As you approach retirement, some things are easier to plan than others. Choosing travel destinations, new restaurants and hobbies should be straightforward. But selecting your Medicare plan isn’t so simple.
Healthcare costs rise dramatically as we age. And with many Americans saying they’re reluctant to spend their retirement savings because they fear running out of money, understanding what your Medicare plan will (and will not) cover is critical. So here’s a quick rundown:
- Part A: Coverage for hospitals, inpatient care, skilled nursing facility care, hospice care and home healthcare
- Part B: Coverage for medical services, including those from doctors and other healthcare professionals, outpatient care, home healthcare, durable medical equipment (like wheelchairs, hospital beds) and many preventative services (like screenings, vaccines, annual wellness visits)
- Part C: Also called Medicare Advantage, bundled coverage that is an alternative to Original Medicare (i.e., Part A and Part B with options to join Part D); offers Medicare-approved private health plans and can include vision, hearing, dental and more
- Part D: Coverage for prescription drugs (including many vaccines) that retirees can access in addition to Original Medicare or by joining a Medicare Advantage plan with drug coverage
So why do Parts A, B and D exist when you can simply bundle them through Part C? One reason is that the latter is network-based, and with Original Medicare, patients can see any doctor or visit any hospital nationwide so long as they accept Medicare. Another big reason is that with Original Medicare, you generally don’t need prior authorization or referrals for specialists.
Importantly, Medicare generally pays 80% of Plan B costs, leaving you responsible for the remaining 20% with no maximum cap. That’s where Medigap comes into play, which isn’t available through Part C plans.
If all of this seems confusing, that’s because it is. But knowing what to expect out of your Medicare plan — and which options are the best fit for you — means you can refocus your energies on the fun parts of retirement, like planning family cruises, date nights and fishing trips.
— Jordan Chussler, investing and banking editor 
