Navigating healthcare in retirement can be complex, with numerous options and decisions. Terms like Medicare, Medicare Advantage, prescription coverage, and retiree benefit programs can overwhelm the process. Our concern is that if the wrong choice is made, it can lead to improper and inadequate coverage, which can cause retirees to dip into their investments to cover any excess expenses.
Many of our clients fall into one of two paths when it comes to healthcare coverage. The first path is for retirees who will use Medicare as their only source of health insurance. The second group is our clients who have worked for the school system or the federal government. The major difference between these paths is that teachers and federal employees have some healthcare costs paid for as an added benefit.
If Medicare is your only source of insurance, then at age 65, you will go on Original Medicare (Parts A and B), purchase a Medicare Supplement policy from a private insurance company, and sign up for a Part D prescription plan. Premiums can vary, but you will typically only have premiums for your Part B of Medicare, your supplement policy, and possibly your prescription plan.
Again, this is a case-by-case scenario because some individuals, not all, also have a Part A premium.
Another option for retirees who only have Medicare is to go on a Medicare Advantage Plan. Medicare Advantage (also known as Part C) is an alternative to Original Medicare but also adds extra benefits like dental, vision, and fitness programs. Under an Advantage Plan, your Part A, B, and D plans are covered, and your premiums can vary or be nothing. The one constant is that you will still have the Part B premium.
As Educators and Administrators, you dedicate your career to shaping the future of our communities, and we take immense pride in supporting professionals like you for the last 40 years. Your healthcare coverage includes both Original Medicare (Parts A and B) at age 65 and your employee benefits from the school system. Medicare will act as your primary insurance in retirement. As a part of working for the school system, you do not have to purchase a Medicare supplement policy. Your insurance from the school system becomes your secondary insurance, which also provides prescription drug coverage. This benefit from the school system is free to the retiree and their spouse
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For our clients who are retired federal employees, you will have both Medicare and Federal Employee Health Benefits (FEHB). When you turn 65, you can sign up for Original Medicare (Parts A and B). You have a comprehensive coverage plan by fully enrolling and having your federal benefits. Here, you would have Medicare as your primary insurance and federal benefits as your secondary insurance covering prescription drugs. You would have a premium for your federal benefits; however, the government pays about 75% of the total cost.
Understanding your healthcare options is critical to ensuring proper medical coverage and protecting retirement assets. Without the correct coverage, you may be forced to spend down your investments, increasing the risk of running out of money or reducing the assets intended for your beneficiaries.
We look forward to the opportunity to help you plan for a secure and comfortable retirement. Please feel free to reach out to learn more about how we can tailor our services to meet your unique needs.