When people retire before age 65, it can be a challenge to find affordable health care insurance. Most companies no longer provide coverage to retirees. If you do not qualify for a subsidy from the government health exchange, it could cost $600 to $700 each per month, and that will break many budgets.

Once you reach 65, you qualify for Medicare, the government health program that most Americans must go on once they reach the official age. The only exception to this rule is if you or your spouse is still working for a company with 20 or more employees.

Medicare has four parts. Part A covers hospitals and it has no premium if you or your spouse is fully insured under Social Security. You have been paying into this your entire working life. Part B covers doctors, testing and other items. Currently, the cost is $135.50 per month, which can be deducted from your SS check if you are receiving one. If you are waiting to collect SS to earn delayed credits, you will be invoiced quarterly.

Part C is an advantage plan if you select to be covered through that method. In an advantage plan, the government pays an insurance company a monthly fee to take over your coverage. You still must pay the $135.50. Part D is prescription coverage.

Medicare is an 80/20 plan where you can be held responsible for 20% of the approved service cost. There also are a number of deductible and co-pays. Because of this, most people who do not elect to be covered by Part C buy a supplement known as Medigap. Depending on the level of coverage you select, it can cover some or all of the hospital cost. Prescription costs usually are not totally paid for.

It is a little bit confusing because Medigap plans also are distinguished from each other by letters of the alphabet. The most comprehensive are Plan F or G. All companies’ Plan G covers the same things. The only difference is the price. Some policies are much more expensive. Medigap policies allow you to see any doctor in the country who accepts Medicare and is accepting new patients.

Advantage Plan, also known as Part C, operates a little differently. The government pays your selected insurance company a monthly fee to accept you as a participant. The cost to you each month is usually lower, and sometimes is even free. You are limited to a network of providers.

Some of these networks are pretty big. You may incur some co-pays and out-of-pocket maximum. Advantage plans often provide additional benefits, such as eye care and gym memberships, that are not part of traditional Medicare.

Health care expenses often increase as we age. Selecting the right policy is one important step in managing health care expenses. Do your homework and consider all of the choices.

Gary Boatman is a Monessen-based certified financial planner and the author of “Your Financial Compass: Safe passage through the turbulent waters of taxes, income planning and market volatility.”

To submit columns on financial planning or investing, email Rick Shrum at rshrum@observer-reporter.com.

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