Remember the adage that says you’re never too old to stop learning?
Americans turning 65 should keep that in mind as their birthday approaches. For most people, reaching this milestone means becoming eligible for Medicare. And that can mean “graduating” from health insurance as you know it to a new system with its own timelines, rules, and terminology.
Understanding your options and making wise choices can be daunting. Fortunately, the route to Medicare success follows a familiar path: Do your homework, don’t rush, follow directions, and seek clarification if you have a question.
Below are five tips for navigating Medicare, whether you’re about to turn 65, the adult child or caregiver of someone turning 65, or a Medicare recipient interested in remedial learning.
Now let’s get educated!
Know when and where to enroll
You can enroll at a Social Security office or online beginning three months before turning 65 and no more than three months after to avoid late penalties that can permanently impact your premium. Those who have a disability, special condition, or receive benefits from Social Security or the Railroad Retirement Board may qualify before turning 65, or could be enrolled automatically when they’re turning 65. Determine your eligibility and calculate your premium on the official Medicare site.
Evaluate current coverage
If you or your spouse are working and you’re covered by an employer’s plan, ask the benefits administrator if they require you to enroll in Medicare. If not, you can sign up later during a special enrollment period without incurring a late penalty. Also, make sure any prescription drug coverage you receive through an employer after turning 65 is creditable — deemed by Medicare to be at least equal to its drug coverage — or you’ll be on the hook for another late penalty.
Understand the Medicare basics
If you’re not covered by an employer or former employer, there are two main ways to get Medicare coverage:
Original Medicare (Parts A and B) – managed by the federal government.
Medicare Advantage (Part C) – managed by private insurance companies to replace Original Medicare while also providing other value-added benefits.
Those who choose Original Medicare must purchase separate prescription drug coverage (Medicare Part D). They can also opt for Medicare Supplement (Medigap) to work alongside Original Medicare.
Original Medicare (Parts A and B)
Medicare Advantage plans (Medicare Part C) are offered by health insurance companies to replace Medicare Parts A and B. Medicare Advantage covers the services provided by Original Medicare, along with dental, hearing, vision, annual physicals, and wellness benefits not covered by Original Medicare. Many Medicare Advantage plans also provide prescription drug coverage (Part D) and the convenience of having all of your Medicare benefits administered by one plan.
Medicare Advantage (Part C)
Most prescription drugs are not covered by Original Medicare and require a separate Medicare prescription drug plan (Medicare Part D). Some people who opt for Original Medicare also purchase Medicare Supplement (Medigap) from a private insurance company. This type of plan works alongside Original Medicare and helps pay for some uncovered medical costs, though a separate Medicare Part D plan would still be required to receive prescription drug coverage.
Medicare Part A provides hospital insurance for inpatient stays, skilled nursing facilities, and hospice care. Medicare Part B provides medical insurance for doctor services, outpatient care, medical supplies, and preventive care. Parts A and B do not include many value-added benefits and services such as routine vision and dental visits, health management programs, and more. These costs would be out-of- pocket.
Avoid late penalties
Failing to enroll on time can result in significant penalties, which can be permanent.
Medicare Part A
Most people won’t have a premium for Part A if they paid Social Security taxes for at least 10 years while working. But those who are late and don’t meet that standard will see a 10 percent premium increase for double the length of time they were eligible but not enrolled.
George moved to the United States from Europe and paid Social Security taxes for only a few years before turning 65. He became eligible for Part A but didn’t enroll for 18 months, so he had a 10 percent premium increase for 36 months – double the length of time he was eligible but not enrolled.
Again, nearly all people turning 65 meet the standard for “premium-free Part A,” so the penalty wouldn’t apply. However, Parts B and D aren’t forgiving no matter how long you’ve paid into the system.
Medicare Part B
Part B carries a permanent 10-percent premium increase for each full year you are eligible but not enrolled.
Helen was eligible for Part B for two full years before she signed up, so she has a permanent 20 percent increase (10 percent for each year) on her Part B premium.
Medicare Part D
The Part D penalty is also permanent and is determined by multiplying 1 percent of the “national base beneficiary premium” ($34.10 in 2016) by the number of full months you didn’t have Part D or creditable coverage. The monthly premium is rounded to the nearest $.10 and added to your monthly Part D premium.
Tom didn’t have Part D or creditable coverage for 24 months after becoming eligible, so his 2016 penalty is 24 percent of $34.10 (the national base beneficiary premium for 2016), or $8.18. Rounded to the nearest $.10, his Part D premium increase is $8.20 per month in 2016. The total fluctuates each year with changes to the national base beneficiary premium.
Remember open enrollment
There is an open enrollment period, called AEP or Annual Election Period, for making changes to your Medicare Advantage or prescription drug plan that spans from Oct. 15 to Dec. 7. While you can sign up for Medicare plans up to three months before turning 65, and have the coverage begin on the first day of your birthday month, changes to your plan can only be made between those dates.
AEP is not only for new enrollees. No matter how long you’ve been a Medicare recipient, open enrollment provides an opportunity to revisit your plan and make changes that reflect your current needs. Has your health changed? Are you happy with your current plan? Did you have significant out-of-pocket costs? What were these costs for? Will your current plan change in the coming year? Having these answers prior to open enrollment will help you make smart choices.
Have a question or need information?
CDPHP can discuss your Medicare plan options, help you choose a plan, assist with enrollment, and show you how to maximize your Medicare coverage. If you have questions, please call us toll free at 1-888-519-4455 (TTY/TDD 711) Monday through Sunday, 8 a.m. to 8 p.m.*
*Our hours are 8 a.m. – 8 p.m. seven days a week, October 1 – February 14. From February 15 – September 30, Monday – Friday, our hours are 8 a.m. – 8 p.m. A voice messaging service is used weekends, after-hours, and federal holidays. Calls will be returned within one business day.