Posted by Debi G Hill, CPA

How does Medicare work after retirement?

How does Medicare work after retirement?

Health care is one of the most critical expenses for retirees, but not only because the elderly tend to access more medical services. Even if you've never seen your doctor, your insurance account will be higher in retirement than when you were working.

Indeed, retirees pay more of their premiums with Medicare than employers' health insurance. Employers generally subsidize approximately 75% of employee health insurance premiums, leaving employees only a quarter of their monthly costs.

If you are what Social Security considers a "higher-income beneficiary," you will pay more for Medicare Part B, the Medicare Health Insurance part. (Most members do not pay Medicare Part A, which covers hospitalization.)

Health insurance premiums are based on your adjusted gross income or MAGI. This is your adjusted total gross income, plus non-taxable interest, deducted from the latest IRS social security tax data. To determine the cost of health insurance by 2020, social security probably relied on the fees you deposited in 2019, which detail your income in 2018.

It is essential to understand what happens to Medicare when you retire and how to get the best and most cost-effective coverage. Many retirees are wondering how they need all four parts of Medicare. There are also often questions about health insurance costs, additional insurance, and periods of application.

Key Notes

  • For Americans over the age of 65, conversations about health insurance should include Medicare.
  • Medicare has four parts: A, B, C, and D, which cover different health care needs.
  • Medigap insurance is provided by private insurance companies and can help pay for expenses not covered by Medicare.
  • The open Medicare registration period lasts approximately seven months and begins three months before the month of your 65th birthday.

Part A (hospital)

Part A, hospital coverage, pays for your care in a hospital, specialized care center, nursing home (as long as it is not just for attention), hospice, and certain types of home health services.

Part B (medical)

Part B coverage includes services or supplies clinically necessary for the diagnosis and treatment of a medical condition. It also covers services for the prevention of diseases such as flu. This includes inpatient and outpatient medical services and, in some cases, ambulatory prescription drugs.

Part C (Medicare Advantage)

Part C, Medicare Advantage, is sold by private insurance companies. These AM plans come in two varieties: Health Maintenance Organization (HMO) and Preferred Provider Organization (PPO), and replace Medicare Part A, Part B, and often cover Part D. Many offer supplements, such as being health services, vision, dental, hearing and wellness devices.

Part D (prescribed medication)

Prescription drug coverage is based on a list (called a form) included in Part D. Medicare. Each prescription drug plan has its list. Most plans put drugs at different "levels," and each level has a different cost.

The Medigap option

It is challenging to predict Medicare costs. For this reason, many retirees who do not choose a Medicare Advantage plan (Part C) buy a Medigap plan. These plans come in 11 standardized policies that offer a wide range and supplement most of the traditional direct Medicare costs. Some even provide additional services that are not covered by conventional health insurance. However, Medigap plans do not cover prescription drugs. Therefore, if you have a Medigap policy, you may also need Part D.

A single Medigap application period lasts six months and begins the month you reach age 65 (and you are Part B). During this time, you can purchase any Medigap policy sold in your state, regardless of your medical condition. After the application period, if you want a Medigap policy, you may be refused or forced to pay a higher premium.

Medicare Advantage can be an alternative to a Medigap policy and Part D coverage. It is essential to analyze your situation and determine the plan that works best for you. 

Initial application period

The initial Medicare enrollment period (all four parts) begins three months before the age of 65 and lasts until the end of the third month after your birthday, for seven months. If you do not register in the opening window, you can enroll between January 1 and March 31 of each year for coverage that begins on July 1. However, if you do not register during the initial registration period, you can generate even higher rewards. - Unless you are eligible for exclusive membership.

Special Enrollment Period (SEP)

If you are still covered by a group health plan offered by your employer (or spouse) at age 65, you may be eligible for a special enrollment period. In general, SEP requires you to enroll in Medicare no later than eight months after the end of the group health plan or the work on which it is based (after the first arrives). A notable exception to the rules of SEP: if the group or health plan for the position on which you have based ends in the initial registration period, you are not entitled to SEP.

Other registration periods

There is an open registration period for Medicare Advantage coverage and prescription drug coverage each year, from October 15 to December 7. There is also a new annual membership period, open to Medicare Advantage, from January 1 to March 31, during which you can switch to traditional Medicare from an MA plan and join a prescription drug plan to add drug coverage.

Drug costs

Many people pay enough for the Medicare system during their working lives to avoid paying for Medicare Part A coverage.

The first monthly standard 2018 for Medicare Part B coverage is $ 135.50, compared to $ 134.00 in 2018. If you are one of the 70% of beneficiaries who benefit from the "stay safe" clause and pay less than 134 $ in 2018, the amount you pay in 2019 will increase. However, the increase is only 2.8% compared to the 2019 COLA social security adjustment. If you earn more than $ 85,000 ($ 170,000 for couples), you will pay more for the coverage of Part B.

Some Part C (MA) plans do not have additional fees. Other costs may include copies for medical appointments and other services.

Part D coverage includes a monthly premium that varies depending on the plan you choose and the drugs you use. Significant gaps in Part D coverage include the dreaded "overdraft," which may require you to pay more of your drug costs until you reach the "catastrophic" amount of $ 5,100.

Sorting options

This can be confusing as to which recording options are best for you. Most subscribers to A, B, and D, and many add Medigap coverage. Others choose Medicare Advantage over A, B, and D. If you choose a PA plan and want prescription drug coverage, make sure it is provided by your PA plan. Otherwise, you may need to add Part D coverage to the plan.

Because Medicare pays typically in advance (before other coverage), any available retirement policy may require you to have at least Parts A and B. Medicare. Check your costs and coverage before joining Medicare.

If you decide to return to work after retirement and are eligible for group health insurance, you can work differently with Medicare. Consult the human resources department of the new employer to avoid overlapping or coverage failures. If you have health insurance removed from a former employer, find out what happens if you cancel this coverage, but you want to get it later.

Medigap coverage costs depend on the type of policy you have and where you live; These can range from $ 50 a month to several hundred dollars. Know the level of drug prices, and Part D can help you decide on an ideal plan.


Visit the website and use it to review the topics covered in this article before deciding which Medicare coverage is right for you. Compare with Medicare Medicare Plan Finder. This handy tool will allow you to specify your health condition, including up to 25 medications you take. It will then show you the plans, with the costs available in your area.

When you are online, you can find many non-Medicare information sites. Remember, you may be a supporter of a professional health sponsor. Finally, be sure to check the full health insurance coverage put in place each year to make sure the plan is still right for you.

Debi G Hill, CPA
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