It’s never too early to plan for retirement, and that includes one of the biggest expenses you’ll face as a senior – medical costs.
Medicare insurance should be a key part of your plans when you are thinking about your retirement. You’ll need to have a basic understanding of Medicare costs so you can choose the right plan and have the money earmarked for it when you retire.
Types of Medicare
There are several main types of Medicare: Medicare Original Part A, Part B; and Medicare Advantage (Part C). Ultimately, you’ll want to take part in more than one of these plans. Here’s how they break down.
Medicare Part A is a plan that is premium-free for most people. It’s a basic hospital insurance plan and if you have worked at least 10 years paying into Medicare taxes, then you will likely have nothing to pay for it. If you don’t qualify, then there is a monthly premium — which in 2019 is up to $437 per month.
Medicare Part B always requires a monthly premium. It can vary depending on your financial situation and often the premium is automatically deducted from your Social Security benefits. In 2020, the standard monthly premium is around $135.
If your income exceeds a certain amount, then Part B could be higher.
Supplemental Medicare Plans
Also known as Medigap, these plans can help you pay for some of the out-of-pocket costs that aren’t covered by Original Medicare. Medigap is offered through private insurance companies and not the government.
Premiums vary quite a bit depending on which insurance company you choose, where you live and how much coverage you want.
The Medicare Advantage plan is an all-encompassing plan that includes the benefits of Original Medicare with additional benefits.
This type of plan can cover everything from prescriptions. dental, vision, general wellness and more. You’ll be responsible for paying your Medicare Part B premium whenever you join a Medicare Advantage plan.
Medicare Part D
This is a purely optional plan that will help cover your prescription drugs. It’s important to sign up for Medicare Part D when you enroll in Original Medicare to avoid any late-enrollment fees.
Also, note that Medicare Part D premiums can vary depending on your income and location.