WHAT YOU NEED TO KNOW
As you get closer to your 65th birthday, you might be planning the next chapter of your life. Will you be retiring soon? Downsizing? Traveling? Are you eager to spend more time with family or pursue new interests? Whatever the next years may look like for you, something that’s going to need your attention now is Medicare.
Medicare is health insurance for people who are 65 and older, and for some younger people who have certain disabilities or conditions. If you begin getting retirement or disability benefits from Social Security before you turn 65, you’ll get Medicare automatically. If you wait until you’re 65 or older to collect Social Security benefits, you’ll have to contact Social Security to sign up. However, if you’re still working past your 65th birthday and have health insurance through your employer, you may want to wait before getting Medicare. But even if you think you might not need it yet, it’s important to understand all your options because if you delay signing up when you’re first eligible, you may find that you are subject to penalties.
How does this all work?
Medicare is only for individuals. There are no family plans, and you cannot be denied coverage for medical conditions. Medicare is broken down into parts and there are rules for enrollment. Costs are associated with each part of the coverage. By visiting Medicare.gov you can learn more about the details.
Parts A and B together make up Original Medicare. With Original Medicare, a federally run program, you can choose any primary care doctors and specialists who accept Medicare. If you elect to go with a Medicare Advantage plan (Part C), this is a private insurance plan and options that are available differ by state.
- Part A is hospital coverage. If you’re admitted as an inpatient to a hospital that accepts Medicare, most hospital services for the first 60 days will be covered. Contingent on meeting certain requirements, skilled nursing care in a facility (up to 20 days), skilled home care services and hospice care may also be covered. However, there are exclusions, and most care outside of the United States will not be covered.
- Part B is doctor and outpatient services. Part B covers medically necessary doctor services and outpatient care, but excludes most vision, hearing and dental care. Most prescription drugs are not covered under Part B.
- Part C is Medicare Advantage. According to AARP, almost half of all Medicare beneficiaries (nearly 32 million), are enrolled in a Medicare Advantage plan and the average enrollee has more than 43 plans to choose from. This is an all-in-one plan that combines Part A and Part B and typically adds prescription drug coverage (Part D). The federal government requires these plans to cover everything that Original Medicare covers, but many plans may also offer additional benefits such as dental, vision, hearing, lifestyle and transportation. Most Medicare Advantage plans have more restrictions on the doctors you are able to see as they are generally either a health maintenance organization (HMO) or a preferred provider organization (PPO). While you still have choices, you would be limited to seeing providers within your network or face additional costs. Remember, Part C is optional private insurance that varies by state.
- Part D is prescription drug coverage. Prescription drugs in a plan’s formulary (drug list) and certain vaccines are covered. If you choose Original Medicare, you can purchase a stand-alone Part D plan, or most Medicare Advantage plans include this coverage in their benefits. There are many Part D plans to choose from and costs vary greatly.
- Medigap or Medicare Supplement Insurance. If you choose Original Medicare, you can also purchase supplemental insurance called Medigap to help cover the costs of deductibles, copays and other expenses. You cannot purchase a Medigap plan if you enroll in Medicare Advantage.
When do you need to choose a Medicare plan?
When you are turning 64, it’s a good idea to start investigating your options. Learn about the different parts to Medicare and what might be a good fit for you. Research the various plans, comparing all costs and benefits, and see which ones your current doctors participate in.
You should expect to receive many solicitations in the mail. You’ll likely be contacted by health insurance agents, brokers and directly from insurance companies. It can be helpful to start a folder and keep all of this information together, so when you are ready, you can take your time in reviewing the different offerings.
- You can sign up for Medicare during your Initial Enrollment Period (IEP). This begins three months before the month you turn 65 and ends three months after.
- Depending on your personal circumstances and whether you are receiving job-based healthcare coverage from an employer with more than 20 employees, you may be eligible to delay enrolling in Part B. If you meet certain requirements, you may qualify for a Special Enrollment Period (SEP) without having to pay a late enrollment penalty.
- The General Enrollment Period (GEP) runs each year from January 1st to March 31st. If you haven’t signed up for Medicare during your Initial Enrollment Period or a Special Enrollment Period, then you will need to sign up during the General Enrollment Period. Keep in mind that you may incur penalties if you delay signing up for Medicare.
Steps to Take
- If you’re still working, you can speak with your employer to learn more about your health insurance options.
- If you don’t already have one, create a mySocialSecurity account. You will use this account to sign up for Medicare Parts A and B online.
- After you’ve signed up for Parts A and B, you can purchase a Medicare Advantage plan or add Part D prescription coverage or a Medigap plan. You can reach out to your health insurance broker for assistance or use the search tool available Explore your Medicare coverage options on Medicare.gov to compare plans.
- Once you are signed up, know that you are not locked in forever. You will be able to make changes to your Medicare coverage each year during the Medicare Open Enrollment.
Choosing your Medicare plan can seem daunting at first. From learning about all the requirements and costs involved, to making sure you can continue to see doctors you are comfortable with, it’s enough to leave anyone feeling overwhelmed. But with a little time and research, you can select a healthcare plan that is right for you and works as part of your healthy financial plan. If you have any questions, feel free to contact us.
