As you near retirement, planning for health care is just as important as planning for income—and Medicare should play a central role in that strategy. Understanding how Medicare works, what it covers, and where it falls short can help you make more informed decisions about your long-term financial well-being.
Understanding the Basics
Medicare can be confusing at first glance, but taking time to learn the fundamentals pays off. Once you turn 65, you’ll become eligible for Medicare Part A (hospital insurance) and Part B (medical insurance)—collectively known as “Original Medicare.”
Part A is typically free if you or your spouse paid Medicare taxes while working. It covers up to 100 days of hospital care, home health care, nursing home care, and hospice care.
Part B covers doctor visits, outpatient procedures, and lab work. It requires a monthly premium and includes copays and deductibles that can add up over time.
While this coverage provides a solid foundation, it’s not all-encompassing. Original Medicare does not include dental, vision, or hearing care, and it also excludes prescription drugs and care received outside the U.S.
Filling the Gaps
Because Original Medicare has limitations, many retirees explore supplemental options to help manage out-of-pocket costs.
Medigap (Supplemental) Insurance: These policies, sold by private insurers, can help pay for expenses like copays and deductibles that Medicare doesn’t cover. You must have Original Medicare to purchase a Medigap policy, and while helpful, these plans do not include prescription drug coverage.
Part D (Prescription Drug Coverage): Offered through private insurers, Part D plans cover many—but not all—prescription medications. In 2025, average monthly premiums are around $40, with annual deductibles capped at $590.
Part C (Medicare Advantage): These plans bundle Parts A, B, and sometimes D coverage through private insurance companies. They can help simplify coverage, though networks and benefits vary by provider.
Why Strategy Matters
Medicare decisions can have lasting financial implications. The right combination of coverage depends on your health needs, lifestyle, and retirement goals. Some retirees find Original Medicare sufficient, while others prefer the added protection of supplemental plans to manage potential health care costs.
It’s also worth planning for interim coverage if you retire before age 65, since you won’t be eligible for Medicare until that milestone.
Talk With Your Financial Professional
Choosing the right Medicare strategy is more than a health care decision—it’s a financial one. A thoughtful approach can help you manage costs, protect your savings, and maintain confidence in your retirement plan.
If you’re approaching Medicare eligibility or re-evaluating your coverage, consider discussing your options with your financial professional. Together, you can create a strategy that fits into your broader retirement plan.