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Know the basics of Medicare

Older Americans have several considerations to make when they are planning for their retirement. Retirement planning should include understanding the basics of Medicare and how the program will affect their medical expenses.

Most Americans are eligible for Medicare benefits once they reach the age of 65 but it is wise to understand Medicare and how it works before you become eligible to receive these benefits. Medicare is a comprehensive health insurance program offered through the federal government for seniors. Since most Americans receive some type of Medicare services during their lifetime, it is important to understand how Medicare works and what services are offered.

Retirement planning should involve care planning and figuring out how medical expenses will be covered. This includes what Medicare services they are eligible for, what expenses are covered, and what the potential out-of-pocket costs will be under each plan.

There are four different parts of Medicare: A, B, C, and D. Medicare Part A is hospital insurance and it covers inpatient care in hospitals as well as care in a nursing home facility, hospice care and home health care. Individuals receiving Social Security benefits are required to enroll but there is no monthly premium for people who have worked at least 40 quarters. Individuals who receive hospital care have to pay a deductible that is determined by how long the hospital stay is.

Medicare Part B is medical insurance that covers doctor office visits and medical care. This part also covers home health care, outpatient care, durable medical equipment and some preventative services. Part B enrollment is automatic for people receiving Social Security benefits. The premiums for Part B are determined by a person's income listed on their previous federal tax returns. Part B also has a deductible, and once the deductible is met, patients usually pay 20 percent for services.

Medicare Part C is Medicare advantage, which provides a single health insurance plan instead of having patients pay for Part A, B, and D separately. Part C plans include Part A and B coverage, and most include Part D. This plan also offers extra coverage for vision, dental, hearing and other wellness programs.

Medicare Part D is a prescription drug coverage plan. The monthly premiums are based on a person's income. Seniors are required to pay copayments and coinsurance for their prescriptions.

Understanding Medicare can be complicated and it may be beneficial to work with an elder law attorney to understand and determine what Medicare plan is appropriate once you reach retirement.

Source: Market Watch, "Do you know your Medicare A, B, C, Ds?" Robert Klein, May 13, 2013

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