There are certain programs that retirees tend to rely on. An important one is Social Security.
Although workers are encouraged to set aside money for retirement, seniors often get most of their income from Social Security. And when it comes to health care in retirement, a related but separate program comes into play: Medicare.
Unfortunately, however, many workers feel they know nothing about Medicare. In fact, a good 44% say they’re not getting enough education on this key program, according to a recent Bank of America report. If you’re in that field, here are some key things about Medicare you should know.
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1. Medicare is not free
It’s a big mistake to think that once you sign up for Medicare, all of your health care needs will be fully covered and you won’t have to spend money on medical costs. That couldn’t be further from the truth.
First of all, it costs money just to be enrolled in Medicare. Although Part A, which covers hospital care, is usually free of a premium, Part B, which covers outpatient services, costs money to sign up for (in the same way you may be used to paying ongoing premiums for private health insurance). ). And if you stick to original Medicare, instead of Medicare Advantage, you’ll also pay a premium for Part D, your drug plan.
Then you have to think about copays, coinsurance and deductibles. Medicare Part A may not charge a premium, but if you end up in the hospital, you’ll pay a deductible for your initial stay. And when you use Part B, you’ll be responsible for a portion of your care in the form of coinsurance. These are all costs you’ll need to plan for and save so you don’t end up with cash problems in retirement (or, worse yet, be forced to skimp on care).
2. There are some services that Medicare will not pay for
Medicare might pay for you to see a doctor for a bad cough or get an MRI if you’ve had dizziness. But it won’t pay for a dental cleaning or an eye exam to see if you need a new prescription for glasses.
Seniors are often surprised to learn that original Medicare won’t cover dental, vision, or hearing services. But Medicare Advantage, an alternative to original Medicare, usually will.
However, Medicare Advantage is not right for everyone. Depending on where you live, you may not be able to find a plan that works for you or is affordable for you. As such, it’s important to understand the limitations of Medicare and save money before retirement so you can cover all of your health care needs.
3. The cost of Medicare will depend on your plan choices and income
Medicare Part B charges members a standard monthly premium. But you may end up paying a Part B penalty if you earn more. In the meantime, how much you spend on Part D will depend on the plan you choose and also on your income.
Then there is Medicare Advantage. The amount you pay for coverage will depend on the Advantage plan you choose. But all in all, don’t think that all seniors pay a universal monthly premium for their Medicare coverage.
There’s a lot to know
Medicare is a complex program with many rules, just like Social Security. And it’s important to know a lot about it before you’re of an age where you’re eligible to enroll.
If you think you’re lacking in education about Medicare, start reading about how it works. That should put you in a better position to plan and save for your future health care needs.
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