Most people know a little about Medicare, the federal program that provides health benefits to people 65 and older. Yet, many people wait until retiring before becoming familiar with the specifics of Medicare– even though it is an important part of retirement.
Medicare is a federal government program that provides health care insurance to people aged 65 and older, as well as certain disabled individuals. Medicare covers certain basic medical expenses, but it does not cover everything.
Medicare Parts A, B, C and D
Medicare consists of four types of coverage, Parts A, B, C and D. Most people are enrolled automatically in Medicare Part A without taking any action.
Part A helps pay for inpatient hospital care, skilled nursing facilities, hospice care, and some home health care. Because people usually pay for Part A coverage through a federal Medicare tax while working, most don’t pay a deductible or monthly premium after age 65. However, if you or your spouse did not pay Medicare taxes while working, you may still be able to purchase Part A coverage.
Part B helps pay for doctors’ services, outpatient hospital care, physical and occupational therapy and some home health care. Part B coverage requires payment of a monthly premium. Most people will pay $96.40 per month in 2010 for Part B coverage. This monthly premium may vary depending on when you enrolled for coverage and whether the rates increase in the future.
Part C is another option for Medicare benefits. It combines Part A, Part B, and, sometimes, Part D (prescription drug) coverage. These plans are called Medicare Advantage Plans and are managed by private insurance companies approved by Medicare. These plans must cover medically-necessary services; however, plans can charge different amounts for co-payments, coinsurance, or deductibles for covered services. It may be worthwhile to shop around for the best Part C rates.
Part D provides coverage for prescription drug benefits. The prescription drug plans will generally require you to pay a monthly premium and co-payment or co-insurance for each prescription you fill. Plans vary by cost, number of drugs covered and pharmacies on each plan, but all plans must meet a minimum standard for drug coverage set by Medicare.
One very important note: many retirees think that Medicare will cover the costs of long-term care, and that’s simply not the case. While Medicare will pay for a few medically necessary expenses associated with long-term care and will cover a set amount of days in a facility following a hospital stay, Medicare will not cover the bulk of care in a long-term facility. Those expenses typically must be paid out of your pocket or through a long-term care insurance policy if you have one.