A young man is helping an older woman sit down.
Planning for retirement

Understanding Medicare Parts A to D

When thinking about health care costs in retirement, it's important to understand how Medicare works. We looked at Medicare options and other factors and how they affect annual health care costs for retirees and summed it up in a new research paper. One finding: The plan you choose can make a significant difference in your annual health care costs.
5 minute read

Read on for answers to your Medicare questions and help understanding Medicare options!

 

Parts of Medicare

  COVERS THE BASICS YOU SHOULD KNOW
Hospital care costs. Part of Traditional Medicare run by the U.S. government. It's free at 65 if you or your spouse have worked (and paid taxes) for 10 years.*
Outpatient & doctor visits Part of Traditional Medicare run by the U.S. government. It's not free. Monthly premiums are set annually. You also might have a co-pay.
Hospital & physician costs. Also known as Medicare Advantage offered by private insurance companies. Most plans have an out-of-pocket max. They also may cover dental, hearing, and vision costs.
Prescription costs. Can be added to Traditional Medicare (A+B) or Medicare Advantage (C). Costs will vary depending on the plan you choose and prescriptions you need.
Out-of-pocket costs, such as co-pays and deductibles. Can be added to Traditional Medicare (A+B) but not Medicare Advantage (C). You can get Medigap later, but you might pay more for services.

 

COVERS
Hospital care costs.

THE BASICS
Part of Traditional Medicare run by the U.S. government.

YOU SHOULD KNOW
It's free at 65 if you or your spouse have worked (and paid taxes) for 10 years.*

 

COVERS
Outpatient & doctor visits.

THE BASICS
Part of Traditional Medicare run by the U.S. government.

YOU SHOULD KNOW
It's not free. Monthly premiums are set annually. You also might have a co-pay.

 

COVERS
Hospital & physician costs.

THE BASICS
Also known as Medicare Advantage offered by private insurance companies.

YOU SHOULD KNOW
Most plans have an out-of-pocket max. They also may cover dental, hearing, and vision costs.

 

COVERS
Prescription costs.

THE BASICS
Can be added to Traditional Medicare (A+B) or Medicare Advantage (C).

YOU SHOULD KNOW
Costs will vary depending on the plan you choose and prescriptions you need.

 

COVERS
Out-of-pocket costs, such as co-pays and deductibles.

THE BASICS
Can be added to Traditional Medicare (A+B) but not Medicare Advantage (C).

YOU SHOULD KNOW
You can get Medigap later, but you might pay more for services.

What are the most popular plans?

What to consider …

Your health status

If you have health issues, consider a plan with more coverage.

Your costs

Make sure you understand the different deductibles, co-pays, coinsurance, and maximum out-of-pocket costs that come with the plans you're considering.

Your travel plans

If you want to travel internationally, consider either a Medicare Advantage plan or a Medigap plan that offers foreign travel benefits.

Your preferred doctor

Find out if your favorite health care provider or network accepts the plan you want to choose.

Employer-sponsored health care

If you're still working, your spouse has employer-sponsored benefits, or you have retiree health benefits, consider how the plans work together.

FIND OUT WHAT YOU MIGHT SPEND ON HEALTH CARE

When it comes to retirement planning, knowing the "average" only gets you so far. We can help! As part of our advice service, you'll receive a retirement plan that includes a personalized health care estimate for every year you're in retirement, taking into account your health status, coverage choices, retirement location, and more.

See how we can help

Where does retirement fit into your priorities?

See how to juggle multiple financial goals

 

Vanguard research

Planning for health care costs in retirement PDF

Use our handy tools

You've been saving your whole life. Will it be enough to last you through retirement?

See the chances your savings will last

Roll over your retirement money

Did you leave retirement savings behind at an old job? Get more flexibility and easier money management.

See if a 401(k) rollover is right for you

Get more from Vanguard. Call 800-523-9447 to speak with an investment professional.

Explore advice

*In certain circumstances, you may qualify for Medicare at a younger age than 65.

Vanguard's advice services are provided by Vanguard Advisers, Inc. ("VAI"), a registered investment advisor, or by Vanguard National Trust Company ("VNTC"), a federally chartered, limited-purpose trust company.

The services provided to clients will vary based upon the service selected, including management, fees, eligibility, and access to an advisor. Find VAI's Form CRS and each program's advisory brochure here for an overview.

VAI and VNTC are subsidiaries of The Vanguard Group, Inc., and affiliates of Vanguard Marketing Corporation. Neither VAI, VNTC, nor its affiliates guarantee profits or protection from losses.