Health insurance is one of the best support systems for retirees. The ability to access medical care when you need it, and the confidence of knowing a significant portion of your medical expenses will be covered, makes growing older more comfortable. However, there may be a few aspects of this resource you need more clarity about in regards to paying for Medicare.

What is Medicare?

Everyone's heard of it. But what is it, really?

​Medicare is a health insurance plan administered by the government and available to U.S. citizens who are age 65 or older, disabled, suffer from Lou Gehrig’s disease (i.e., Amyotrophic Lateral Sclerosis), have kidney failure or meet the qualifications to receive a kidney transplant.¹
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The concept of offering every American a medical service coverage plan was initially proposed by President Theodore Roosevelt during his electoral campaign. President Harry S. Truman also made attempts to get legislation passed to approve federal funding for the plan. However, the plan was not approved until 1965, and stipulations were attached to the bill, which prevented every American from receiving national medical insurance. Despite these initial failed attempts, the persistent efforts of Presidents Roosevelt, Truman, Kennedy and Johnson eventually resulted in the approval of this health insurance program.²

The Four Plans that Keep You Covered.

​There are four options Medicare recipients can utilize simultaneously to help pay for medical expenses for frequently used services—they are Parts A, B, C and D. Here’s a brief overview of the benefits each plan provides.³

​What’s the Difference between Medicare and Medicaid?

​While each insurance plan is administered by the government and paid by taxpayers, there are a few distinctions between each program. The federal health care coverage available to seniors and the disabled is limited to these two groups of the population. Medicaid, on the other hand, is available to the general population who meet the program’s qualification criteria. It is supported on the federal level but administered by state governments.⁴
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Although state-administered health insurance plans are open to the general population (i.e., children, adults, disabled individuals and seniors), the qualification guidelines are higher than the federally sponsored health insurance plan available to seniors and the disabled. The distribution of state health insurance is determined by an individual’s income and value of assets. The services covered by state-administered health insurance plans are similar to Medicare, but some services are restricted if individuals are age 21 and older or age 21 and younger.

What about the Gaps Parts A and B Don't Cover?

​Health care expenses can quickly accrue, and when unexpected medical emergencies occur, you may not be prepared to handle the financial consequences. Although Parts A and B provide a significant amount of coverage, the total costs will not be paid. These Parts pay approximately 80 percent of health care expenses, and you are responsible for paying the remaining 20 percent. This remaining balance typically consists of copays and deductibles. These fees are affordable when the amounts are between $10 and $50. However, if you have an extended hospital stay or visit the doctor frequently, and don’t have enough money saved, these fees can be expensive. This is where a supplemental health insurance plan to cover the gap can provide a safety net for you.⁵

A supplemental health insurance plan can offer some financial relief, but you will still need additional coverage if you are admitted into a nursing home permanently or need in-home nursing services. If you need to purchase eyeglasses, visit a dentist or require a hearing aid, Medigap will not cover these expenses. Medigap insurance offers 10 coverage options you can choose for Medicare in retirement. When you speak with an insurance representative about this type of plan or request information, make sure you evaluate the coverage terms closely because some options don’t cover services such as skilled nursing facility stays, hospice care or blood transfusions.⁶
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Paying for Medicare can be challenging, but with diligent research and talking to your financial professional, you can find what you will need when you reach age 65 or what you need to change to your retirement health care plan now.⁷

What are some steps you can take to pay for health care in retirement?

Plan Ahead by Saving

​If you are still working, you should consider setting money aside for Medicare in retirement. For example, a health care spending account can help you control your expenses and reduces the temptation to use medical service savings for non-medical expenses.⁸ Although Medicare pays a significant portion of your expenses, you don’t want to be burdened with medical bills that exceed your monthly budget. Late fees and interest can also cause medical expenses to increase if bills are not paid on time.

Consider Additional Supplemental Income

​In addition to your pension and Social Security income, supplemental retirement income, such as a fixed indexed annuity, can provide the financial stability you need to cover unexpected expenses. Depending on the amount you save prior to retirement, you will receive a monthly amount over a fixed period of time. Discuss what your options are and what supplemental income vehicles may be right for your unique situation with your financial professional.

Purchase Non-Medicare Insurance Products

​According to a 2014 Centers for Disease Control and Prevention report, 1.4 million seniors reside in nursing homes.⁹ Long-term care insurance can also help you fill in the gaps of what Medicare supplemental plans don't cover. Adults between the ages 40 and 84 can purchase a long-term care insurance plan.¹⁰ The more proactive you are with saving for retirement by acquiring supplemental insurance plans and supplemental income sources, the less likely you are to encounter financial challenges.
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Even with the rising costs of health care, planning for health care in retirement doesn’t have to be complicated. Consider the options we’ve outlined here and talk to your financial professional to find out the best strategy for you and your situation.

www.turning65today.com

Turning 65 is not an option. And neither is enrolling for Medicare. The process may seem intimidating, but that’s where we come in. Turning65Today was established to assist individuals in maneuvering the Medicare maze.

As licensed, independent Medicare specialists, certified with top Medicare Advantage, Prescription Drug and Medicare Supplement insurance plan carriers, we offer assistance, free of charge, to ensure you end up with the plan that is right for you.

There is no “one size fits all” when it comes to Medicare coverage. We will help you find the one that fits your needs, desires and budget. Through education and plan comparisons, you will feel in control of each decision you make along the way. The right medical coverage + the right prescription drug plan = Peace of Mind.

​We work with the top insurance carriers to provide you the best choices for all your Medicare needs:

• Medicare Enrollment (Parts A & B)
• Medicare Advantage Plans (Part C)
• Prescription Drug Plans (Part D)
• MediGap Plans
• Group Work Health Coverage
• Enrollment/Change Deadlines

1 http://www.investopedia.com/terms/m/medicare.asp

2 https://www.medicareresources.org/basic-medicare-information/brief-history-of-medicare/

3 http://www.investopedia.com/articles/personal-finance/070914/medicare-101-do-you-need-all-4-parts.asp?ad=dirN&qo=investopediaSiteSearch&qsrc=0&o=40186

4 http://www.investopedia.com/articles/pf/07/medicare-vs-medicaid.asp?ad=dirN&qo=investopediaSiteSearch&qsrc=0&o=40186

5 https://www.medicare.gov/supplement-other-insurance/medigap/whats-medigap.html

6 https://www.ehealthinsurance.com/medicare/compare-supplement-plans

7 http://www.investopedia.com/articles/insurance/10/the-shortcomings-of-medicare.asp?ad=dirN&qo=investopediaSiteSearch&qsrc=0&o=40186

8 https://www.ameriprise.com/research-market-insights/financial-articles/retirement/strategies-to-help-save-enough-for-health-care-in-retirement/

9 https://www.ameriprise.com/research-market-insights/financial-articles/insurance-estate-planning/what-is-long-term-care-insurance/

10 http://www.cdc.gov/nchs/fastats/nursing-home-care.htm
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Disclosure:
This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

This material is not intended to be legal or tax advice. The insurance agent can provide information, but not advice related to social security benefits. Clients should seek guidance from the Social Security Administration regarding their particular situation. The insurance agent may be able to identify potential retirement income gaps and may introduce insurance products, such as an annuity, as a potential solution. Social Security benefit payout rates can and will change at the sole discretion of the Social Security Administration. For more information, please consult a local Social Security Administration office, or visit www.ssa.gov.

Annuities are insurance products backed by the claims-paying ability of the issuing company; they are not FDIC insured; are not obligations or deposits of, and are not guaranteed or underwritten by any bank, savings and loan or credit union or its affiliates; are unrelated to and not a condition of the provision or term of any banking service or activity.