There are important things you need to know about medicare when reaching the age of 65. After turning 65, you become eligible for Medicare, and it is important to act right away because delaying your enrollment can result in penalties.
Options to Consider When Signing Up for Medicare
Medicare consists of four major programs:
- PART A – covers hospital pays.
- PART B – covers physicians fees
- PACT C – permits Medicare beneficiaries to receive their medical care from among a number of delivery options
- PART D – covers prescription medications.
In addition Medigap policies offer additional coverage to individuals enrolled in Parts A and B.
Three months before your 65th birthday begins Medicare enrollment continues for 7 months. If you are currently receiving Social Security benefits, you don’t need to do anything. You will be automatically enrolled in Medicare Parts A and B effective the month you turn 65. You need to sign up for Medicare by calling the Social Security Administration at 800-772-1213 or online at http://www.socialsecurity.gov/medicareonly/, to receive Social Security benefits.
It is possible you don’t need to sign up for Medicare Part B if you are still working and have an employer or union group health insurance plan? If Medicare, rather than the employer’s plan, is the primary insurer, then you will still need to sign up for Part B. Even if you aren’t going to sign up for Part B, you should still enroll in Medicare Part A, which may help pay some of the costs not covered by your group health plan.
Should I enroll in Medicare if I’m Still Working? Yes! Many people keep working well beyond the age of 65, when most of the people become eligible for Medicare. Whether you should enroll in Part B while you are still working depends on whether your employer has more than 20 employees. If your employer has more than 20 employees, you do not need to sign up for Part B right away because your employer’s group health plan will be the primary insurer. When you retire, you will have a special enrollment period of eight months to sign up for Part B, without penalty. It covers outpatient and preventative care like doctor visits and tests, has a monthly premium that changes each year – it is $104.90 a month in 2016. Individuals who don’t sign up for Part B when they first become eligible can pay a 10 percent premium penalty for each year that enrollment is delayed. However, there is an exception. In addition, you will have to wait for the general enrollment period to enroll. The general enrollment period usually runs between January 1 and March 31 of each year.
Important: To sign up for Medicare Part B during your initial enrollment if you don’t have an employer or union group health insurance plan.
Note: COBRA coverage does not count as a health insurance plan for Medicare purposes.
With all the deductibles, copayments and coverage exclusions, Medicare pays for only about half of your medical costs. Much of the balance not covered by Medicare can be covered by purchasing a so-called “Medigap” insurance policy from a private insurer. You can search online for a Medigap policy in your area at http://www.medicare.gov/find-a-plan/questions/medigap-home.aspx.
You must be enrolled in Medicare Parts A and B to join a Medicare Advantage plan (Medicare Part C) the name for private health plans that operate under the Medicare program. If you join a Medicare Advantage Plan, the plan will provide all of your Part A and Part B coverage, and it may offer extra coverage, such as vision, hearing, dental, and/or health and wellness programs. Most such plans include Medicare prescription drug coverage.
The advantage of Medicare Part C if you have Part A and B. Under Medicare Advantage beneficiaries may choose from a number of private health plans, which include the following:
- Health maintenance organization (HMO) plans that require you to go to doctors, other health care providers, or hospitals on the plan’s list, except in an emergency. You may also need to get a referral from your primary care doctor to see a specialist.
- Preferred provider organizations (PPOs) that allow the use of doctors and hospitals outside the plan network for an extra out-of-pocket cost.
- Private fee-for-service plans (PFFSs), which are a Medicare-approved private health insurance plan for which Medicare pays part of the cost. The plan determines how much it will pay doctors, other health care providers, and hospitals, and how much you must pay when you get care.
- Special needs plans (SNPs), which limit membership to people with specific diseases or characteristics. The plan tailors benefits, provider choices, and drug formularies to best meet the specific needs of the groups they serve.
- Medical savings account (MSA) plans, which allow you to join a high-deductible plan and also set up a special medical savings account with a bank the plan selects. Medicare then gives the plan an amount of money each year for your health care, and the plan deposits some money into your account. You can use the money in your account to pay your health care costs, including health care costs that aren’t covered by Medicare. Money left in your account at the end of the year stays in the account and may be used for health care costs in future years.
If you are not going to sign up for a Medicare Advantage plan with prescription drug coverage, then you will want to enroll in a prescription drug plan at the same time you sign up for Parts A and B. For every month you delay enrollment past the initial enrollment period, your Medicare Part D premium will increase at least 1 percent. You are exempt from these penalties if you did not enroll because you had drug coverage from a private insurer, such as through a retirement plan, at least as good as Medicare’s. This is called “creditable coverage.” Your insurer should let you know if their coverage will be considered creditable.