Which Type of Medicare Plan Should You Choose?

April 24, 2018

Retiring soon? If so, you have some big milestones in your future, such as filing for Social Security and leaving work for the last time. Perhaps one of the most important milestones is applying for Medicare coverage. You’ve likely paid into Medicare your entire career. Retirement is your time to finally benefit from the plan.

When it was originally introduced, Medicare only covered hospitalizations and limited forms of skilled nursing. However, other services have been added over the years. Today, Medicare offers coverage for a broad range of treatments and medical services.

Many new retirees are overwhelmed by the available choices. It’s impossible to predict your future health care needs, so it can be difficult to know which type of coverage is right for you.

Below are descriptions of the four main parts of Medicare coverage. If you better understand your options, you can find the protection plan that best aligns with your needs. Your financial professional can also help you develop a health care strategy as part of a comprehensive retirement plan.

Part A

Also known as Original Medicare, this is the first type of Medicare coverage that was introduced. It covers hospitalizations, emergency services, hospice and some forms of skilled nursing care and home health care. Enrollment in Part A is automatic, and it doesn’t have a premium.

Many people misinterpret the “skilled nursing care” aspect of Part A to mean that it covers long-term care. This usually isn’t the case. Part A covers temporary skilled nursing care or home health care that’s related to a specific hospitalization or treatment. However, the coverage is partial and lasts for only a short period of time. Part A won’t cover extended long-term care, especially if it’s provided by home health aides or other nonskilled providers.

Part B

Part B covers supplies and services needed to provide treatment, as well as preventive services such as visits to your doctor. It also covers ambulance transportation, medical equipment, mental health services, second opinions before surgery and a limited menu of prescription drugs.

You are automatically enrolled in Part B when you file for Social Security benefits. However, you can opt out of it if you wish. The premium for Part B depends on your income level. While Part B comes with additional expense, it’s a popular option that’s chosen by many retirees.

Part D

Part D is the most recent addition to the Medicare menu. It provides coverage for prescription drug costs. It’s an optional form of coverage and comes with a monthly premium. Medicare offers a wide range of Part D plans, all with different premiums, copays and deductibles. Review your options and choose the one that best fits your prescription drug needs.

Medicare Advantage (Part C)

Part C, commonly known as Medicare Advantage, is a unique program in which private insurers can offer Medicare policies to retirees. There are many different Medicare Advantage plans available, which could help you find the plan that best fits your needs and your budget.

At a minimum, all Medicare Advantage plans must offer the same coverage as Part A. However, many plans offer the same coverage as parts A and B, as well as prescription drug protection. Many also offer coverage for services not eligible under Medicare, such as dental, vision and physical therapy.

Ready to develop your health care funding strategy? Let’s talk about it. Contact us today at Grand Canyon Planning Associates. We can help you analyze your needs and develop a plan.