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How New Medicare Options Fit Into Your Retirement Planning

Josh DeForest

CFA, CFP®, Managing Director


mature man planning for retirement


Getting ready to retire? Medicare coverage starting at age 65 is a valuable benefit, but some of the available options will change next year. Your financial advisor can help you choose a plan that matches your retirement needs.


Medicare and Financial Planning

If you’re among the more than 3.7 million Americans who will reach age 65 and become eligible for Medicare in the next year, choosing a specific healthcare coverage plan that aligns with your retirement goals and needs could be one of the most important financial planning decisions you’ll make. And you might be surprised at how many options exist in the market.

Navigating the enrollment process, comparing the benefits and weighing the costs of various Medicare and Medsup (Medicare Supplement) plans can be complex. As part of Mercer Advisors’ holistic approach to financial planning, we can help you understand all the available Medicare options in relation to your retirement and financial plans.


Understanding Your Medicare Options

Nearly all Americans 65 and older are eligible to receive standard Medicare coverage, which includes:

  • Part A – covering inpatient hospital services
  • Part B – covering doctor visits and outpatient services
  • Part D – covering prescriptions

Many participants choose to combine Parts A, B and supplemental coverage by enrolling in a Medicare Advantage (Part C) plan. The Part C plan generally includes prescription drug coverage (Part D). Many Medicare Advantage providers also offer extra benefits such as vision, dental and hearing that are not Medicare-covered benefits.

An alternative to Medicare Advantage is to enroll in the traditional Parts A and B and purchase a separate Medigap or Medsup plan. Prescription drug coverage (Part D) is purchased as a standalone policy under this option. Beneficiaries who elect this benefit structure may purchase separate vision, dental, and hearing coverage.


No Plan F for New Medicare Enrollees in 2020

Medicare Supplement Plan F, which pays many of the out-of-pocket costs not covered under standard Medicare, as well as the Part B deductible, will no longer be available to people who become newly eligible for Medicare on or after January 1, 2020. Individuals who already have Plan F or are eligible to enroll before the end of 2019 can retain Plan F coverage.

Despite the phase-out, several other Medigap plans will continue to be available in 2020 and beyond. Although Plan F will no longer be sold, Plan G will still be offered. Plan G is identical to Plan F except that it does not cover the Part B deductible.

Your initial enrollment window for Medicare healthcare coverage begins three months prior to the month in which you turn 65, includes the month of your birth, and lasts through the following three months. Someone born on July 15, for example, can newly enroll between April 1 and October 31. Existing participants in Medicare Advantage and Part D plans can change their enrollment (e.g., signing up for a supplemental plan) between October 15 and December 7 for the 2020 year. Additional enrollment periods for special circumstances are also available throughout the year, so Medicare beneficiaries should understand their personal situation and options.

Because of this, if your 65th birthday occurs on or before December 31, 2019, you can still apply for the Plan F Medicare Supplement Plan, but you should still consider it in relation to all your other options.


Three C’s to Consider

Here are three key areas to think about when assessing Medicare Supplement Plan (Medsup) options in the context of your retirement and financial plan:

  • Cost. How the combination of monthly premium, deductibles, and out-of-pocket expenses (which vary by plan and provider) will influence your cash flow in retirement
  • Coverage. Which Medicare plan best aligns with your current and future health needs, disposable income, how often you plan to travel outside your local provider network, and other lifestyle considerations
  • Consistency. What level of support you’ll expect from your Medigap insurance provider in areas such as filing claims, resolving disputes, updating your coverage as your needs evolve, and avoiding steep premium increases from in the future

It’s also a good idea to meet with your insurance agent and financial advisor for help with making the right choice.

If you have questions about how Medicare healthcare coverage factors into your overall wealth management strategy and retirement planning, a conversation with your Mercer Advisors financial advisor could be a great next step. Along with helping you explore alternatives to Plan F coverage, your advisor can discuss potential adjustments to other pieces of your comprehensive financial plan.

You can learn more about Medicare enrollment and different coverage plans, including Plan F, on the U.S. Social Security Administration website. Also, check out our Insights page for additional retirement planning and investment management guidance, expert commentary, and financial market perspectives from your team at Mercer Advisors.



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