Retirement and Medicare – Factoring in Your Health

Planning for your retirement? Make sure you’re factoring all of life’s little surprises and protecting yourself against costly medical bills by enrolling in comprehensive Medicare coverage.
Agnus Smith
Published on
February 27, 2024
Updated on
May 16, 2024

Medicare plays an important role in your retirement planning and should be considered carefully and thoroughly. Before getting started, it’s crucial you understand how your coverage contributes to your overall health and wellbeing, along with your financial security.

In this article, we will attempt to outline the importance of choosing the right Medicare coverage, including available health insurance options if you choose to retire before you become eligible for the federal healthcare program. Here’s everything you need to know.

How Medicare Factors Into Your Retirement

For the majority of Americans, the eligibility age for Medicare and the day they choose to retire often coincide. Most will be eligible for premium-free Medicare Part A, which you are entitled to based on your work history. Aside from your hospital insurance, you will need to factor in other costs associated with any additional parts or plans you opt to enroll in. Those parts and plans include:

When you retire, there will inevitably be changes to your income. For most, Social Security benefits will be the sole source of income. Things like living expenses, travel, and leisure are a bit easier to plan for, as they are often fixed, but healthcare costs are a bit trickier to predict.

Medicare Part A on its own leaves much to be desired and will provide some, but not nearly enough benefits. If you want to protect your health and finances, you’ll need to factor in monthly premiums for additional coverage. From there, you’ll need to decide if you want to further protect yourself from potential out-of-pocket expenses, or take your chances and pay those costs yourself.

Costs You Should Prepare For

Though many people refer to Medicare as being completely free after you reach the age of 65, this is simply not true. For example, Medicare Part A might be free for those who have sufficiently paid the Medicare tax, but Part B is not included in this. This is why those who have paid the Medicare tax and are claiming their benefits at the age of 65 should prepare for also paying a premium on their Plan B insurance.

The premium that you pay for Medicare Plan B can also be affected by whether or not you signed up for it immediately, so be on the lookout for that. Many people who are just retiring and not sure if they'll need Medicare Plan B typically just sign up for what is free, but can be affected later by higher premiums if they change their mind.

Do You Need to Enroll in Medicare When You Retire?

Nobody is going to force you to bundle retirement planning and Medicare, but it's worth acknowledging that if you are already receiving Social Security or Railroad retirement benefits, you will be enrolled automatically in Parts A and B. If you are not enrolled in either of those programs but still want to take part in Medicare, you have to manually enroll yourself.

Here's Why You Should

As touched on earlier, by choosing to forego Medicare coverage, you’re essentially gambling with both your health and finances. Without coverage, it will be nearly impossible to plan for your retirement, because we never know what our future holds.

If you have a clean bill of health the day you turn 65, it’s still probable that you endure any number of health complications throughout your senior years. For example, the CDC reports around 54.4 million Americans suffer from some form of arthritis, with the most common cases being found in seniors over the age of 65 years old.

Conditions like arthritis can lead to further complications and ultimately result in knee and hip replacements. In 2009 alone, over 900,000 replacement surgeries took place, costing over $42 billion dollars. Without comprehensive Medicare coverage to help cover the costs, your retirement funds may become depleted with just one procedure.

The truth is, we don’t know what the future holds when it comes to our health. For that reason, when planning for your retirement, factoring in Medicare premiums into your monthly expenses is crucial to a happy and healthy life.

Your Other Options

If you are somebody who wants to continue working during retirement, then your Medicare options will also be affected by whether or not your employer gives you benefits. Another factor that will affect your relationship to Medicare is if you are somebody who doesn't want to have Medicare, but rather invest in private insurance. For some, this might be a preferable option, but it's important to crunch the numbers beforehand just to be sure. To review quotes and options for your current situation, you can visit our sister site, FirstQuote Health.

What if You Retire Before 65?

If you retire before you turn 65 years old, you won’t be eligible for Medicare, but you will be eligible for Social Security benefits. Although, your benefits may be lower than they would be if you retired at a later age.

If you are not eligible for Medicare, you can opt for private health insurance options as we mentioned above. Finding coverage through the private sector, health insurance marketplace, or any other medium would all be great options.

How to Make the Most of Medicare

Making the most of your retirement planning and Medicare is done by understanding not just how the program can save you money, but also how you can customize it to make sure that you get the most out of your benefits. For example, looking into a Medigap or Medicare Supplemental Insurance can be a great way to cover any gaps that Medicare might not care, saving you even more money in the long run.

Find Plans Today With FirstQuote Medicare

Planning for retirement and Medicare does not have to be a difficult process, with understanding your benefits not just being an important part of the process, but an essential one. That's where FirstQuote Medicare comes in—contact us today for your first quote!

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