Many years ago, our country designated 65 years of age to be our customary retirement; this was many years before life expectancies increased to 80-plus years of age. Reaching age 65 is still a milestone. It may be surprising to you, but every day, 10,000 baby boomers turn 65. 

Everyone knows we become eligible for Medicare when we turn 65. A few months before turning 65, you’ll receive your Medicare card in the mail and have the option of enrolling. 

If you are collecting Social Security, you will be automatically enrolled.

Still, the intricacies of Medicare and choosing supplemental insurance can be daunting. 

Original Medicare

Medicare has three parts. For most people, Part A is provided at no cost; it covers hospitalization. 

Part B covers outpatient treatment. If your individual income is below $85,000 ($170,000 for a couple), the monthly fee for Part B is $104.93. Together, Parts A and B are referred to as “Original Medicare.” 

Since Original Medicare does not provide prescription coverage, you should sign up for a prescription-drug plan — this is Medicare Part D. If you forego prescription coverage, there will be a monetary penalty for enrolling later. 

With a qualified, workplace medical insurance plan you can defer enrollment in Medicare.

So the question is, if I have Medicare, why consider purchasing additional insurance? The reason: As a standalone, Original Medicare coverage has glaring deficiencies. 

Part A hospitalization has a deductible fee of $1,184 per incident. There is a 60-day coverage limit; then you’ll be charged $296 per day for the next 30 days. After 90 days, you’ll be charged $592 per day.

Part B, which provides outpatient coverage, has an annual deductible of $147; after that, doctor fees are split 80/20. 

Medicare has NO out-of-pocket expense limit.

Medicare coverage of dental, hearing, and vision is extremely limited. 

Supplement and Advantage plans 

Here’s an overview of auxiliary Medicare coverage. Hopefully, the details do not overwhelm you.

Medicare Supplement (Medigap) and Medicare Advantage (Part C) plans came into existence because insurance companies determined they could deliver health care more efficiently than Medicare. 

For senior health-care services, the government sets aside approximately $700 per month. Insurance companies said to the government, “Give us the $700 per month, and we’ll provide better care and coverage than you can.” 

If you choose Medicare Supplement (Medigap), two entities will be billed for your medical services: Original Medicare and the Medigap insurance provider. If your usage of medical services is high, Medigap can be financially advantageous. 

There is no prescription coverage, so that must be purchased separately.

A majority of seniors enroll in Medicare Advantage plans. The administrators of Advantage plans are private insurance companies, but you still retain all of the rights and benefits of Medicare. 

An additional benefit: Most Medicare Advantage plans include prescription coverage. 

When you enroll in Medicare Advantage, there are two core structure types. Your health care will be provided by either a health maintenance organization (HMO) or a preferred provider option (PPO). Both structures require you to receive your medical care from providers within their networks; otherwise, additional fees apply. The main difference: PPOs generally allow you to self-refer to specialists; HMOs typically require primary-care physicians to make referrals to specialists.

Monthly premiums range from $0 to $150. Deductibles, co-pays and out-of-pocket limits vary from plan to plan. 

Unlike Original Medicare, all Medicare Advantage plans have out-of-pocket limits. Many plans include the “Silver Sneakers” benefit: a no-cost gym membership. Determining which plan is best depends on the frequency with which you anticipate needing health-care services. 

For a more detailed look, it’s important to seek out the advice of a professional, independent insurance broker who specializes in Medigap and Medicare Advantage plans. This specialist can walk you through myriad options and help you choose the best coverage for your current needs.

In the Seattle area, the main providers of Medicare insurance plans are United Healthcare (the nation’s largest provider; associated with AARP), Humana (No. 2 nationwide), Premera Blue Cross, Regence Blue Shield, Group Health, Sound Health and Community Health Plan, among others.

Open enrollment

The annual Medicare open-enrollment period is from Wednesday, Oct. 15, through Dec. 7. If you have no supplemental insurance and/or want to add prescription coverage, make these changes during the open-enrollment period. 

During the open-enrollment period, assess your supplement, Advantage and/or prescription plans to determine whether the insurance is providing the best value/benefits for your current medical situation and prescription needs. If you are dissatisfied, this is the time to change plans. 

Coverage changes become effective Jan. 1, 2015.

To explore coverage options, go to the Medicare website: www.medicare.gov/find-a-plan/questions/home.aspx.

Please note: The Medicare plans described above are not part of the Affordable Care Act (ACA), otherwise known as “Obamacare.” If receiving Medicare, do NOT apply for supplemental coverage through the ACA via the Washington Health Plan Finder website. 

MARLA BECK is the founder and president of Andelcare Inc., which provides in-home eldercare. Submit questions by calling (206) 838-1844 or via e-mail to marla@andelcare.com.

J.R. Gillespie of All-Star Financial provided information for this column.