One of the primary concerns for retirees is the fear of financial insecurity. To mitigate this risk, having the right insurance in place is crucial, a key component of holistic planning known as asset protection. Insurance allows us to transfer the risk of significant expenses to an insurance carrier in exchange for a monthly premium. The right insurance can provide peace of mind, reduce the risk of depleting your savings, and ensure more assets are preserved for your heirs. Understanding how Medicare and a Medicare Supplement policy complement each other is fundamental to a robust asset protection plan.
Most people get health insurance through their employer during their working years. As we age and transition into retirement, the need for health insurance still exists and, in most cases, increases. When Americans turn 65, they can apply for Medicare. Original Medicare consists of Part A and Part B. Retirees also have the option to purchase a Medicare Supplement policy. Together, a well-coordinated insurance plan can be there when you need it most.
Original Medicare consists of Parts A and B and is purchased through the Social Security Administration. Part A, also known as hospital insurance, is accessible to people who have paid Medicare taxes for at least ten years while working. You can purchase a Part A plan if you don't meet this criterion. Part A covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and home health care. Medicare Part B, also known as medical insurance, is the portion of Medicare with a monthly premium. This premium can change based on your income and can be deducted directly from your Social Security benefit. Medicare Part B covers specific doctor's services, outpatient care, medical supplies, and preventative care. Medicare Parts A and B cover 80% of your Medicare-approved expenses.
To cover the other 20% of Medicare-approved expenses, many retirees purchase a Medicare Supplement policy, also known as a Medigap policy. These policies are purchased from private insurance companies and cover copayments, coinsurance, and deductibles. Like Medicare Part B, a supplement plan has a monthly premium. A Medicare Supplement premium varies by plan selection and insurance provider. What is excellent about a Medicare Supplement policy is that your plan automatically renews each year if you pay your premiums, even if you begin to have increased health problems.
Having a financial advisor who understands how insurance works as part of an overall financial strategy is critical. Part of that strategy is knowing how Original Medicare and a Medicare Supplement policy work together. As holistic planners, we assist our clients in setting up a Medicare plan that provides the coverage they need. This can bring peace of mind, reduce the risk of spending through your savings, and help ensure more assets go to your heirs.