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Medicare Basics - What You Need to Know About Healthcare in Retirement

Planning for retirement includes thinking about your health—from staying active and eating well to making sure you have affordable and adequate health care coverage. 

Almost every American knows what Medicare is and that they will eventually get it. But most of us don’t really know how Medicare works. If you’re approaching retirement, it’s important to understand this government health insurance program so you can get the best and most affordable coverage. This overview and accompanying infographic will help you make the most of Medicare after you retire. 

When Am I Eligible for Medicare?

You might be wondering “When will my Medicare benefits start?” It’s a question we hear a lot at Wealth Legacy Institute

Generally, if you sign up on time, your Medicare coverage starts the first day of the month you turn 65. If your birthday is on the first day of the month, your coverage starts on the first day of the prior month.

  • The Initial Enrollment Period begins three months before your 65th birthday month and ends three months after it - a total of seven months. 
  • Most people are automatically enrolled in Original Medicare: Part A (hospital insurance) and Part B (medical insurance). .  You should apply as soon as possible since coverage may start one to three months after you sign up.  Also, failure to sign up during the Initial Enrollment Period can result in higher premiums, gaps in coverage, and other penalties.
  • If you miss the Initial Enrollment Period, you can still sign up during Medicare’s General Enrollment Period. The period is from January 1–March 31, with coverage starting July 1st.
  • Once your Initial Enrollment Period ends, you may also have the chance to sign up for Medicare during a Special Enrollment Period. However, this is only if you have special circumstances.

What’s Covered? Overview of Medicare Coverage Types

Medicare includes four main plans which vary in cost and comprehensiveness. In a nutshell:

Medicare Part A (Hospital)

Medicare Part A covers inpatient hospital care, inpatient skilled nursing care, hospice care, and some home health care.  

Medicare Part B (Medical) 

Medicare Part B covers certain doctor's visits, medical supplies, and other outpatient services. 

Medicare Part C (Medicare Advantage) 

Medicare Advantage is a private insurance plan which is required to cover everything that Original Medicare (Part A and Part B) covers. It can be combined with other pieces of the Medicare system and may pay for additional services. 

Medicare Part D (Prescription Drugs)

Medicare Part D pays for some prescription drug coverage. With this plan you’ll generally pay a co-pay or a percentage of the prescription cost. 

The Medigap Option

This option is provided by private insurance companies and can help pay for expenses not covered under Medicare Part A and Part B. Many retirees who don’t purchase a Part C (Medicare Advantage) plan will choose a Medigap plan instead. Medigap plans do not cover prescription drugs, so they need to be paired with Part D.

Note that original Medicare doesn’t cover vision or dental; you’ll have to buy a separate policy for that (or it may be included in your Medicare Advantage or Medigap policy).

How Much Does Medicare Cost?

The other burning question most retirees have about Medicare is how much does it cost? We understand every dollar counts, and you want to spend your retirement savings wisely. Unfortunately, calculating the cost of Medicare isn’t completely straightforward. There are many factors that can affect your premium, such as:

Plan Type  

According to, if you buy Part A, you could pay up to $458 each month in 2020. However, most people pay enough into the Medicare system during their working lives that they do not have to pay for their Medicare Part A coverage. The standard Part B premium amount is $144.60. Part C and D premiums vary by plan and the coverage offered. . 


Parts B and D are government-subsidized, which means the higher your income, the higher your premium. Married couples, who file a joint tax return, will see their premiums for both Parts B and D begin to increase if their income is greater than $174,000.

Health Status 

Unfortunately, if you have a chronic condition, if you wait until you’re sick to buy supplemental coverage, or are otherwise high-risk (such as being a smoker), you can expect to pay more for coverage. It’s important to note, that during your initial enrollment period, federal law requires that you be given the best rate for any policy you purchase regardless of your health status, and they cannot deny you coverage. 

Retirement Age 

If you can retire early, great! Use the extra time to start researching about Medicare so that you can make well-informed decisions when the time comes. In the meantime, you’ll need to purchase health insurance. Consider options such as COBRA, your former employer’s health insurance, the marketplace, or your spouse’s insurance. 

Employer Subsidies 

Although this number is sinking, about 1 in 4 large employers offer subsidized retiree health benefits. Essentially, this type of program gives employees a discount on the cost of retiree health benefits for a certain amount of time. 

Where You Live 

Your state of residence may affect some premiums. For example, Colorado Medicaid pays the Medicare Part B premiums for those who are on any Medicare Savings Program (MSP) and most Medicaid programs. Medicare Advantage plans available will also vary by state.

If you already have Medicare, you can get specific cost information such as whether you've met your deductible, how much you'll pay for an item or service, and the status of a claim at

Tips for Getting Started with Medicare

Medicare can seem overwhelming for new retirees, but it’s worth your time to understand it. After all, you’ve paid into the system and you deserve to reap the benefits. Here are our top tips for Medicare planning (you can also save or print this infographic as a reference):

Get Informed

Start planning early so you’re prepared when your Initial Enrollment Period begins. AARP and are great places to start for general information. You can also find details about Colorado’s state Medicare program and other state programs.

Enroll On Time

Don’t miss your chance to sign up during the Initial Enrollment Period. Trust us, enrolling on time will save you both headaches and cash. 

Keep Good Records 

Have your ducks in a row by hanging on to absolutely everything related to your healthcare - insurance policies, doctors visits, prescriptions purchased, hospital stays - everything. 

Choose Providers Carefully 

To avoid surprise costs, always confirm that your doctor accepts Medicare before your visit. If you have Medicare Advantage, you’ll have access to a directory of Medicare doctors in the provider network. If you have Parts A and/or B, you can see any doctor you choose, but you’ll save money with participating doctors.

If healthcare decisions seem overwhelming, don’t worry. Working with a long-term financial planner allows you to address the full spectrum of retirement planning needs including healthcare, estate planning, and of course, financial planning.

Understanding Medicare is one important step in creating your ideal retirement plan. Learn more about the seven things you need to do before you retire, with our 2020 Essential Retirement Guide.Medicare-Infographic-Retirement-Planning


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