Medicare covers approximately 80% of eligible medical expenses and most retirees will choose to purchase a Medicare Supplement Policy (Medigap) which is designed to cover those medical expenses not covered by Medicare Parts A, B, and D.
For most retirees there is no cost for Medicare Part A. Conversely, premium costs for both Medicare Part B and Part D are income-based and can range in 2020 from $144.60 to $491.50 per person per month. Medicare Part D premiums will range in 2020 from $12.20 to $76.40 per person per month. Your Medicare premiums for medical and pharmacy coverage will depend on your income as reported on your IRS income tax return from two years ago. You will pay the standard premium amount plus an Income Related Monthly Adjusted Amount (IRMAA).
After retirement your premium costs will be significantly higher and benefits and claims management for the government and private market are separate. When you are retired your medical coverage will be multifactorial and consist of the following:
Medicare Part A inpatient hospital coverage
Medicare Part B outpatient provider coverage
Medicare Part D prescription drug plan
Medicare Supplement Policy (Medigap) and Supplemental Prescription Drug Plan are extra insurance coverage that you purchase from a private company
Medicare Supplement (Medigap) policies are only “guaranteed issue” (not subject to medical underwriting) during the Initial or Special Enrollment Period. If you do not enroll in a Medicare Supplement (Medigap) policy when you are first eligible, in most states you will lose guaranteed issue rights for future Medicare Supplement (Medigap) Insurance applications.
Medicare Supplement (Medigap) policy premiums can vary in cost depending upon the scope of your coverage, but are not income-based.