When you turn, you qualify for Medicare, the federal health insurance program for older Americans. Medicare open enrollment runs from Oct. 15 through Dec. 7.
While many seniors expect Medicare to be a one-stop health insurance solution, it often isn’t enough.
The program offers coverage for hospital stays, doctor appointments, medical tests and more. But there’s a lot that Medicare doesn’t pay for, and the out-of-pocket costs can drain your savings.
“Medicare covers only 80% of outpatient expenses, which comes as a surprise to many who are new to Medicare,” says Danielle Roberts, co-founder of Boomer Benefits in Fort Worth, Texas. “Many beneficiaries purchase supplemental coverage to help fill in the gaps.”
It’s very possible you’ll find you need more than basic Medicare.
Costs and coverage from ‘original’ Medicare
The basic form of Medicare is known as “original” or “traditional” Medicare. Both names refer to Medicare Parts A and B.
Part A, Medicare’s “hospital insurance,” covers hospital care and some home health services. Most people don’t pay premiums for Part A, but you do face a $1,408 deductible in 2020 when you’re admitted to a hospital.
Once a hospital stay stretches past 60 days, patients also must pay coinsurance of $352 per day.
Part B, Medicare’s “medical insurance,” covers doctor visits, tests, preventive screenings, outpatient surgical care, some medical equipment, physical therapy and mental health services.
But you have to meet a $198 deductible, and then Part B picks up only 80% of those costs. “Beneficiaries are responsible for the other 20%, with no limit,” says Roberts.
Part B also comes with premiums, starting at $144.60 per month in 2020. You can be required to pay more if your income surpasses some thresholds. Medicare has five higher premium levels for seniors at higher incomes, going all the way up to $491.60 per month.
Why most seniors will want more than original Medicare
There are two big problems with trying to make it on Medicare Parts A and B alone:
First, original Medicare doesn’t cover many of the essentials, including prescriptions, dentures, eyeglasses or hearing aids.
And second, original Medicare’s out-of-pocket costs have no cap. Many common health conditions require a significant amount of care – and your 20% share of the outpatient costs under Part B can be colossal.
So, most seniors will want to look into some other options, which include going deeper into the Medicare alphabet. You may want to turn to a certified financial planner for help navigating your choices.
The alternatives to original Medicare
Medicare Part C, also known as Medicare Advantage, is a private insurance alternative to traditional Medicare that often includes additional benefits, such as vision, dental or drug coverage.
Medicare Advantage plans do have