Dave Ramsey sends strong message to Americans on Medicare

Americans planning and preparing for retirement have plenty of financial considerations on their minds, including thoughts about Social Security and other retirement income such as 401(k) plans and IRAs (Individual Retirement Accounts).

Another important topic to tackle is how best to approach health care. For most people, that involves taking a good look at the complicated subject of Medicare.

Personal finance coach Dave Ramsey helps to simplify the general Medicare processes and rules on which people are wise to gain a working knowledge. But we can get into his advice a bit more in a minute.

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I first wanted to note that I recently had a conversation with a woman who is near 65 years of age, but plans to continue working until she is 72. She plans to stay on her employer’s health insurance until she eventually retires. 

That brought up the need to examine exactly what the rules are for health care coverage for those delaying Medicare because they have the option of staying with their company’s health insurance beyond the age of 65, when eligibility for Medicare begins.

Related: Dave Ramsey warns Americans on Social Security

If you’re still working at 65 and have health coverage through your employer, you have choices when it comes to Medicare enrollment. Your options depend on the size of your employer, according to the AARP.

If you work for a company with 20 or more employees, you can delay enrolling in Medicare without penalties if your employer provides creditable health coverage. 

Creditable coverage is employer-sponsored insurance that meets or exceeds Medicare’s benefits, allowing you to delay enrollment without penalties. Large employers (20-plus employees) typically provide creditable Part B coverage (doctor visits and preventive health care), while prescription plans must match Medicare’s drug benefits for Part D.

You can keep your employer plan and postpone Medicare, switch fully to Medicare by dropping your employer coverage, or have both — though your employer plan will be the primary payer, meaning it covers costs first before Medicare kicks in.

For those working at smaller companies with fewer than 20 employees, Medicare becomes your primary insurance once you turn 65, so enrolling is necessary to maintain full health benefits. Your employer coverage can act as secondary insurance, helping cover additional expenses.

It’s important to weigh your options carefully, taking into account premiums, out-of-pocket costs, and your coverage needs.

Dave Ramsey speaks with TheStreet about personal finance issues. The popular radio host and bestselling author has advice for Americans about making the complicated Medicare process easier to understand.

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Dave Ramsey offers a blunt message on Medicare coverage

For people planning to enroll in Medicare exclusively at age 65, Ramsey offers some thoughts.

“You’ve reached your golden years. You’ve got a lot of life under your belt and wisdom under your hat. Things should be easier now. So, why does this dang Medicare feel so confusing?” Ramsey asked. 

“Well, it was created by the government so that might be your first clue,” he wrote, answering himself. “And second, it’s just a lot to understand.”

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Ramsey simplifies Medicare by clarifying some key points on which to focus.

Medicare is a federal health insurance program designed for people aged 65 and older, providing coverage for those who are no longer working. It is divided into different parts to address specific health care needs, Ramsey explains.

Part A covers hospital stays, Part B includes doctor visits and other outpatient care, and Part D helps with prescription drug costs.

When enrolling in Medicare, you can choose between Original Medicare and Medicare Advantage, Ramsey wrote. 

Original Medicare offers more flexibility in selecting healthcare providers, while Medicare Advantage (also known as Medicare Part C) functions as an all-in-one alternative with more structured coverage but less control over provider choices. 

Medicare Advantage is covered by private insurance companies.

Because Original Medicare alone may not cover all medical expenses, many people choose Medicare supplemental insurance to help with costs such as copayments and deductibles.

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Dave Ramsey explains Medicare supplemental plans

Ramsey puts it simply: Medicare doesn’t cover everything, and many people find they need extra protection to handle out-of-pocket costs. 

To fill in the gaps, private companies offer Medicare Supplemental Insurance, known as Medigap. 

This additional coverage helps pay for expenses such as copays, deductibles, and other costs left behind by Original Medicare.

Most people on Original Medicare find Medigap necessary, but it comes at a price — you’ll pay a premium for your Medigap plan in addition to the one for Medicare Part B, Ramsey wrote.

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