After you turn 65, you will most likely depend on Medicare to help pay for your healthcare during your golden years. There are several moving parts to the whole Medicare enrollment process to be aware of in your first year on Medicare. These will help you avoid some fairly common (and pricey) blunders
Don’t Miss Your Medicare Initial Enrollment
If you currently receive Social Security benefits, you will be automatically enrolled into Medicare at age 65. If you do not receive either of these benefits, it is your responsibility to enroll in Medicare.
To avoid lifelong penalties, you will want to enroll during your Initial Enrollment Period (IEP) unless you have other creditable coverage. Your IEP begins three months prior to your birthday month, includes your birthday month, and extends three months after as well for a total of seven months.
Not everyone enrolls into Medicare when they turn 65 though. For example, you may still plan on working beyond 65 and keep the health benefits offered through your workplace. If your employer has more than twenty employees, then you can delay enrollment into Medicare to save on paying the Part B and D premiums.
If you stay on the job beyond 65 and your employer has less than twenty employees, you will need to enroll in Original Medicare during your IEP. For small companies, Medicare is primary, and the health plan is secondary. Should you fail to enroll in Medicare, your group plan may decide not to pay claims that Medicare would have paid as primary.
Get Part B Even if You Have COBRA or Retiree Coverage
Sometimes people retire after age 65 and decide to enroll in COBRA instead of Medicare. If you get health insurance through COBRA after leaving your job, you need to be aware that COBRA is not creditable coverage for delaying enrollment into Medicare. This means you have 8 months from the last day you worked to enroll in Part B.
People get this one wrong all the time and end up paying late enrollment penalties for life. Depending on when you discover your mistake, you can also face delayed enrollment into Medicare which can result in many months without coverage.
Choose the Right Coverage
Since Medicare doesn’t pay for everything, most people choose to supplement their coverage with private insurance.
These supplemental benefits come in two forms for you to choose from: a Medicare Supplement (Medigap) plan along with a Part D drug plan, or a Part C Medicare Advantage plan with drug coverage built in.
Each option has its pros and cons, so it is important to know your own health needs and determine which one would best fit your lifestyle.
In general, Medicare Advantage plans tend to cost less each month but come with significant restrictions on where and when you can receive your medical care. It’s important to verify that your doctors participate in the plan’s network.
An advantage to these plans (no pun intended), is that most Advantage plans include Part D prescription drug coverage. This gives you all your coverage together in one plan.
Alternatively, Original Medicare with a Supplement (Medigap) plan along with a Part D prescription drug plan generally costs more. The difference is that you can use your Medigap plan wherever Medicare is accepted, which gives you access to nearly 900,000 providers nationwide. If you do not want to be restricted to a certain network of providers or know you will be seeing several different doctors, this may be the best plan for you.
If you choose the wrong path initially, you will have chances to change your plan. No plan can lock you in forever, but you should proceed with caution especially if you think a Medigap plan is the right one for you. If you decide to switch Medigap plans after your Medigap Open Enrollment has passed, you will have to go through medical underwriting.
In this case, you may or may not be able to switch plans depending upon your pre-existing health conditions.
Review Your Part D Drug Plan Every Year
Each year in the fall, Medicare beneficiaries can change Part D prescription drug plans in the AEP (annual enrollment period). Your drug coverage changes annually so it’s important that you be aware your benefits will be different next year. If you just let your plan auto-renew, you could end up paying more than you should.
During the annual enrollment period, you can see what plans are available in your area. Compare the copays for drugs you take often as well as monthly premiums that you pay for your plans. If you enrolled through a Medicare broker, your agent should be able to do this for you.
During the AEP, you can also switch Medicare Advantage plans. If your Medicare Advantage plan covers your Part D, be sure to review your options annually. You never want to let your plan just automatically renew because this could mean you are paying more than you need to the next year.