Enrolling in Medicare and Choosing the Right Plan

If you’re turning 65, you are; or should be; thinking about Medicare. Unfortunately, most folks find this to be a complex topic, with much to understand about eligibility, enrollment periods, coverage, and what to expect for costs. And it’s important to have the right timing, as well as the right decisions; late enrollment can result in a lifetime premium penalty

Medicare plans are organized into several parts, A, B, C, and D. Each part has its own rules, requirements, and costs. Here is some information to help you understand how to enroll in Medicare and how to get the medical coverage you need.

Eligibility

Medicare insurance is available to all U.S. citizens age 65 or older, as well as permanent residents age 65 or older, who have lived in the US for at least five years.

Additionally, If you’re under the age of 65, you can enroll in Medicare under the following conditions:

  • You are receiving Social Security Disability benefits or Railroad Retirement Board Disability benefits, and have been receiving them for at least 24 months.
  • You are living with end-stage renal disease (ESRD).
  • You are living with Amyotrophic Lateral Sclerosis, also known as ALS or Lou Gehrig’s Disease.

 

The Parts of Medicare

Here is a short description of Medicare’s 4 parts, which are essentially Medicare’s categories of coverage:

Part A ( Hospital Insurance )

Medicare Part A covers costs of inpatient care, hospice care, home health care, and skilled nursing care. It does not cover long-term care, long term memory care, or assisted living.

Part B ( Medical Insurance ) 

Medicare Part B covers costs of  preventative care and medically necessary care, including doctor visits, laboratory tests, diagnostic health screenings, ambulance transport, medical equipment, and outpatient services.

Part C ( Medicare Advantage )

Medicare Part C is more is commonly known as Medicare Advantage. It is a bundle package that includes Part A, Part B, and usually Part D. Often, these plans have lower out-of-pocket costs for beneficiaries with fewer needs, but they may be more restrictive about which doctors and facilities can be used.

Part D ( Prescription Drug Coverage )

Medicare Part D is prescription drug coverage, and works with Part A and/or Part B. It covers the costs of retail prescription medications. There are often copays.

When to Sign Up for Medicare 

If you are receiving Social Security retirement or disability benefits, you will automatically be automatically enrolled in Medicare Parts A and B once you turn 65. Otherwise, you need to sign up for Medicare to receive coverage. To avoid having lapses in your medical insurance coverage, you should apply for Medicare about 3 months before you turn 65. Although the initial enrollment period lasts seven months, waiting until you turn 65 may delay receiving benefits.

Part A premiums must be paid, unless you or your spouse have been employed and paid Medicare taxes for a minimum of 40 quarters (about 10 years), or if you receive Social Security benefits.

Medicare.gov has an on-line tool to help you with your eligibility and premiums. Click here.

When Medicare Coverage Begins

If you apply for Medicare after turning 65, coverage begins from one to three months after signing up.

If you are under 65, and living with ESRD, you can enroll in Medicare and it will begin during your fourth month of dialysis treatment; or your first month of treatment, if you’re receiving a kidney transplant.

If you under 65, and living with ALS, you are automatically enrolled in Medicare when you apply for Social Security disability benefits. There is a five-month waiting period for Social Security and Medicare benefits to begin.

If you are over age 65 and living with ESRD or ALS, all waiting periods are waived..

The Medicare Enrollment Periods 

Generally, all Medicare enrollments happen during enrollment periods. There are three main enrollment periods and several additional periods that affect when your Medicare coverage begins.

Initial Enrollment Period (IEP)

The Initial Enrollment Period lasts for seven months: the three months before you turn 65, the month of your birthday, and the three months afterward. This is usually the first time you can apply for Medicare coverage.
Note:  It’s important to enroll when you’re first eligible, to avoid paying a lifetime penalty on premiums.

Annual Enrollment Period (AEP)

The Annual Enrollment Period and Medicare Advantage Open Enrollment last from October 15 to December 7 each year. During this time, you can:

  • Disenroll from Original Medicare and enroll in Medicare Advantage, change from one Medicare Advantage plan to another, or switch from Medicare Advantage back to Original Medicare
  • Enroll in a Part D (prescription drug) plan, change from one Part D plan to another, or cancel your prescription drug coverage.

Changes you make during the Medicare Annual Enrollment Period will take effect on January 1st of the following year.

It’s important to know that Medicare Advantage and Part D benefits may change each year, possibly changing your benefits, and/or increasing your costs. You may want to change your coverage due to your premiums increasing, your doctor no longer in your plan’s network of your plan, or your medication no longer being covered by your plan.

In September of each year, you will receive an Annual Notice of Change from your carrier, explaining any changes to your current policy that will take effect the following year. If you’re unhappy with the changes shown in your Notice of Change, you can change your coverage during the Annual Enrollment Period.

General Enrollment Period 

The General Enrollment Period and Medicare Advantage Open Enrollment last from January 1 to March 31 every year. During this time, you can:

  • Sign up for paid Part A and Part B if you haven’t done so when you were first eligible. (You may pay the penalty if you didn’t join in Part B during an IEP or SEP).
  • Switch to a different Medicare Advantage plan if you were already enrolled in Medicare Advantage.
  • If you don’t have Part A coverage and you enroll in Part B during the General Enrollment Period, you can sign up for a drug plan between April 1st – June 30th

Coverage for new enrollments begins July 1. Changes to existing Medicare Advantage coverage take effect the month after Medicare receives your request.

Special Enrollment Period (SEP) 

Special Enrollment Periods for Parts A and B only happen if you experience a qualifying event. They happen if you lose group health insurance coverage, move, have a change in your eligibility status, or experience several other types of life events. The length of the special enrollment period depends on the type of event.

Medigap Open Enrollment Period 

The Medigap Open Enrollment Period starts when you enroll in Part B. It lasts for six months and is the best time for you to purchase a Medigap policy, since you may do so without medical underwriting or limitations. To be eligible to purchase Medigap insurance, you must have Part A and Part B. It is important to note that Medigap supplements Original Medicare; you cannot purchase Medigap if you have a Medicare Advantage plan.

Medicare Penalties For Late Enrollment

It’s important to understand penalties because they add costs to your medical expenses.

Medicare Part A Penalty 

There are no late enrollment penalties If you’re eligible for Part A with no-cost premiums, even if you don’t enroll at age 65. If you are in the category of beneficiaries who pay Part A premiums, you must enroll when turning 65, or you will pay a late enrollment penalty, unless you qualify for a Special Enrollment Period. Generally, the penalty is 10% on each monthly premium, and is assessed for twice the number of years you were eligible but didn’t enroll. For example, if you wait one year to sign up, you’ll pay a penalty for two years.

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Medicare Part B Penalty 

Part B penalties are assessed for the lifetime of your coverage. The penalty is 10% for each year you were eligible but didn’t sign up, and it’s cumulative. For example, if you wait two years to sign up, you will pay a 20% penalty. There is no penalty if you delayed enrolling because you still had employer insurance coverage, and enrolled during a Special Enrollment Period.

Medicare Part D Penalty 

Part D penalties are assessed if you were eligible, and didn’t have Part D coverage or Medicare Advantage with prescription coverage for 63 days or more, or if you can’t show other creditable drug plan coverage. The penalty is 1% of the national base premium for that year and is multiplied by the number of months without drug coverage. It is assessed for the lifetime of your coverage.

Click here to download a PDF of this Guide.

Get Assistance with Medicare 

I’m happy to offer a free consultation to answer your questions and help you get the coverage you need. Please call me at (434) 373-0051.