Medicare has four parts; A, B, C and D which often times can be confusing. Having a clear understanding of them are critical in making the correct decision around your retirement healthcare. We are going to break them down below as simply as possibly to help make this decision easy for you!
What is Part A?
This part of Medicare is the “free” part and it covers your hospital stays. More specifically it covers your stay while you are an in-patient at the hospital or in a skilled nursing facility, such as an in-patient rehabilitation center with physical and occupational therapist, speech pathologists or audiologists.
When do I sign up and what to consider?
Being this part of Medicare has no cost, most people sign up for it when they turn 65. You can technically sign up three months prior to your 65th birthday. One major thing to consider is that you can no longer make Health Savings Account (HSA) contributions after you sign up for Part A as Medicare is not a high deductible plan.
What is Part B?
Medicare Part B encompasses the general medical coverage. This would include your doctor visits, clinic services and care you receive as an outpatient.
When do I sign up and what to consider?
Just like Part A, you can sign up for Part B three months prior to your 65th birthday. This part of Medicare is not free, and the premium amount is based on your income. If you are drawing social security, the premium cost will come right out of your social security check.
If you are still working, covered by your employer health plan, and there are more than 20 employees covered under the employer health plan, then you DO NOT have to sign up for Medicare Part B when you turn 65! If there are less than 20 employees, then you MUST sign up for Medicare A and B at 65. If the latter is your situation, then Medicare will be your primary insurance, and any employer health benefits will be a secondary payor.
What is Part C?
This type of Medicare combines A and B into one plan, also known as a Medicare Advantage Plan. Many of these plans also include prescription drug cover (Part D) as well as vision and dental benefits.
When do I sign up and what to consider?
You would sign up for Medicare Part C three months prior to your 65th birthday just like with traditional Medicare. Keep in mind you do not sign up for A, B, and C. You either sign up for A and B, or C. When forgoing traditional Medicare A and B, and going with Medicare Advantage Part C, you must be certain you are comfortable with the doctor network offered. You typically need referrals as well for this network, which you do not for traditional Medicare. Also be leery of some of the enticing benefits offered that you may never use!
What is Part D?
Medicare Part D is your prescription drug plan. Part D covers many generic and brand-name prescription medications, detailed by a list of medications for each plan.
When do I sign up and what to consider?
You would sign up for this plan the same time that you sign up for your other Medicare. Keep in mind that if use a Medicare Advantage plan (Part C) then the drug coverage could be included in your plan and you would not necessarily need a separate drug plan. When signing up make sure that you compare your current list of medications to the ones offered for that particular drug plan.