22
Financial Planning for Retirement Workbook • CFS-685-W
Purdue extension
employer or union. Your premium for Part B is $96.40
per month in 2009.
Medicare was never intended to cover everything.
It does not pay anything toward certain items, such as
routine dental care, long-term care, such as custodial
care in a nursing home, routine eye care and most
eyeglasses and hearing aids. See a complete list of
noncovered items in the Medicare and You workbook
available from your local Social Security ofce.
You pay a deductible before Medicare coverage
takes over; and you must co-pay a certain part of
charges above that deductible. The amounts have been
adjusted frequently, so be sure to check with your
Social Security ofce to be sure you have the most
recent gures.
Even after you are enrolled in Medicare, it will be
important to buy a supplementary health insurance
policy, sometimes called “Medigap” insurance.
These policies pay some or all of your Medicare co-
payments and deductibles, and include benets for
services that Medicare doesn’t cover at all. Since
1992, insurers in most states are limited to selling 10
standardized Medigap policies (labeled “A” through
“J”), which provide varying levels of benets.
However, the price of premiums for the same policy
can vary widely depending on the insurer. Shop
carefully, comparing rates from at least three insurers.
“H,” “I,” and “J” plans all include coverage for
prescription drugs, so you would need to drop the
drug benet from your policy before enrolling in
Medicare Plan D (see below). For assistance in
comparing Medigap policies, call your local Agency
on Aging or your state insurance department to nd
the nearest senior health insurance counseling service.
In 2006, Medicare started providing insurance
for prescription drugs (Part D) for everyone with
Medicare. Prescription drug coverage is available
from insurance companies and other private
companies approved by Medicare. Plans vary in costs
and drugs covered. Generally, plans charge a monthly
premium, have a yearly deductible, copayments or
coinsurance, and a coverage gap. If you don’t join a
Medicare drug plan when you are rst eligible and
you don’t have other creditable prescription drug
coverage as dened by Medicare, you will pay a late
enrollment penalty if you choose to enroll later. You
may switch Part D providers every year. A list of the
plans that are eligible to provide coverage in your
state is available at www.medicare.gov.
If you’re hoping to start a new job in retirement for
more income, what ideas do you have for this now?
What can you do now to prepare for this new job, or
nd it? If you’ve built up net worth in such assets as
real estate or antiques that you hope to sell later, start
thinking how you could most protably turn them into
income.
Reducing Expenses
You may feel you’ve estimated your retirement
budget realistically, but if you don’t have enough
income, you’ll have to cut down. What could you
do now to prune future expenses? While you’re still
working, could you pay for needed maintenance on
your house to get it into better shape? Build up a
bigger fund to cover replacement of home appliances,
your car, or other big items? Examine insurance to be
sure you are buying only what you will need? What
skills can you learn that will enable you to do some
of your own home or car repairs or other jobs around
the house? Check Cooperative Extension Service
bulletins and other sources for ways to cut the costs of
food, energy, etc.
If you’re carrying a large debt load now, reduce it
before retirement. Credit is a handy tool, but it can
cost money that you may not be able to afford once
you retire.
Medicare and Other Health
Insurance
Medicare is a federal health insurance program for
people 65 and older (and some disabled persons).
Medicare has three parts: Part A is hospital insurance,
which someone eligible for benets can get without
charge at age 65; Part B helps cover your doctor’s
services and outpatient care, which eligible persons
can get at age 65, but there is a monthly premium for
it; and Part D, which is the prescription drug coverage.
Health care costs may be a big budget item for
some older persons, so know when you are eligible
for Medicare and the coverage it gives you. Get basic
booklets on Medicare including Medicare and You
from your local Social Security ofce or call toll-
free 1-800-633-4227. Check the Medicare Web site
for information (www.medicare.gov). Ask questions
about anything you don’t understand.
Apply for Medicare at least three months before you
turn 65 to be sure you get enrolled in time. Apply even
if you plan to keep working after age 65. If you wait
before applying, your premiums for Part B generally
will be higher unless you are covered by your