Many retired Americans depend on Medicare, a form of health insurance from the federal government, to help cover their health care costs. But even those who don’t plan on accessing Medicare for several years can benefit from learning how this program may impact their future retirement expenses.

Who is eligible for Medicare?

U.S. citizens or permanent U.S. residents at or over the age of 65 are eligible for Medicare hospital insurance. You are eligible for “Part A” at no cost at age 65 if you received or are eligible to receive Social Security benefits or railroad retirement benefits, your spouse (living or deceased, including divorced spouses) receives or is eligible to receive Social Security or railroad retirement benefits, or you or your spouse worked long enough in a government job through which you paid Medicare taxes. Some workers with a disability or certain chronic diseases may also be eligible.

What medical expenses does Medicare help cover?

Medicare consists of four parts. Enrollees may participate in one or more of them.

  • Part A helps pay for inpatient care in a hospital or skilled nursing facility (following a hospital stay), some health care and hospice care. Many people at or over age 65 (and some who are younger but meet program criteria) qualify for free Part A coverage. You can check your eligibility at Medicare.gov. If you buy Part A, the standard cost in 2019 is up to $437 a month. The 2019 deductible for a hospital stay is $1,364 for each benefit period.
  • Part B is medical insurance covering expenses such as doctors visits, lab and x-ray services, physical therapy, and out-patient hospital visits. You can go to any doctor or facility that accepts Medicare for treatment. Most people pay a monthly premium for Medicare B. The standard premium is $135.50 in 2019. You could pay more than that if your income is higher than a certain amount and less if you qualify for state-based help if your income is lower than a certain amount. The deductible is $185 a year.
  • Part C, also known as a Medicare Advantage plan, is offered through Medicare-approved private insurance companies. Out-of-pocket costs and rules around details, such as referrals and emergency care, vary by company. All offer the same benefits as Parts A and B, except hospice care, which is covered by Medicare even for those in a Medicare Advantage Plan. Some plans may also offer extra coverage for vision, hearing, and dental. Most include Part D coverage for prescription drugs. Premiums and deductibles vary depending on the company providing the plan.
  • Part D, Medicare’s prescription drug coverage, is administered through private insurers. Different Part D plans cover different drugs, so be sure that the prescriptions you need are covered under the plan you choose. Premiums and deductibles vary.

When should you sign up to receive Medicare benefits?

You must sign up for Medicare A three months before you turn age 65 if you want to begin Medicare coverage at age 65. At that time you will be asked to decide if you want to enroll in Medicare Part B coverage. Though your Medicare coverage can be changed, waiting to enroll can cause delays in obtaining it, as well as potentially higher premiums. You can postpone Medicare B and enroll later without penalty if you have active group medical coverage through your employer or your spouse’s employer and that employer has at least 20 employees.

How can you make changes to your Medicare coverage?

Review your Medicare coverage annually to ensure it still meets your needs. Changes to your health or drug plan can be made during certain times of the year. Consult Medicare online for specific dates for the Open Enrollment Period.

Understanding your Medicare coverage choices can help you make smart decisions about your health care during retirement.

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