Health care is an important issue at all stages of life, especially at retirement. Those who are in their working years will likely have insurance through an employer or through the Affordable Care Act (ACA) Marketplace. After you hit age 65, you will likely be eligible to enroll in Medicare.

Understanding Medicare

Medicare is made up of several parts. Medicare Part A, which is hospital coverage, is free to those who qualify. Even if Americans over the age of 65 have their own health insurance through an employer or a former employer, they will likely want to sign up for Medicare Part A.

Medicare Part C is also called Medicare Advantage. If you choose this, you will receive all your Medicare benefits through a private insurer and your coverage and copayment options may be different. Your premiums may be higher, lower, or the same as traditional Medicare. Some seniors use Advantage to get needed vision and dental coverage. The ACA, also known as Obamacare, has made some changes to the way that the government reimburses Medicare Advantage plans, and over time this might affect the coverage available. In 2014, 30 percent of Medicare participants chose an Advantage plan, the highest proportion ever.

Medicare Part D is the prescription drug coverage for Medicare beneficiaries. Seniors who need drug coverage will want to be sure to add Part D. Those who choose an Advantage plan may get prescription coverage through that plan – if not, they will also need to sign up for Medicare Part D.

There is an additional coverage known as Medigap. This extra health insurance is provided by a private insurer in order to cover medical costs not covered by Medicare. This may include coverage for copayments, deductibles, and health care outside the U.S. It does not include coverage for dental, vision, or long-term care. Those with Medicare Advantage cannot get Medigap, but those with Medicare Parts A and B may purchase this coverage.

Planning for Health Insurance As You Near Retirement

The variety of choices available within Medicare means that most seniors will be able to find a combination of plans that meet their needs. It’s important to assess the following needs before choosing a plan:

  • Retirement Age – Are you planning to work after age 65? Or are you planning to retire before age 65 and thus need coverage from retirement until you are eligible for Medicare at 65? In the latter case, you may want Marketplace insurance for the interim.
  • Provider needs – Do you have certain medical providers that are important to you? Perhaps you have a long term relationship with your doctor, or have certain specialists that know your situation and condition. You’ll need to ensure your chosen plan covers those providers.
  • Prescription needs – Will you need to make sure your chosen health insurance coverage includes prescription drugs? Which drugs need to be covered? Different plans have different formularies for what they cover.
  • Financial needs – What will your financial flexibility be in retirement? How much can you afford to pay, compared to how much medical treatment you may need? An Advantage plan with a cap on out-of-pocket expenses may be important, but traditional Medicare may offer lower monthly payments.

By considering these questions and familiarizing yourself with all aspects of Medicare, you’ll be able to choose the best coverage for your retirement years. With that peace of mind, you’ll be able to truly enjoy your life after age 65.