility, hospice care, and some home health care.
- Medicare Part B (Medical Insurance): Covers certain doctors’ services, outpatient care, medical supplies, and preventive services.
- Medicare Part C (Medicare Advantage Plans): Combines Part A and Part B with services from private Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), Fee-for-Service Plans, Special Needs Plans, and Medicare Medical Savings Account Plans.
- Medicare Part D (Prescription Drug Coverage)
Medicare Part A is free for people over 65 who are already insured and can help pay for in-hospital stays and certain doctor appointments. A person does not have to be retired to apply for Medicare; instead you can apply online or at your local social security office, up to three months before turning 65. Or, once you apply for and begin receiving social security benefits, you will be automatically enrolled in Parts A and B.
The other Medicare Parts do require a monthly premium payment, calculated based on which plan (or combination of Parts) you choose. The Medicare website has several helpful online tools, including a checklist to help you pick the level of Medicare you will need, or a quick finder to see if your service is covered.
Helping Pay Medicare Deductibles, Co-Payments, and Co-Insurance
In order to help pay for deductibles, co-payments, and co-insurance related to your Medicare policy, you can purchase an additional “Medigap” policy from a private insurance agency. Medigap policies also require a monthly premium that must be paid in addition to your Medicare premium, but can help offset the larger costs of health care services (say, an unexpected hospital stay or procedure). Medigap policies are sold by private agencies but are regulated by the government and must be guaranteed to be renewable; in other words, they cannot be cancelled if your health declines. They must also not duplicate your existing coverage.
Medigap policies often exclude many of the same services as Medicare (see below), so it is important to carefully review what is and is not covered. You can purchase varying degrees of Medigap coverage based on what you are able and willing to pay for your monthly premium; for example, some Medigap policies will help pay for medical expenses you may incur when traveling outside of the U.S. You also have a right to cancel a policy within a certain amount of time (usually 30 days) if you are not happy with the policy.
Services NOT Covered by Medicare or Medigap
When planning your retirement, it’s important to remember that Medicare (and most Medigap) policies do not cover all services you may need in the future. Services excluded by Medicare are:
- Long-term care (also called custodial care)
- Most dental care
- Eye examinations related to prescribing glasses
- Cosmetic surgery
- Hearing aids and exams for fitting them
- Routine foot care
If you see the need for these services in the future, it may be worthwhile to consider purchasing additional private health insurance or looking for a way to remain on your employer’s insurance after retirement (many companies offer “retiree insuance”). The amount of information and options for medical insurance can be overwhelming, so don’t hesitate to work with a trusted insurance agent, family member, or doctor to help consider your needs and benefits.
You can also find a phone number for your own State Health Insurance Assistance Program (SHIP) – an organization set up specifically to provide free, in-depth, one-on-one insurance counseling and assistance to Medicare beneficiaries, their families, friends, and caregivers – by selecting your state from the drop down menu here.