Retirement Medical Plans

Medicare Part A

For most people, Medicare Part A coverage has no monthly premium.  Medicare is paid for via FICA withholding during your working years.  Those few who don't have the required 40 quarters of coverage credits to qualify for cost-free Part A pay $240 per month in 2019 if they had 30 to 39 quarters, or $437 per month if they have fewer than 30 quarters.

However, everyone must pay deductibles and co-payments when using Part A coverage. The deductible for Part A in 2019 is $1,364 before Medicare starts making payments on your behalf.  Exactly how much Medicare pays after that depends on the types of services provided.

Medicare Part A covers two basic categories of expenses: hospital costs and expenses for a skilled nursing facility outside of a hospital.  If you need to stay in a hospital, Medicare will pay for a semi-private room, and you'll get coverage for meals, general nursing services, prescription drugs, and other treatment or related services while you're there.  Your doctor must state that you need at least two nights of care that requiring a hospital stay for Medicare to cover those costs.  Hospital-provided skilled nursing care and long-term care hospital stays are also included in Part A, with the restriction that your medical condition must be expected to improve.

For skilled nursing facilities, Part A requires that you have at least three days of inpatient hospital care that's connected to your stay at the facility, and your doctor must affirmatively state that you need the services that the skilled nursing facility provides. You generally can't get coverage for custodial care that's similar to what you'd find at nursing homes and long-term care facilities.

There are also some additional services available under Medicare Part A.  If you need hospice care in connection with a medical condition that is expected to give you six months or less to live, then Medicare will cover expenses to allow you to stay in your home.  Hospice benefits are available for two periods of 90 days, and doctors must confirm that you have a terminal illness to extend coverage.  Home healthcare is also available in a few other situations if you're under the care of a doctor whose care plan includes occasional skilled nursing care, physical therapy, speech-language pathology, or continued occupational therapy services. To qualify, your doctor must expect your condition to improve or state that you need services to maintain your current health status. These benefits typically involve a mix of Part A and Part B services.

Medicare Part B

Medicare Part B coverage is for service or treatment that is medically necessary to treat a disease or medical condition.  Services necessary to diagnose conditions are eligible, as are treatments to cure problems, prevent an illness from occurring in the first place, or detect early onset of a potential medical problem.  The most common use of Medicare Part B among participants is to visit one's doctor.  Medical diagnostic tests as part of ordinary treatment are also typical charges.  Part B covers a wider range of items, ranging from ambulance services, clinical research, and durable medical equipment to mental-health services and second opinions for surgical operations.

The Part B premium is automatically deducted from:

  • Social Security income
  • Railroad Retirement Board
  • Office of Personnel Management

If you don’t receive these benefit payments, you’ll receive premium bills. 

Most people will pay the standard premium amount.  If your modified adjusted gross income is above a certain amount, you may pay an Income Related Monthly Adjustment Amount (IRMAA). Medicare uses the modified adjusted gross income reported on your IRS tax return from 2 years ago. This is the most recent tax return information provided to Social Security by the IRS. The standard Part B premium amount for 2019 is $135.50. 

Supplemental Health Insurance

Supplemental insurance can be purchased to help pay for services and out-of-pocket expenses that Medicare Parts A and B do not cover. Some supplemental insurance plans will pay for out-of-pocket medical expenses, such as deductibles, co-payments, and co-insurance.


Medicaid is a joint federal and state program that helps with medical costs for people with limited income and resources.  Medicaid also offers benefits not normally covered by Medicare, such as nursing home care and personal care services.  Medicaid is the largest source of funding for medical and health-related services for people with low incomes providing free health insurance to 74 million low-income and disabled people (23% of Americans) as of 2017. It is a means-tested program that is jointly funded by the State and Federal governments and managed by the States, with each State having broad leeway to determine who is eligible for its implementation of the program. Medicaid recipients must be U.S. citizens or qualified non-citizens, and may include low-income adults, their children, and people with certain disabilities. Poverty alone does not necessarily qualify someone for Medicaid.