If you are retiring before age 65, you will most likely stay on your county or state plan. The cost can be more than $670 per month for an individual and $1,770 per month for a family. You need to check with your Human Resource Department to get an estimated cost. Special-class employees may receive a subsidy for health insurance costs. An individual also should explore Affordable Care Plans, especially if there is no subsidy from the county or state.
At age 65, you need to sign up for Medicare A. It is free. You can sign up three months before you turn 65. If you are retiring at age 65, you have a 7-month Initial Enrollment Period to sign up for Part A and/or Part B. It starts three months before you turn 65 and ends three months after your birthdate. You can sign up for free Part A (if you’re eligible) any time during or after your Initial Enrollment Period starts. Your coverage start date will depend on when you sign up. You also will need to sign up for Medicare B. You will need two forms: The Medicare B sign up form and the Employer Credible Coverage form. Part B cost is $135.50 per month.
At age 65 and older and you are still working, you need to sign up for Medicare B about three months before you retire. This ensures you will not have a gap in coverage.
Medicare Supplement versus Medicare Advantage Plans
Before you retire at age 65 or older, you will need to decide if you want Original Medicare (Medicare Supplement (Medigap Plan)/Medicare D plan) or a Medicare Advantage Plan (like an HMO or PPO)
There are many plans to consider. Here are several questions you need to answer.
- Do you want your Medicare coverage to include prescription drugs?
- Do you want extra coverage to help pay the 20% of your medical bills that Original Medicare doesn’t cover?
- Do you want Medicare coverage for vision and dental?
- Do you travel a lot, or live in another state part of the year?
- Do you want Medicare coverage for frequent international travel?
Medicare Advantage Plans
Medicare Advantage Plans are a type of Medicare health plan offered by a private company that contracts with Medicare. Medicare Advantage Plans provide all of your Part A and Part B benefits. Medicare Advantage Plans include:
- Health Maintenance Organizations
- Preferred Provider Organizations
- Private Fee-for-Service Plans
- Special Needs Plans
- Medicare Medical Savings Account Plans
If you’re enrolled in a Medicare Advantage Plan:
- Most Medicare services are covered through the plan
- Medicare services aren’t paid for by Original Medicare
- Most Medicare Advantage Plans offer prescription drug coverage
If you join a Medicare Advantage Plan for the first time, and you aren’t happy with the plan, you’ll have special rights under federal law to buy a Medigap policy. You have these rights if you return to Original Medicare within 12 months of joining.
- If you had a Medigap policy before you joined, you might be able to get the same policy back if the company still sells it. If it isn’t available, you can buy another Medigap policy.
- The Medigap policy can no longer have prescription drug coverage even if you had it before, but you may be able to join a Medicare Prescription Drug Plan (Part D).
- If you joined a Medicare Advantage Plan when you were first eligible for Medicare, you could choose from any Medigap policy.
- Some states provide additional special rights.
Medicare Supplement Insurance (Medigap)
A Medicare Supplement Insurance (Medigap) policy helps pay some of the health care costs that Original Medicare doesn’t cover, like:
Medigap policies are sold by private companies.
Some Medigap policies also cover services that Original Medicare doesn’t cover, like medical care when you travel outside the U.S. If you have Original Medicare and you buy a Medigap policy, here’s what happens:
- Medicare will pay its share of the Medicare-approved amount for covered health care costs.
- Then, your Medigap policy pays its share.
Eight things to know about Medigap policies
- You must have Medicare Part A and Part B.
- A Medigap policy is different from a Medicare Advantage Plan. Those plans are ways to get Medicare benefits, while a Medigap policy only supplements your Original Medicare benefits.
- You pay the private insurance company a monthly premium for your Medigap policy. You pay this monthly premium in addition to the monthly Part B premium that you pay to Medicare.
- A Medigap policy only covers one person. If you and your spouse both want Medigap coverage, you’ll each have to buy separate policies.
- You can buy a Medigap policy from any insurance company that’s licensed in your state to sell one.
- Any standardized Medigap policy is guaranteed renewable even if you have health problems. This means the insurance company can’t cancel your Medigap policy as long as you pay the premium.
- Some Medigap policies sold in the past cover prescription drugs. But, Medigap policies sold after January 1, 2006, aren’t allowed to include prescription drug coverage. If you want prescription drug coverage, you can join a Medicare Prescription Drug Plan (Part D).
- It’s illegal for anyone to sell you a Medigap policy if you have a Medicare Advantage Plan unless you’re switching back to Original Medicare.
Medigap policies don’t cover everything
Medigap policies generally don’t cover long-term care, vision or dental care, hearing aids, eyeglasses, or private-duty nursing.
Drug coverage (Medicare Part D)
Medicare offers prescription drug coverage to everyone with Medicare. If you decide not to get Medicare drug coverage when you’re first eligible, you’ll likely pay a late enrollment penalty if you join later unless one of these applies:
Generally, you’ll pay this penalty for as long as you have Medicare prescription drug coverage.
Two ways to get drug coverage
- Medicare Prescription Drug Plan (Part D). These plans (sometimes called “PDPs”) add drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private Fee-for-Service (PFFS) Plans, and Medicare Medical Savings Account (MSA) Plans.
- Medicare Advantage Plan (Part C) (like an HMO or PPO) or other Medicare health plan that offers Medicare prescription drug coverage. You get all of your Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) coverage, and prescription drug coverage (Part D), through these plans. Medicare Advantage Plans with prescription drug coverage are sometimes called “MA-PDs.” You must have Part A and Part B to join a Medicare Advantage Plan.
Consider all your drug coverage choices
Before you make a decision, learn how Part D works with your other drug coverage. For example, you may have drug coverage from an employer or union, TRICARE, the Department of Veterans Affairs (VA), the Indian Health Service, or a Medicare Supplement Insurance (Medigap) policy. Compare your current coverage to Medicare drug coverage. The drug coverage you already have may change because of Medicare drug coverage, so consider all your coverage options.
If you have (or are eligible for) other types of drug coverage, read all the materials you get from your insurer or plan provider. Talk to your benefits administrator, insurer, or plan provider before you make any changes to your current coverage.
Each Medicare drug plan must give at least a standard level of coverage set by Medicare. Plans can vary the list of prescription drugs they cover (called a formulary) and how they place drugs into different “tiers” on their formularies.
You’ll make these payments throughout the year in a Medicare drug plan:
- Yearly deductible
- Copayments or coinsurance
- Costs in the coverage gap
- Costs if you get Extra Help
- Costs if you pay a late enrollment penalty
Your actual drug plan costs will vary depending on:
- The drugs you use
- The plan you choose
- Whether you go to a pharmacy in your plan’s network
- Whether the drugs you use are on your plan’s formulary
- Whether you get Extra Help paying your Medicare Part D costs
Look for specific Medicare drug plan costs, and then call a DROP Advisory Council member to get more details.