Many Americans celebrate their 65thbirthday because that’s the year they become eligible for Medicare. They hope they’ll start paying less for medical insurance premiums, and also they no longer need to worry about being denied insurance for pre-existing conditions. Indeed, these are good reasons to turn 65!
Unfortunately, hitting that magic number doesn’t mean you’re finished paying attention to how you’ll pay for medical coverage! While Medicare may be called “medical insurance,” don’t think it’s similar to the health insurance your employer offered you while you were working. Don’t think that Medicare is the only health insurance you need. That would be a big mistake!
Here are a handful of very significant differences between Medicare and the typical medical insurance that’s offered to American workers:
- Many employer-sponsored medical insurance plans are comprehensive, often covering medical, dental, hearing, and vision services, as well as services that complement traditional medical care, such as acupuncture or chiropractic services. Not so with Medicare. It doesn’t cover vision, dental, or the cost of hearing aids, nor does it cover acupuncture or most chiropractic services. Medicare also doesn’t pay for any medical care you receive outside of the U.S. To cover the cost of any of these services, you’ll either have to pay out-of-pocket or look for a separate insurance policy that supplements Medicare.
- Most employer-sponsored medical insurance is integrated into one plan that covers the cost of hospitals, physician and outpatient services, and prescription drugs. Not so with Medicare. It has separate coverage for hospital costs (Medicare Part A), physician and outpatient services (Medicare Part B), and the cost of prescription drugs (Medicare Part D). Each of these “parts” has its own set of premiums, deductibles, and copayments.
- With typical employer-sponsored medical insurance, once you satisfy the deductible for the year, the plan’s benefits kick in and you may only need to pay for copayments or coinsurance. With Medicare, it’s possible that you might need to satisfy the Part A deductible for hospital services more than once in a year, if you’ve had services during two or more different “benefit periods.”
Medicare also limits reimbursements to health care providers as a cost-saving feature. As a result, some physicians and other health care providers decide not to accept reimbursement from Medicare. In this case, you might not be able to continue seeing a doctor who was covered under your employer-based health care plan.
As a result of all these differences, when you sign up for Medicare, you’ll want to buy a separate health policy that complements Medicare’s coverage. To avoid making a big Medicare mistake, learn about your options as you approach age 65, so that you can make an informed choice when you become eligible for Medicare. If you’ve already attained age 65 and didn’t previously buy supplemental coverage, you have a good opportunity to correct your mistake with the upcoming Medicare Open Enrollment Period from October 15 through December 7.
For more details on Medicare’s provisions and strategies to best address your insurance needs, see my latest book, Retirement Game-Changers: Strategies for a Healthy, Financially Secure, and Fulfilling Long Life.
Nobody said it would be easy to plan for medical insurance in your retirement. It’s well worth your time learning about your options–it could potentially save you thousands of dollars over the course of your lifetime.