US citizens and Canadians living legally in the US for at least five years become eligible for US Medicare at age 65.  Medicare is currently made up of three parts - Part A, Part B and Part D. Part A is hospital insurance and helps pay the cost for care while in a hospital. Part B is medical insurance and helps pay for the doctors, outpatient hospital care and a variety of other medical services not covered by Part A. Part D is the optional drug prescription plan, which is still being finalized.

Once you have established the required 40 quarters of Medicare eligible earnings, you qualify for free Medicare Part A coverage. In 2004, Part A cost $343 per month ($4,116 annually) per person. However, t o qualify for free Medicare Part A, you must have earned income that you paid Social Security taxes on in excess of the required amount (around $3,500 in 2004) for at least 10 years.  Once 30 quarters have been established, the premium for Part A drops 45% to $189 per month. At times, Medicare planning can make or break your finances and your pending transition to the US .  There are many strategies to get you eligible for free Medicare Part A but it depends on what stage of your life you are in, your unique financial situation and your individual goals and objectives. 

Part B coverage for doctors and outpatient hospital care costs $66.60 per month in 2004 ($799.20 annually) per person and is not free no matter how many quarters of eligibility you have. At this point, it appears that Part D drug coverage will cost approximately $35 - $43 per month with a $250 deductible. Prescriptions from $250.01 to $1,250 will be on an 80%/20% coinsurance plan.

While Medicare provides good base coverage, it should not be relied on to cover all of your medical expenses (i.e. hospital stays greater than 150 days are not covered and excess doctor billings). You will need to purchase a Medicare Supplement policy to cover the expenses not covered by Medicare. Medicare Supplements have ten government-defined types of policies, ranging from basic ("A") to comprehensive ("J"). These are all the same no matter who provides them so it becomes a matter of shopping price. We typically recommend an "F" policy as it provides the best value but again, that depends on your individual financial situation. Your Medicare Supplement does require underwriting but it is very broad and we have not heard an instance of anyone being turned down. Medicare Supplements cost approximately $1,200 per year per person.