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Your Bank > Education and Advice > CNB University

Healthcare Benefits Available in Retirement

N Bowes 2014
Nancy E. Bowes, CFP®
Vice President, Wealth Advisor
NBowes@CNBank.com
(585) 419-0670 x50673

The Government provides healthcare benefits in retirement using three federal programs administered by the state and local counties: (1) Medicare, (2) Medicaid, and (3) VA Benefits. Medicare eligibility is generally automatic at age 65. Medicaid is based on financial need, it is not automatic at any age. In addition to these two programs, you may also be entitled to military healthcare benefits if you or your spouse is a veteran or retired service member. The majority of seniors utilize services provided under Medicare.

Medicare is a federal health insurance program to assist those who are 65 or older, but if you are disabled or have kidney disease, you may be eligible no matter what your age. Medicare currently consists of Part A (hospital insurance), Part B (medical insurance), Part C (which allows private insurance companies to offer Medicare benefits called Medicare Advantage Plans or MAP), and Part D (which covers the costs of prescription drugs). 

Seniors enroll in Medicare through the Social Security Administration. If you are collecting Social Security already when you turn 65, you are automatically enrolled and will be mailed a Medicare card showing your coverage. If you don’t receive this card, call to receive it, as it is your proof of coverage. If you are waiting until after 65 to start your Social Security, you will need to contact Social Security Administration to enroll yourself – it is not automatic and you need to do this in order to avoid penalties for late enrollment. 

You do not have to sign up with a private insurance company for Medicare – you may use your Medicare card for healthcare services. This is called “straight” Medicare and it covers 80% of your eligible costs. In our community, we are fortunate to have excellent, low cost Medicare Advantage Plans (MAPs). They can provide better coverage than “straight” Medicare with more bells and whistles (think “Silver Sneakers”). These MAPs work really well for those who are relatively healthy.

If you have more health issues requiring multiple specialist visits and numerous procedures, then you should consider buying a Medigap policy instead of a MAP. Medigap policies have higher monthly premiums, but the coverage is more comprehensive and flexible. However, MAPs usually include prescription drugs, while Medigap policies do NOT. You must buy a separate Part D Drug plan to complement a Medigap policy, therefore you are paying two monthly premiums instead of one.

If you compare the amount you’re spending each month on copays and deductibles under the MAP, and if it adds up to more than the cost of the monthly Medigap & Part D premiums, you should consider switching. Under Medigap, you could have zero co-pays and zero deductibles, plus the flexibility to see any healthcare provider who accepts Medicare in the U.S. – something vitally important if suffering from a complex disease or injury.

Medicaid is a need based government program which provides assistance to aged, disabled, and dependent children who could not otherwise afford necessary medical care. Medicaid pays for a number of medical costs, including hospital bills, physician services, home healthcare, and long-term nursing home care. You apply for Medicaid through your County Department of Human Services office where they will look at income and resources. The state has the right to examine your finances and those of your spouse as far back as 60 months from the date you are eligible for medical assistance under the state plan.

Disability benefits, healthcare benefits, and long-term care benefits are available through various military programs sponsored by the Department of Defense and the Department of Veterans Affairs (VA). Healthcare for veterans is typically available at VA hospitals and healthcare facilities. In general, active service members, retirees, and veterans are eligible for military benefits. Survivors of service members and veterans are also generally eligible for some of the same benefits. The rules surrounding these benefits can be complex and may change frequently. It is best to check with your military personnel office or local VA office if you have questions about any of these benefits. 

Bottom line? Seek professional guidance when considering your options for health insurance coverage in retirement and review it annually. Our experienced team at CNB Wealth Management is here to help you navigate the next steps on your path to retirement.

This material is provided for general information purposes only. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Bank & Trust or its affiliates, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.