Buckle up! Turning 65 means signing up for Medicare. You are not alone: over 10 thousand Baby Boomers turn 65 each day for the next 20 years, with almost 50 million Americans currently covered by Medicare, according to the Social Security Administration. Even though Medicare touches so many citizens, most are confused about the enrollment process due to a shortage of clear information about this program. As a result, many don’t have the knowledge they need to enroll without incurring penalties or to prepare for the costs Medicare does not cover. To learn more about the ins and outs of Medicare, begin with the road map below.
Medicare is a federal insurance program funded with payroll taxes. It is divided into four parts:
PART A – HOSPITAL INSURANCE
Helps cover inpatient hospital care, skilled nursing facility care, nursing home care, hospice, and home health services. Most people don’t pay premiums because they paid Medicare taxes while working.
PART B – MEDICAL INSURANCE
Covers medically necessary services (services and supplies needed to diagnose or treat medical conditions) and preventive services (health care to prevent or detect illnesses at an early stage). This helps cover outpatient healthcare including doctor visits, vital services and mental health care. Monthly premium required.
PART D – PRESCRIPTION DRUG (OPTIONAL)
In order to get Medicare prescription drug coverage, you enroll in a plan run by a private insurance company. Each plan will vary in cost and what drugs are covered.
PART C – ALSO KNOWN AS MEDICARE ADVANTAGE Combines parts A, B, and D. It is not supplemental, but offered by private companies approved by Medicare. Each Medicare Advantage plan can have different out-of-pocket costs and rules for how to get services, and these rules can change each year.
WHAT’S NOT COVERED BY PART A & PART B
Unfortunately, Medicare parts A and B do not cover everything. If you need services not covered by Medicare, you’ll have to pay for them yourself (unless you have other insurance or a Medicare health plan that covers them). Even if Medicare does provide coverage, you will have to pay your deductible, coinsurance, and copayment. Items and services Medicare doesn’t cover include long-term care, most dental care, accupuncture, and hearing aids.
MEDIGAP (AKA MEDICARE SUPPLEMENTAL PLAN)
Medigap is a solution for those who are using parts A and B but want further coverage in case of unexpected bills. Medigap is a private optional health insurance designed to help pay some of the costs (“gaps”) that parts A and B don’t cover, such as co-payments, co-insurance, and deductibles.
HOW TO APPLY?
Before your 65th birthday, visit your local Social Security office, check Medicare.gov, and discuss with your financial advisors to ensure the coverage you choose is the right financial and health care decision for you.
WHO SHOULD APPLY?
You qualify for part or all of Medicare coverage if you:
1. Are turning 65 or older; or
2. Have been receiving Social Security disability benefits for at least 24 months; or
3. Have a severe disability; or
4. Have end stage renal disease.
MOST RETIREES FALL INTO ONE OF THE FOLLOWING CATEGORIES
1. TURNING 65, NOT RECEIVING SOCIAL SECURITY BENEFITS, WITH NO QUALIFIED EMPLOYER-BASED HEALTHCARE COVERAGE
You can enroll in Medicare parts A, B, D, and Medicare Advantage. You must enroll during your Initial Enrollment Period (IEP) unless you are eligible for a Special Enrollment Period (SEP).
If you do not enroll in Medicare on time and are not eligible for an SEP, you will pay lifelong penalties and delay your access to Medicare coverage.
2. TURNING 65 AND ALREADY RECEIVING SOCIAL SECURITY BENEFITS
You will be automatically enrolled in Medicare parts A and B because you are already receiving Social Security benefits. However, you need to apply for Part D during your IEP or you will face penalties. Likewise, if you want a Medicare Advantage plan instead of original Medicare, you must apply during your IEP.
If you are covered by a qualified employer health plan, you might want to refuse Part B by contacting Social Security before your 65th birthday month.
3. OVER 65 AND LOSING QUALIFIED EMPLOYER-BASED COVERAGE
You can sign up for parts B and D or a Medicare Advantage plan without penalty during your special enrollment period (SEP). This period usually lasts for eight months after employer-based coverage ends. You have only two months after losing drug coverage in order to sign up for a Part D plan without incurring a late penalty.
WHEN TO APPLY? DEADLINES AND PENALTIES
There are different time periods when you can sign up, make changes or disenroll. If you miss a date, you will face penalties or higher premiums for as long as you are covered by Medicare. Watch for those key deadlines.
INITIAL ENROLLMENT PERIOD (IEP)
This is your most important window for enrollment. It begins three months before your 65th birthday month, and it ends three months after your birthday month. Let’s say your birthday is February 7. As you can see below, your IEP window is 11/1/18 through 5/1/19.