Retirement and Health Insurance: Understanding Medicare

What is Medicare?

Medicare, also sometimes referred to as Original Medicare, is a federally funded health insurance plan for the following:

  1. People 65 or older
  2. People under 65 with certain disabilities
  3. People of any age with End-Stage Renal Disease (ESRD)

Medicare has 4 parts:

  1. Medicare Part A (hospital insurance) helps cover inpatient hospitals stays, skilled nursing facilities, hospice and home health care. Part A is free for most people.
  2. Medicare Part B (medical insurance) helps cover doctors’ services, lab work, outpatient care, durable medical equipment and other medical services. There is a monthly premium for Part B that many people have automatically deducted from their Social Security checks.
  3. Medicare Part C (Medicare Advantage plans) are health plans like HMOs and PPOs run by Medicare-approved private insurance companies. Medicare Advantage plans include Part A and Part B benefits, and may also include extra benefits like vision, hearing and fitness. Many plans also include Medicare Part D prescription drug benefits, sometimes for an extra cost.
  4. Medicare Part D (prescription drug coverage) helps cover the cost of prescription drugs. Coverage is available through Medicare-approved private insurance companies. It can either be a stand-alone prescription drug plan (PDP) or a Medicare Advantage prescription drug plan (MA-PD) that combines medical and drug coverage.
When can I get Medicare?

Most people qualify for Medicare when they turn 65, and some get Part A and Part B automatically.

  1. If you are already getting benefits from Social Security or the Railroad Retirement Board (RRB):

        You will automatically get Part A and Part B starting the first day of the month you turn 65. If your birthday is on
        the first day of the month, Part A and Part B will start the first day of the month prior.

        You will receive your Medicare card in the mail three months before your 65th birthday. If you decide you don’t
        want Part B coverage, follow the instructions on the card and send the card back. If you keep the card, you
        keep Part B and will pay Part B premiums.

  1. If you are still working and are not already getting Social Security or RRB benefits — and want Part A or Part B — you will need to sign up.

        You should contact Social Security at 800-772-1213 (TTY 1-800-325-0778) or
        about three months before your 65th birthday to sign up for Medicare. You can sign up for Medicare even if you
        do not plan to retire at age 65. There are specific timeframes around Medicare enrollment, and the rules can be
        very strict. You need to know the differences between your Part B Initial Enrollment Period and a Part B Special
        Enrollment Period.

Can I apply for Medicare after I turn 65?

Yes. Many people delay their Medicare Part B enrollment — working to age 66 for full retirement benefits or even later. There are specific rules to follow if you are over 65 and not yet enrolled in Medicare. You may already be receiving Medicare Part A coverage — which is generally free of charge. However, to enroll in Part B there are timeframes to follow in order to avoid late-enrollment penalties once you stop working.

  1. If you do not enroll in Medicare Part B during your Initial Enrollment Period (three months before the month you turn 65, the month you turn 65 and three months after the month you turn 65), you have another chance each year to sign up during a General Enrollment Period from January 1 through March 31 (with coverage starting July 1). You may also qualify for a Part B Special Enrollment Period.
  2. However, your monthly Part B premium increases 10% for each 12-month period you were eligible for, but did not enroll in, Medicare Part B (unless you qualify for a Special Enrollment Period).
What is the Part B Special Enrollment Period?

If you are 65 or older and currently covered under an employer group health plan (your own or your spouse’s), you may qualify for a Special Enrollment Period when you move off the group plan to Medicare. This means that if you continue working past age 65, you may delay enrolling in Medicare Part B without having to wait for a General Enrollment Period or paying the late-enrollment penalty.

  1. You can enroll in Medicare Part B during the eight-month period that begins following the last month your group health coverage ends, or following the month employment ends — whichever comes first.
  2. Special Enrollment Period rules do not apply if employment or employer-provided group health plan coverage ends during your Initial Enrollment Period. In addition, if you have COBRA coverage or a retiree health plan, you don't have coverage based on current employment. You're not eligible for a Special Enrollment Period when that coverage ends.
Besides qualifying for Medicare, what else should I consider?

Social Security! While you can start collecting Social Security retirement benefits at 62, the full retirement age is 66 if you were born between 1944 and 1955.

If you continue to work past 65, employers with 20 or more employees must offer workers who are age 65 or older the same health benefits they provide for younger employees. If you are covered under your or your spouse’s employer, that plan becomes your primary health insurer and Medicare may pay some of the remaining expenses. If you do not accept coverage from your employer, Medicare will be your primary health insurer.

What does Medicare pay?

This chart shows what you would pay for services if you have no coverage other than Medicare.  Premiums, coinsurances and deductibles are based on 2013 Medicare Part A and Part B rates.





First 60 days of an admission

61st to 90th day
91st to 150th day**
Beyond 150 days

You pay $1,184* each benefit period. Medicare covers the rest.
You pay $296* a day. Medicare covers the rest.
You pay $592* a day. Medicare covers the rest.
You pay 100% of expenses.

Skilled Nursing Facility Care
First 20 days

21st to 100th day

Beyond 100 days

You pay nothing. Medicare covers 100%.

You pay $148* a day. Medicare covers the rest.

You pay 100% of expenses.

(Medical and Doctor Charges)
Medical Expenses
In or out of the hospital and outpatient treatment, such as physician services, medical and surgical services and supplies, physical and speech therapy, diagnostic tests and durable medical equipment
You pay a $147*** annual deductible, then 20% of Medicare-approved charges.
Clinical Laboratory Services
Blood test for diagnostic services
You pay nothing. Medicare covers 100%.
Other Benefits Under Medicare 
Benefits for Medically Necessary Emergency Care Received in a Foreign Country
(except in some parts of Canada and Mexico)
You pay 100% of expenses.
Preventive ServicesCosts will vary. Health reform legislation eliminated out-of-pocket cost sharing for most Medicare-covered preventive and screening services. You will also be covered for an Annual Wellness Visit.
Outpatient Prescription DrugsCosts will vary based on the Part D plan and benefit level you select.


 * These are the 2013 copays and deductibles for Medicare Part A (Hospital and Skilled Nursing Facility

care) and may change on January 1, 2014.

** After 90 consecutive days of hospitalization, Medicare benefits are paid from a one-time lifetime reserve

of 60 additional days that are not renewable each benefit period.

*** This is the 2013 deductible for Medicare Part B and may change on January 1, 2014.


When planning for retirement you need to ask yourself:

·   Could I afford to pay Medicare’s $1,184 Part A deductible out of my own pocket if I had to go into the hospital?

·   What would a prolonged hospital stay do to my retirement savings?

·   Would I be better off with a private insurance plan designed to help fill Medicare’s gaps?

What are my options for covering health care costs?

You can rely on Medicare (Part A & Part B) for your health care coverage, but it may not be enough. Medicare has deductibles and coinsurances, with no limit on out-of-pocket spending, and you are responsible for the gaps. It DOES NOT COVER most prescription drugs; routine vision and hearing services; eyeglasses (except after certain cataract surgeries); emergency services outside the U.S.; and certain other services.

You can:

Healthcare Options

Keep in mind that you must have Medicare Part A and Medicare Part B to enroll in a Medicare Supplement or Medicare Advantage plan.

What is the difference between a Medicare Advantage and a Medicare Supplement plan?

A Medicare Advantage plan is a Medicare insurance plan that replaces and in most cases enhances Part A and Part B. It combines the benefits of both Part A and Part B and in most cases adds a few extra benefits. Prescription drug coverage (Part D) may be included in a Medicare Advantage plan. Medicare Advantage plans can be Health Maintenance Organization (HMO) plans, Preferred Provider Organization (PPO) plans, or Private Fee-for-Service (PFFS).

A Medicare Supplement plan, also sometimes known as a Medigap plan, is designed to help pay some of the health care costs (“gaps”) that Original Medicare does not cover, like copayments, coinsurance, and deductibles. If you have Original Medicare and you buy a Medigap policy, Medicare will pay its share of the Medicare-approved amount for the covered services and the Medigap policy pays its share (in whole or in part). In other words a Medicare Supplement plan helps to offset the out-of-pocket expenses that Original Medicare does not cover. Prescription drug coverage (Part D) is not included in a Medicare Supplement plan and has to be purchased separately.

A Medicare Prescription Drug plan, also sometimes known as a PDP, adds drug coverage to Original Medicare, Medicare Supplement plans, some Medicare Cost Plans, some Medicare Private Fee-For-Service plans and Medicare Medical Savings Account plans. You can also receive prescription drug coverage (Part D) along with all your Part A and Part B coverage through a Medicare Advantage plan. Medicare Advantage plans with prescription drug coverage are sometimes called MA-PDs.

Medicare Advantage plans, Medicare Supplement plans, and Prescription Drug plans are offered by private insurance carriers.

How does working past my full retirement age affect my Social Security and Medicare benefits?

If you decide to continue to work past 66, you can keep working, and delay your enrollment in Social Security and Medicare Part B. If you choose to delay receiving your Social Security benefits beyond your full retirement age, your benefit will be increased by a certain percentage, depending on the year you were born.

  1. The increase will be added in automatically from the time you reach full retirement age until you start taking benefits or reach age 70, whichever comes first.
  2. For example, if you were born in 1940, your benefit would increase 7 percent for each year, between your full retirement age and age 70, that you do not get retirement benefits.

For more information about how work affects your benefits, look for “How Work Affects Your Benefits” (Publication No. 05-10069) at*.

* External sites will open in a new window. will remain open for continued browsing and reference.

What are some other resources I should consider in researching my options?

Social Security Administration (SSA): 800-772-1213 (TTY: 800-325-0778)

Medicare: 800-633-4227 (TTY 877-486-2048)

Massachusetts Office of Medicaid: 617-210-5000