Transitioning from private, employer-provided healthcare to Medicare can feel like an intimidating proposition. But investing time to learn the basics can help you feel more comfortable. Here are four key considerations to get you started.

Original Medicare and Medicare Advantage

Medicare offers two types of plans: Original Medicare and Medicare Advantage. According to, Original Medicare is a fee-for-service plan that allows you to go to any doctor or hospital that accepts Medicare.

Medicare Advantage is a plan offered by a private insurance company that contracts with Medicare. These plans include Part A and Part B coverage and may be set up as an HMO, PPO, fee-for-service, or another type of plan. They typically include prescription drug coverage and may offer vision, dental, and other services.

#1 Costs

Original Medicare has no annual limit for your out-of-pocket expenses. A Medigap policy can help pay some of the remaining healthcare costs like copayments, coinsurance, and deductibles. A Medicare Advantage plan has a yearly maximum out-of-pocket (MOOP) limit, which is set every year by the U.S. government. For 2022, the MOOP limit was $7,550 for in-network and $11,300 for in-network and out-of-network services combined. Once you reach this limit, you owe nothing for covered services for the remainder of the year.

#2 Coverage

Original Medicare includes two parts: Part A covers inpatient hospital stays, nursing facility care, hospice, and some home healthcare, and Part B covers doctors’ services, outpatient care, medical supplies, and preventive services.

Prescription drug coverage requires signing up for Medicare Part D, with an additional premium. Supplemental policies, known as Medigap policies, can cover certain benefits not covered by parts A and B, such as vision and dental care.

#3 Prescription Drugs and Doctor Choice

To receive drug coverage, you’ll need to join a Medicare Drug Plan (Part D) if you have Original Medicare coverage. This coverage allows you, in most cases, to go to any doctor, healthcare provider, hospital, or facility that’s enrolled in Medicare. You do not need to choose a primary care physician, and you usually don’t need to get a referral to see a specialist.

Medicare Part B doesn’t cover most prescriptions. If this is a concern, you can add drug coverage through a Medicare Part D plan. Medigap, or Medicare Supplement Insurance, which covers costs that Original Medicare does not.

Most Medicare Advantage plans include coverage for prescription drugs. Doctor and hospital choices may be more limited under these plans.

#4 Travel

Both Original Medicare and Medicare Advantage generally do not provide coverage if you are outside the U.S. You may be able to buy supplemental insurance for emergency care if you are traveling abroad.

Deadlines and Penalties

Be aware that penalties exist for failing to enroll in Medicare during the seven-month enrollment period surrounding your 65th birthday. The late-enrollment penalty never goes away. For Medicare Part B, the penalty can go up 10% for every year that you were eligible but didn’t enroll. For example, if you waited three years to sign up for Medicare after eligibility, the penalty could be 30% of the Part B premium for the rest of your life. There is also a penalty for Part D late enrollment.

At Savant, we stand by your side to help you navigate the details of transitioning into retirement. Switching gears from saving for to living in retirement can be challenging. If you’d like to discuss your retirement plans, we invite you to schedule an introductory call with a member of our team.

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