The average retirement age is increasing because many households would not be able to maintain their standard of living in retirement. Meanwhile, healthcare costs continue to rise. Fortunately, you can enroll in Medicare while you are still working. You become eligible for Medicare at age 65, whether or not you are retired.
What Are the Benefits of Enrolling In Medicare?
Medicare makes healthcare very affordable. Many people pay nothing for Medicare Part A, which covers inpatient services (hospitalization). Most people pay the standard premium amount for Medicare Part B, which covers outpatient services, such as doctor visits and lab work. The standard premium amount for 2021 is $148.50, as stated on medicare.gov.
You have a choice between Original Medicare and a Medicare Advantage plan provided by a private insurer. In either case, you pay Part B premiums. Some Medicare Advantage plans charge an additional premium, but these are typically minimal compared to the cost of private health insurance, and some plans charge no additional premium.
In addition, many states have Medicare Savings Programs (MSPs). For people who qualify, these programs help cover costs such as premiums, deductibles, prescription drugs, copayments, and coinsurance.
What If I Have Employer-Sponsored Group Health Insurance?
If you are still working when you turn 65 and have group health coverage through your employer, you have the option to keep your employer-sponsored health insurance instead of enrolling in Medicare right away. However, that could cost you money in the long run. When you decide to retire at a later date and need Medicare coverage, you will have to pay a penalty.
For Medicare Part B, the penalty is 10% for each 12-month period you were eligible to enroll but did not. For example, if you continued with your group health plan for three full 12-month periods after you became eligible for Medicare, when you eventually enrolled, you would have to pay an additional 30% for Part B premiums. In most cases, this penalty continues to be imposed for as long as you have Medicare – or the rest of your life.
Which Is Better: Original Medicare or a Medicare Advantage Plan?
There are pros and cons with both Medicare options. One advantage of Original Medicare is the freedom to choose your own doctors and hospitals from any Medicare providers, anywhere in the country. You don’t need a referral from your primary care physician (PCP) to see a specialist. On the downside, you must meet a deductible before coverage begins, and then pay 20% of the cost for Part B services. There is no cap on out-of-pocket costs with Original Medicare, but you can purchase a Medigap plan to help cover these expenses.
Medicare Advantage HMO and PPO plans do not allow as much freedom of choice in providers, and you may need a referral to see a specialist. There is no deductible to meet, but there are co-pays for emergency room, urgent care, and specialist visits. These plans have out-of-pocket caps, but they can run as high as $6,700.
Our agent can help you determine which Medicare option is best for you.