By gaining a general understanding of your Medicare eligibility and coverage, you will likely be in a better position to navigate the options that will best address your needs.

When planning your retirement, two of the most pressing challenges you’ll likely need to focus on addressing are:

  1. Ensuring your assets will be able to generate enough income to last a lifetime; and
  2. Protecting your savings from being depleted by healthcare costs

While outlasting your assets is a matter of disciplined saving and investing combined with the power of time, protecting your savings from health care costs requires you to make some careful choices based on a thorough understanding of Medicare—in particular, what it does and doesn’t cover

The Longevity Challenge

People today are living longer and more active lives than previous generations. Did you know there’s a 50% probability that at least one partner in a healthy 65-year-old married couple will live beyond age 91? And a 25% chance that at least one partner will reach age 96 or older?1

But greater longevity can also be a double-edged sword—dramatically increasing the lifetime cost of care we may require. In fact, the same healthy 65-year-old couple can expect to pay an estimated $315,000 in out-of-pocket health care expenses over the course of their retirement.2  And that doesn’t include the cost of long-term care (which isn’t covered by Medicare and which statistics say 7 out of every 10 of us will require at some point during our lives).3

For most of us, the days of a 10-year sedentary, low-cost retirement are a thing of the past. Careful and thoughtful planning are more important than ever—starting with the decisions you make about Medicare coverage.

Understanding the Components

Most Americans become entitled to Medicare as soon as they turn age 65. If you're already receiving Social Security benefits, you don't even have to apply—you'll automatically be enrolled in Parts A and B. If, however, you haven’t yet claimed Social Security benefits, you’ll need to submit a Medicare application during the 7-month enrollment period which begins three months prior to the month you turn age 65.

Even if you’re still employed and covered by your employer’s health plan, you should sign up for Medicare as soon as you’re eligible. Otherwise, when you retire and are no longer covered by your current plan, you might experience a gap in coverage as well as be subject to higher monthly premiums. 

When signing up, there are four separate components you’ll need to consider:

  • Part A coverage is premium-free for most retirees and covers inpatient hospital, skilled nursing facility care, hospice, and home health care (note: this does NOT include the cost of long-term care). It requires both deductibles and copays.
  • Part B covers physician care, outpatient home health care, lab tests, medical equipment, physical therapy, and other preventive services. In addition to deductibles and copays, it requires you to pay monthly premiums. 
  • Part C (Medicare Advantage) is an alternative to Part A and Part B (often with fewer out-of-pocket costs). Coverages and costs of these Medicare-approved private plans vary by plan and insurer.
  • Part D provides optional prescription drug coverage requiring monthly premiums and deductibles/copays. You need to be covered by Parts A and B (or Part C) and opt in to Part D by filling out a form and enrolling in an approved plan.

Keep in mind that Medicare doesn’t cover all of your healthcare expenses. In addition to out-of-pocket annual deductibles and copays, there are many care expenses (e.g., dental, vision, and hearing) which Medicare won’t cover. This is why many retirees also opt to purchase a Medigap policy. When you enroll in Part B at age 65, you have a six-month Medigap open enrollment period—during which time you’ve got a right to purchase the Medigap policy of your choice from a private insurance company (regardless of any pre-existing conditions).

Medicare isn’t a Long-Term Care Solution

Whether in a skilled nursing facility or in your own home, Medicare only covers skilled nursing care for a limited time, for specific needs, and under certain conditions. In fact, fewer than 1 in 20 Medicare beneficiaries will qualify for care in a skilled nursing facility, and on average for a stay of just 25 days.4 If you want to protect your wealth from the cost of long-term care, you’ll need a separate policy.

Medicare Decisions for Someone Nearing Age 65

As you approach age 65, you need to familiarize yourself with Medicare coverage options and make some enrollment decisions. It’s best to complete these tasks at least three months before turning 65, as there may be penalties if you do not enroll on time.

Those turning 65 should do the following:

  • Become familiar with Medicare and its parts
  • Determine your initial enrollment period
  • Decide whether to enroll in Part A & Part B when you turn 65
  • Find out if you need to contact Social Security to sign up for Medicare (or opt out of Part B)
  • Decide whether to enroll in Medicare prescription drug coverage (Part D)

If you (or your spouse) are still employed at 65 and are covered under a group health insurance plan through the employer, you need to understand how Medicare works in concert with the group health insurance.

In general, if the company has more than 20 employees, you can wait until you (or your spouse) stop working to sign up for Part B with no late enrollment penalty. In addition, you can still elect Part A coverage at 65 or anytime thereafter. In this scenario, your job-based insurance pays first, and Medicare pays second.

In contrast, if the company has fewer than 20 employees, ask your employer if you need to sign up for Part A & Part B. If you do get Medicare at 65, Medicare pays for services first, and your group health coverage pays second.

This is why it’s a good idea to begin planning well in advance of turning age 65. Together with your Financial Advisor, you can review your options, explore their impact on your projected expenses, and make any necessary adjustments to your overall retirement plan. For more information on Medicare, visit



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Janney Montgomery Scott LLC, its affiliates, and its employees are not in the business of providing tax, regulatory, accounting, or legal advice. These materials and any tax-related statements are not intended or written to be used, and cannot be used or relied upon, by any taxpayer for the purpose of avoiding tax penalties. Any such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.

1. American Academy of Actuaries and Society of Actuaries, May 2022

2. Fidelity Investments' Retiree Health Care Cost Estimate report, May 2022

3. Genworth Cost of Care Survey, June 2022

4. Centers for Medicare and Medicaid Services, “Patient Driven Payment Model,” 2020

About the author

Jay Guyer

Vice President, Senior Financial Planner

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