Baby Boomer Personal Story: Medicare and Medicare Supplemental Insurance

Diagram of medicareI have worked at a direct response agency for the past 15 years where the core expertise is insurance and financial services. I have worked on marketing campaigns that have targeted successfully the audience for Medicare Supplement and other senior health insurance. I had no idea what people did about insurance once they retired but I learned quickly when my parents retired.

When my parents first retired at the age of 62 they were not eligible for Medicare and did not have health insurance to cover their doctor’s bills and treatment. So when my Dad suddenly became ill all his medical cost had to be paid out-of-pocket. The cost of treatment was staggering without Medicare and they had to dip into their savings. Upon reaching age 65 they became eligible for Medicare and immediately signed up for Medicare Supplemental insurance. However, during the three years prior to obtaining insurance they had to be very careful with their finances. After age 65 when my Dad’s health continued to decline his treatments and doctor bills were covered unlike years earlier when my parents first retired. For years this has remained on my mind – the vulnerability of the possible gap in health insurance in the retirement years before reaching age 65.

These are the three lessons I learned from my parents’ experience:

  1. Medicare does not start upon your retirement
  2. Medicare does not cover all the expenses of healthcare
  3. A Medicare Supplement product is necessary

Since, I am part of Baby Boomer generation of which 8,000 boomers a day turn 65, I thought it would be a good time to explore the benefits provided by Medicare.
Who is eligible for Medicare?

Most people are eligible for Medicare at age 65. Even though I will not turn 65 for a long while, I thought I should give myself some time to learn all about Medicare and the Medicare Supplement product.

Everyone must enroll in Medicare by 65 to avoid penalties unless a working spouse provides health insurance from their employer.
So what exactly makes up Medicare?

Medicare is divided into four parts:

  • Part A covers the cost of hospital services
  • Part B covers doctor visits and outpatient services
  • Part C offers private insurance, such as Medicare HMOs, and PPOs, which provides Part A, Part B and Part D services in a single benefit package
  • Part D covers the cost of prescription drugs

Medicare is not free and does not pay for all your healthcare costs. You are required to pay premiums and co-payments for most services, unless you qualify for low-income programs or have other additional insurance.

Medicare only covers roughly about 80% of medical expenses, without a Medicare Supplemental product one could be facing large costs that could rock the financial stability of the most fiscally sound person.

Medicare does not cover long-term care, routine hearing, vision, foot or dental care. It also does not cover medical services outside of the United States. So you will need to find private coverage for these benefits.
What is Medicare supplemental Insurance?

Medicare Supplemental insurance also called Medigap can be purchase to pay some of the out-of-pocket expenses of Medicare. There are currently many insurance companies offering Med Sup insurance and they vary in costs, benefits and quality of the plans. You will need to carefully educate yourself on all available plans to determine which policy works best for your circumstances.
What is the best time to purchase Medicare Supplemental Insurance?

The best time to buy Med Sup insurance is after you turn 65 or during the open enrollment period. Federal law guarantees you the right to buy any Medicare supplement insurance policy available where you live during the six months after you turn 65 and first enroll in Medicare Part B. During this six-month enrollment period, an insurer cannot turn you down or consider your medical history or current health when determining the plan’s premium. However, if you have a pre-existing condition they can make you wait up to six months before you are covered.

After the Medicare supplement open enrollment ends, insurance companies can refuse to sell you this type of insurance or charge you higher premiums based on your health situation.

I feel as though I have learned a great deal, but I still have some additional research to do. Nevertheless, I do feel I am on the right path to make the right decisions so that I will not have to face huge medical expenses like my parents when I retire. It is never too early no matter what age you are to look into the costs of health insurance in retirement.