Medicare
The US federal health insurance program primarily for people aged 65 and older, funded through payroll taxes and premiums, consisting of Parts A, B, C, and D.
Example
“At 65, he enrolled in Medicare Part A for hospital coverage and Part B for outpatient care — both essential for retirement planning.”
Memory Tip
MEDICARE = federal health insurance for 65+. MEDI-care = medical care for seniors.
Why It Matters
Understanding Medicare is crucial for retirement planning because it significantly reduces healthcare costs for seniors, but it does not cover all medical expenses. Knowing how Medicare works helps you budget for retirement and avoid gaps in coverage that could be financially devastating.
Common Misconception
Many people believe Medicare covers all healthcare costs once they turn 65, but this is incorrect. Medicare has deductibles, copayments, and coverage limits, and it does not cover dental, vision, or hearing aids, meaning retirees must plan for additional out-of-pocket expenses.
In Practice
A 67-year-old retiree with Medicare Part A and B might pay a monthly premium of around 175 dollars for Part B, face a 1,600 dollar deductible for hospital stays under Part A, and pay 20 percent coinsurance for doctor visits. If this person needs cataract surgery, they would pay the full cost themselves since Medicare does not cover routine eye care, potentially spending 3,500 dollars out of pocket.
Etymology
MEDI- (medical) + CARE (caring for). MEDICAL CARE program for seniors. Created by the Social Security Act of 1965.
Common Misspellings
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Related Terms
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See Also
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