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Insurance for Seniors (65+)
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Insurance Guide for Seniors (65+)
At 65, Medicare becomes available and your insurance landscape changes significantly. Understanding your options is crucial—decisions made during initial enrollment affect coverage and costs for years to come.
At a Glance
- Medicare is your primary health coverage starting at 65—understand Parts A, B, C, and D
- Medigap or Medicare Advantage fills coverage gaps, but they work differently
- Part D covers prescriptions and has permanent late enrollment penalties
- Long-term care is NOT covered by Medicare—plan separately
- Life insurance needs typically decrease—review existing policies
Medicare Enrollment
When to Enroll
Initial Enrollment Period (IEP) 7-month window around your 65th birthday:
- 3 months before your birthday month
- Your birthday month
- 3 months after your birthday month
Don’t miss it. Late enrollment means:
- Part B: 10% premium increase for each 12-month delay—permanent
- Part D: 1% of premium for each month delayed—permanent
Exception: Still Working with Employer Coverage
If you have employer coverage when you turn 65:
- You may delay Part B without penalty
- Employer plan may become secondary to Medicare
- Rules differ based on employer size (under/over 20 employees)
- Get Special Enrollment Period when employer coverage ends
The Four Parts of Medicare
| Part | Coverage | 2024 Monthly Cost |
|---|---|---|
| Part A | Hospital, skilled nursing, hospice, home health | Usually $0 (10+ years of Medicare taxes) |
| Part B | Doctor visits, outpatient care, preventive services, DME | $174.70+ (income-adjusted) |
| Part C | Medicare Advantage—private plans combining A + B | Varies by plan |
| Part D | Prescription drugs | Varies by plan ($15-100) |
Original Medicare vs. Medicare Advantage
After enrolling in Parts A and B, you choose how to receive benefits.
Original Medicare + Medigap
How it works:
- Use Parts A and B directly
- Add Medigap policy to cover deductibles, copays, coinsurance
- Add separate Part D for prescriptions
- See any doctor who accepts Medicare—no network
Best for:
- Those who want maximum provider choice
- Frequent travelers (coverage works nationwide)
- People who prefer predictable costs
- Those willing to pay higher premiums for lower out-of-pocket
Medicare Advantage (Part C)
How it works:
- Private plan replaces Original Medicare
- Often includes Part D drug coverage
- May include dental, vision, hearing, fitness benefits
- Network-based (HMO, PPO)—may need referrals
Best for:
- Those comfortable with network restrictions
- People who want all-in-one coverage
- Those who prioritize lower monthly premiums
- People who don’t travel frequently
Key Comparison
| Feature | Original + Medigap | Medicare Advantage |
|---|---|---|
| Monthly premiums | Higher | Lower or $0 |
| Out-of-pocket at service | Low (Medigap covers) | Copays/coinsurance |
| Provider choice | Any Medicare provider | Network-based |
| Travel coverage | Nationwide | Regional |
| Extra benefits | No | Often dental/vision/hearing |
Prescription Drug Coverage (Part D)
Most people should enroll in Part D when first eligible.
Why It Matters
- Penalty for late enrollment: Permanent premium increase
- Exception: Only if you have “creditable coverage” (VA, employer, etc.)
Choosing a Plan
- List your medications with dosages
- Use Medicare Plan Finder at Medicare.gov (opens in new tab)
- Check the formulary: Are your drugs covered? At what tier?
- Calculate total cost: Premium + expected out-of-pocket
- Review annually: Plans change every year
The Coverage Gap
After you and your plan spend a certain amount:
- Initial coverage until total drug costs reach $5,030 (2024)
- Coverage gap until out-of-pocket reaches $8,000
- Catastrophic coverage after $8,000 (you pay just 5%)
Long-Term Care
Medicare does NOT cover long-term custodial care—help with daily activities like bathing, dressing, and eating.
The Financial Reality
- 70% of people over 65 will need some long-term care
- Nursing home: $8,000-12,000/month
- Assisted living: $4,500-6,000/month
- Home health aide: $25-35/hour
Coverage Options
Long-term care insurance: If you’re healthy enough to qualify, coverage provides daily benefit for care.
Hybrid policies: Life insurance with LTC rider—if you don’t use LTC benefits, heirs receive death benefit.
Medicaid: Covers long-term care only after you’ve spent down most assets.
Self-insuring: Appropriate only with substantial assets ($500,000+ beyond home equity).
Life Insurance Review
Life insurance needs often decrease in retirement.
When You May Still Need It
- Surviving spouse depends on your income/pension
- Outstanding debts (mortgage, loans)
- Want to leave specific inheritance
- Estate planning purposes (high net worth)
When to Reduce or Drop
- No dependents
- Spouse has adequate assets/income
- Premiums strain fixed income
- Term policy expiring at prohibitive renewal rates
Existing Policy Options
Term life: Let expire if no longer needed.
Whole life with cash value:
- Keep for death benefit
- Surrender for cash value
- Take reduced paid-up (smaller benefit, no more premiums)
- 1035 exchange to annuity
Home and Auto Insurance
Home Insurance
- Dwelling coverage: Still adequate for rebuild costs?
- Personal property: Downsize coverage if you’ve simplified
- Liability: Maintain adequate limits
- Discounts: Ask about retiree, security system, claims-free discounts
Auto Insurance
- Lower mileage discount: Report reduced driving
- Defensive driving course: Senior discounts available
- Vehicle review: Coverage should match car’s current value
- Retiree discounts: Ask your insurer
Medicare Resources
Free Help
State Health Insurance Assistance Program (SHIP)
- Free counseling on Medicare options
- Find your SHIP at shiphelp.org (opens in new tab)
Medicare.gov
- Official information and Plan Finder
- 1-800-MEDICARE (1-800-633-4227)
Annual Review
During Medicare Open Enrollment (October 15 - December 7):
- Review Part D plans for next year
- Consider switching Advantage plans
- Check if your drugs are still covered
Senior Insurance Checklist
At Age 65
- Medicare enrollment: Complete during Initial Enrollment Period
- Part D selection: Choose a drug plan that covers your medications
- Medigap vs. Advantage: Research and decide
- Notify employer: Coordinate with any employer coverage
Ongoing
- Annual Part D review: Compare plans during open enrollment
- Long-term care planning: Assess options while still insurable
- Life insurance review: Still needed at current level?
- Beneficiary updates: Keep all policies current
- Home/auto review: Request retiree discounts
Not Sure What You Need?
Take our free 2-minute quiz to get personalized insurance recommendations for your retirement situation.
Next Steps
- Enroll in Medicare on time—avoid permanent penalties
- Compare Medigap vs. Advantage—understand trade-offs
- Choose Part D carefully—use Plan Finder for your medications
- Review all policies annually—needs change in retirement
- Get free SHIP counseling—expert help with Medicare decisions
Related Guides
Related Checklists
- Retiring Insurance Checklist - Medicare enrollment, Medigap decisions, and coverage transitions
Frequently Asked Questions
What's the difference between Medicare and Medicaid?
Medicare is federal health insurance for people 65+ (or with certain disabilities) regardless of income. Medicaid is a state/federal program for low-income individuals of any age. Some people qualify for both (dual eligible).
When should I sign up for Medicare?
Your Initial Enrollment Period is 7 months around your 65th birthday (3 months before, your birthday month, 3 months after). Late enrollment results in permanent premium penalties—10% per year late for Part B.
Does Medicare cover long-term care?
No, Medicare does not cover long-term custodial care (help with daily activities). It only covers short-term skilled nursing care after a hospital stay. Long-term care requires separate insurance or private payment.
Should I choose Medigap or Medicare Advantage?
Medigap works with Original Medicare, letting you see any Medicare provider nationwide with predictable costs. Medicare Advantage is all-in-one coverage with networks and often lower premiums but cost-sharing at time of service.
What is the Medicare Part D donut hole?
The donut hole is a coverage gap in Medicare Part D. After you and your plan spend a certain amount on drugs, you pay a higher percentage until reaching catastrophic coverage. The gap has narrowed significantly under recent legislation.
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