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Understanding Medicare, Medigap and Medicaid
In general, Medicare is government-sponsored health insurance for people over age
65 or younger with certain disabilities. Medicare is comprised of three parts: Medicare Part A, or hospital
insurance, covers inpatient hospital care, as well as skilled nursing facilities, hospice, and home health
care (if certain conditions are met). Medicare Part B, or medical insurance, covers medically-necessary
doctor services and outpatient care, as well as some preventive services. In 2006, Medicare Part D was
implemented to help cover prescription drugs.
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Medigap, or supplemental insurance, refers to health insurance policies sold by private insurance companies
to fill “gaps” in Medicare coverage. These policies assist with out-of-pocket costs like co-pays or deductibles.
The Medicaid program is available to certain low-income individuals and families, and provides payments directly
to health care providers. Each state has different rules and guidelines, including a possible co-payment for some
services.
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What's Not Covered?
It’s important to note that even with coverage from these programs, there are still gaps
in the system that may result in a tremendous burden of health-care debt, easily impacting or even depleting your
retirement savings. For instance, if you suffer a stroke, you could face an average of $100,000 in personal
costs over your lifetime.* Costs like a wheelchair ramp, meals, delivery services and other personal care
needs are not covered and can easily add up as well. Planning carefully for retirement now can help avoid
significant shortfalls later. Talk to your financial professional today about whether your projected savings
will be enough to include any additional health care-related costs.
*American Heart Association, 2003 Heart and Stroke Statistical Update
Here are some resources that may be helpful:
Medicare and You 2009
2009 Choosing a Medigap Policy: A Guide to Health Insurance for People with Medicare
Medicaid Overview
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