At Cornerstone, we’re no strangers to helping retirees and those close to retirement handle many aspects of their financial lives. That undoubtedly includes medical costs, which are often higher as age increases.
That’s why we’re kicking off a blog series on Medicare. This first post will cover the basics of the program and explain things like what people mean when they say, “Original Medicare.”
Breaking Down the Parts
Medicare is the federal health insurance program for:
- People age 65 or older
- Some younger people with disabilities
- End-Stage Renal Disease patients (permanent kidney failure requiring dialysis or transplant)
There are a few different parts of Medicare that help cover specific medical services. Below is a primer on each. There are several options available for Medicare coverage, so it may be valuable to work with a local insurance professional to find the right fit for you, like here at Cornerstone Financial.
Part A (Hospital Insurance)
This is the portion of Medicare that covers inpatient hospital stays, skilled nursing care (not long-term care) and hospice.
Part B (Medical Insurance)
Medicare Part B covers specific medical services, outpatient care, medical supplies, and many preventive services. Some examples include:
- Clinical lab and diagnostic services
- Ambulance services
- Durable medical equipment
- Mental health services (inpatient, outpatient, partial hospitalization)
- Second opinions for surgeries, if carrier provided
- Limited prescription coverage, only if administered in a hospital setting
- Physical therapy/rehab
Part B premiums are based on income and adjust annually. Here are the latest monthly premiums:
Together, Medicare Parts A and B are known as “Original Medicare” and provide core health coverage to 44 million beneficiaries.
What Parts A and B Don’t Cover
While Medicare Parts A and B cover a lot, they don’t cover everything. And what they don’t cover can be quite costly, if you need that type of care.
For instance, you’ll need additional insurance or have to pay out-of-pocket for these types of services:
- Long-term care
- Most dental care, including dentures
- Eye exams
- Cosmetic surgery
- Acupuncture
- Hearing aids, related exams
- Foot care
- Gym membership
Part D (Prescription Drugs)
Medicare Part D, which was added to the program in 2006, is supplemental coverage for prescription drugs. It can be added to Original Medicare, some Medicare Cost plans, some private fee-for-service plans, and medical savings account plans.
Part D plans are offered through private insurance companies approved by Medicare. More comprehensive Medicare plans known as Medicare Advantage Plans bundle Part D coverage that complies with Medicare regulations.
Cost Factors
With any medical coverage, there are several variables that can affect the cost of care. That is certainly true of Medicare coverage as well, especially since it comes in many shapes and sizes.
Some of the factors that can affect your costs include:
- Your exact Medicare coverage
- If your medical service provider accepts assignment
- Your care needs and frequency
- Medicare’s coverage limitations
- If you have supplemental Medicare coverage
- If you receive Medicaid or other financial aid
- If your medical service provider and you have a private contract
Obviously, each situation is unique. That said, being able to control health costs can make a big difference in your retirement.
Diving Deeper
While we’ve covered a lot, this post only scratches the surface of the Medicare world. In future posts, we’ll cover supplemental coverage, and dive deeper into Medicare Advantage plans.
In most retirement plans, covering health care costs is a top priority. That’s why our goal is to help you learn more about Medicare coverage and how it can benefit you and your family.
Securities sold through CoreCap Investments, Inc., a registered broker-dealer and member FINRA/SIPC; advisory services offered by CoreCap Advisors, Inc., a registered investment advisor. Cornerstone Financial and CoreCap are separate and unaffiliated entities.