We hear it all the time, one day you are turning 16 and finally getting your driver’s license, and you turn around to find a red, white, and blue Medicare card in your mailbox. How did your 65th birthday sneak up on you so quickly?! As the number 65 is glowing on the top of your birthday cake and you are celebrating, you also have some critical decisions to make about your healthcare!
New to Medicare?
Before the big 6-5 is upon you, you’ve got to do some homework on your Medicare options. And I get it, the government websites for Medicare services are murky at best! There’s a slew of information tucked away in these resources, but it’s all messy, hard to navigate, written in tiny print (do they know that there are fonts bigger than 10pt.?), and just plain confusing. There are different coverage options to choose from, late enrollment penalties to avoid – it seems like enrolling in Medicare is a full-time job in itself!
But it doesn’t have to be.
Consider this your guide to starting Medicare, giving you all the basics, and none of the messy jargon. This guide will help you navigate the start of your Medicare journey so you can kick back, relax, and enjoy 65 to the fullest – the way it’s meant to be!
Pieces and Parts
Okay, let’s dive right in! Medicare is comprised of four “parts” or coverage plans, Parts A-D. Each part offers various benefits, has different costs, and has specific requirements for enrollment. To understand your next steps, you need to understand all four parts to some degree. Don’t worry – you won’t need your dictionary or a pen and paper for notes! We’re just getting to know the four parts of Medicare at the surface level. Up first is Medicare Part A!
What is Medicare Part A?
Part A covers all inpatient services. This includes inpatient hospital stays, care in skilled nursing facilities, hospice care services, and limited amounts of home health care. If you have worked for a minimum of 10 years in the U.S., your Part A coverage was funded by your paid taxes while you were employed.
With Medicare Part A, You have to meet a deductible before your coverage takes over your medical expenses ($1,408 is the deductible in 2020), and you may have to foot the bill for some coinsurance costs. Your coinsurance expenses are determined by the length of your stay in a hospital or skilled nursing facility during each benefit period. For example, you won’t have to pay coinsurance costs for hospital stays that are less than 60 days in total. However, if you stay in the hospital for a total of 61-90 days, your coinsurance costs jump to $352 per day!
Even with the potential coinsurance costs, Medicare Part A will save you and your family a good bit of money on inpatient stays.
What is Medicare Part B?
Part B provides coverage for outpatient services, medical supplies, and several preventative services as well. Part B encompasses a slice of “Original Medicare” since it covers essential medical services. “Preventative services” include routine doctor’s visits and tests or scans that can detect illness or deter it. Part B also covers “medically required services” in the same vein of monitoring your body for diseases and catching them early on.
Part B is a valuable asset because it will pay 80% of costs related to preventative and medically required services, so long as you are enrolled in a Medicare insurance plan. If you’re not enrolled, you’ll have to pay a monthly premium, a deductible, and 20% of any services you receive through Part B. As of 2020, Medicare Part B has a deductible of $198 and a premium of $144.60, but keep in mind that these numbers can increase every year!
If you’re worried about these costs, check into Medicare Supplements. They can help cover most – if not all – of these additional costs.
Don’t forget to sign up for Part B when you are ready to start Medicare. In order to sign up you need to contact Social Security (weird right?). You can either give them a call 800-772-1213 or you can sign up online by clicking here.
What is Medicare Part C?
Medicare Part C refers to a Medicare Advantage plan. When it comes to Medicare Part C, you choose to opt out of original Medicare and use the services of a private insurance carrier. Plans are generally network based meaning you need you use certain doctors and hospitals that are witin the network.
Medicare Supplement plans, or Medigap plans, are the other choice when you come into Medicare. With a supplement plan you stay with original Medicare and do not have to stay within a network of doctors and hospitals. These plans are used to cover the costs left over by Medicare Part A and Medicare Part B. Coverage typically includes things like the Part A deductible and copayments, Part B coinsurance/copayments, and Part B excess charges. Medicare Supplement plans can also include things such as foreign travel emergency benefits for when you leave the country. This coverage is extremely beneficial if you plan to travel during your retirement!
An extremely important aspect of Original Medicare with a Medigap plan, is that you are not restricted to a network of doctors or hospitals! With these plans, you are able to see any provider who accepts Medicare as a form of insurance across the entire country. There are no restrictive networks tied to your zip code with Medicare Supplement plans. Medigap plans also do not require pre-authorization or referrals for services. If Medicare covers a service or procedure, your Medicare Supplement plan does as well. This leaves you in control of your healthcare!
There are 11 different options for Medicare Supplement plans (9 if you turned 65 after 01/01/2020). Each plan is differentiated by a letter- A through N- and coverage varies based on the plan. Within each plan, however, coverage is standardized across all insurance carriers. This means that a Plan G with insurance carrier A has the exact same coverage as Plan G with insurance carrier B.
Medicare Supplement plans do carry a monthly premium that you pay in addition to your Part B premium. Although this premium is higher than the premium of a Medicare Advantage plan, it limits your out-of-pocket on the back end of your Medicare coverage.
Medicare is essentially a pay now or pay later system. With a Medigap plan, you pay upfront in the form of a monthly premium, but don’t necessarily have to worry about large bills coming through after you have a doctor’s visit or hospital stay!
The other half of Medicare Part C is a Medicare Advantage plan. Medicare Advantage plans are made up of private health plans contracted with Medicare to give you coverage for things that both Part A and Part B would cover, plus some added “bonus” services. They usually limit you to a select network of hospitals and service providers based on your location.
Since it encompasses the same services as Part A and Part B plans, Part C provides coverage for inpatient hospital stays, care from a skilled nursing facility, home health, and hospice care. They will cover 80% of the cost of preventative services and services used to treat or diagnose medical conditions. Part C plans can also provide coverage for services like hearing aids, eye exams, dental exams, even prescription drugs in some cases.
Now, let’s talk about expenses. While premiums are typically low for Medicare Advantage plans, you may have higher costs when you use the services. With these plans you often have copayments, coinsurances, and deductibles to pay when you use the plan. The maximum out-of-pocket a Medicare Advantage plan can have in 2021 is $7,500. With most Medicare Advantage plans you are also still required to pay your Part B monthly premium. These plans are essentially pay later/ pay as you go plans, but the costs can add up quickly, especially if you have a year with large medical expenses!
What is Medicare Part D?
Unlike Part C that encompasses a wide range of services, Medicare Part D is focused on one thing: prescription drug coverage. You have the option to enroll in this plan on its own or make it part of your Medicare Advantage Plan.
Medicare Part D coverage has some nuances to be aware of when it comes to coverage. The coverage offered by Part D plans is determined by a formulary list with at least two drugs per category. This means that the prescription drugs you’re currently taking may not be on that list! Not to worry, there is most likely a similar drug that you can switch to in this case, or you can request an exception. To do this, your doctor will provide a statement to address the medical reason and support the exception request.
As for costs, it varies by location and the plan you choose. It’s possible to find coverage plans without a deductible, but if you select a plan with one, you must pay the full deductible amount before your plan kicks in. As of 2020, the highest limit for deductibles on any plan is $435, to give you an idea of the maximum cost.
Even though Medicare Part D is considered optional, it’s essential to those who need help covering expenses for several medications. And beware of penalty charges! If you don’t enroll in Part D when you turn 65 (or otherwise become eligible for the first time), but decide to enroll later, you will have a permanent penalty charge added to your account! As long as you have prescription drug coverage through Medicare, the permanent penalty will be added to your monthly premium costs.
You will likely have to pay coinsurance or copayment as well. Part D plans have copay tiers to categorize drugs at different levels and charge you accordingly. Tier 1 prescriptions are generic, low-cost drugs, Tier 2 drugs are preferred, Tier 3 drugs are non-preferred, and Tier 4, the most expensive, are specialty prescriptions.
How Do I Sign Up for Medicare?
Now that we know about all four of the Medicare Parts and plans, where do we go from here? How does one sign up for coverage? Honestly, it depends on you and your circumstance.
Signing Up for Medicare Parts A and B
If you already receive Social Security benefits or are a member of the Railroad Retirement Board, you are automatically enrolled in Parts A and B during the month that you turn 65. Three- four months before your 65th birthday, you will receive a welcome packet from Medicare including your red, white, and blue Medicare card. Your Medicare card will include effective dates for both Medicare Part A and Medicare Part B.
On the other hand, if you are not receiving Social Security benefits at 65 and want to transition into Medicare as your primary insurance, you will have to apply for Medicare yourself. Since you are not required to start Medicare Part B at age 65- you or a spouse may still be working- you have to submit an application to Social Security to begin these benefits. You can submit your application in a few different ways-
- The absolute easiest and fastest way to apply for Medicare Part A and Medicare Part B is electronically through the Social Security website. This way you can apply from home, track your application’s process through your portal, and not wait on hold over the phone for over an hour! The application can be completed on the Social Security website, and I have created a hyperlink that will take you right to the application- StartPartB.com
- You can also call Social Security to initiate your application on their toll-free number 1-800-772-1213. Calling to apply for Medicare benefits will take much longer than applying online, and the SSA representative may ask you to send information to your local office to confirm your identity.
- A really common way people used to apply for Medicare was making an appointment at their local Social Security office. In 2020, however, this is not a possibility, as all of the offices are working remotely. There are options to mail or fax in your application, but you will need to confirm directly with your local office before submitting your application this way. We want to make sure the application we send it makes it to the right place!
When Do I Sign Up for Additional Coverage?
First-Time Enrollment (Initial Enrollment Period)
If you’re getting Medicare for the first time, you can sign up for any Medicare Supplement plan, Medicare Advantage plan or Medicare drug plan during your Initial Enrollment Period. If you don’t receive Social Security benefits (and therefore, won’t be automatically enrolled), but you’re turning 65 soon, this is your time to sign up for Medicare coverage, too!
Your Initial Enrollment Period starts three months before your turn 65, includes the month that you turn 65 and continues through the three months following your birthday month. Essentially, you have seven months total to first enroll in Medicare coverage.
If you plan to enroll in a Medicare Supplement plan, you have 6-months from your Part B start date to enroll into a Medigap plan without your health history as a factor. You are given a 6-month long window where insurance carriers can not ask your health questions, review your prescriptions, or deny you coverage based on any pre-existing conditions. Once you are out of those 6-months though, all bets are off and you have to go through Medical Underwriting to apply for a plan, so it is important to set-up your Medigap plan as soon as possible when you have confirmation of your Part B start date.
It’s worth noting that if you don’t sign up for Medicare Part A and Part B during your seven-month Initial Enrollment Period, there’s a chance you will have to pay a late enrollment penalty for Part B and Part D coverage plans if you do not have another form of creditable health care coverage.
So, what if you miss your Initial Enrollment Period, decide later that you do want Medicare coverage after all, or want to make changes to your coverage after you’ve enrolled? Do you just miss out? Do you have to wait a long time to make changes?
Nope! Luckily, there are more windows of time to sign up or change your coverage plans. You just have to be mindful of the dates.
Special Enrollment Period
Let’s say that you sign up for Part A coverage during your Initial Enrollment Period, but you continued to work and remain covered under your employer-sponsored health plan (or your spouse’s). When can you enroll into Medicare?
If you have what Medicare considers to be “creditable coverage” past the age of 65, you will be eligible for a Special Enrollment Period when you decide to retire. A Special Enrollment Period allows you to leave an employer-sponsored health plan and enroll into Medicare Part B within 8 months of leaving that coverage. Don’t get hung up on 8 months though and try to ride it ‘til the end! When your group coverage ends, you only have 63 days to enroll into a Medicare Part D Prescription Drug Plan. That’s right, two parts of Medicare with totally different due dates! As if Medicare wasn’t confusing enough already.
To be eligible for a Special Enrollment Period (SEP), your employer will need to complete an Employer Coverage Form (L-564), which will be attach to your Medicare Part B application. This form is the document that grants the SEP, as well as waives the late Part B penalty, so it is a pretty important piece of paper!
General Enrollment Period
Let’s say that you sign up for Part A coverage during your Initial Enrollment Period, but never enrolled into Medicare Part B and aren’t coming from creditable health coverage (a retiree plan, COBRA, etc.). Often life changes a bit (as it tends to do), and you’d may want or need to add Part B coverage or other coverage plans. As long as you have Part A coverage already, you can add more coverage plans during the General Enrollment Period.
The General Enrollment Period starts January 1st and ends on March 31st every year. If you get Part B coverage for the first time during this period, then you are eligible to join additional coverage such as a Medigap plan, Medicare Part D Prescription Drug Plan, or a Medicare Advantage Plan. Even though the General Enrollment Period is early in the year, your added coverage will not start until July 1st.
If you want to add a Part D plan during the General Enrollment Period, the timeline is slightly different from Part B. You can apply for a Part D plan from April 1st– June 30th, but the Part D plan, like Part B, will not start until July 1st.
Annual Election Period (Open Enrollment)
Between October 15th and December 7th every year, you can make some changes to your Medicare enrollment. You can enroll, change, or disenroll from Medicare Advantage plans, or enroll, change, or disenroll from Medicare Part D Prescription Drug Plans. If you want to leave your Medicare Advantage plan and enroll into a Medicare Supplement plan, you will still need to apply and go through medical underwriting. If your plan provider receives your requested changes by December 7th, and you are approved through underwriting, those changes will take effect on January 1st of the following year.
You can change from one Medicare Supplement plan to another during any month of the year (with medical underwriting), so it is not necessary to wait until open-enrollment to submit an application. Honestly, it isn’t the best idea, either! Insurance carriers are slammed with applications of people on Medicare Advantage plans trying to switch to Medigap plans, and the entire underwriting process is much slower during this time period than it is throughout the rest of the year.