If you are among the roughly three million Americans turning 65 this year, there are some things you need to know. Near the top of the list are important details about your Medicare enrollment and Medicare options.
Enrolling in Medicare
Even if you have other health coverage, it is nearly always best to sign up for Medicare during your Medicare initial enrollment period, which begins three months before the month you turn 65 and end three months after the month you turn 65. If you enroll during the first three months of your initial enrollment period, your Medicare coverage should begin the first day of your birthday month. If your birthday falls on the first of the month, coverage should begin on the first of the previous month.
It is easy to sign up for Medicare online in a matter of minutes.
Your initial enrollment signs you up for Original Medicare Part A and Part B, the foundation of your Medicare coverage. Medicare Part A helps cover hospital costs, while Medicare Part B helps pay the cost of covered medical expenses.
While Original Medicare has provided important health benefits to Americans 65 and over for nearly half a century, it is important to note that Medicare should not be counted on to pay all of your healthcare costs, even if you are a healthy 65-year-old. Before enrolling in the Medicare system, it is important to recognize the shortfalls in Medicare coverage.
These shortfalls include:
- The Medicare Part A deductible, currently $1,216 per benefit period (which can occur more than once per year)
- Part A copayments of hundreds of dollars per day after you spend 60 days in the hospital—until Medicare completely stops helping pay for hospital expenses after 150 days
- The Part A copayment of $152 per day after your first 20 days in a skilled nursing facility
- The 20 percent Medicare Part B coinsurance—which you will have to pay out of pocket with few exceptions
Your Medicare Options
1. Original Medicare (Medicare Part A and Part B)
Medicare Part A pays for inpatient hospital services, skilled nursing facility care after a hospital stay, home health care, and hospice care. Medicare Part B, meanwhile, helps pay for medical expenses, clinical laboratory services, and outpatient hospital treatment.
Part A is premium-free for about 99 percent of Medicare-eligible people. People who have paid the Medicare tax—or whose spouse has paid the Medicare tax—for at least 10 working years (or 40 quarters spread over any period) are not required to pay the Part A premium. The remaining roughly 1 percent currently pay a monthly premium of $426. Meanwhile, the standard Medicare Part B premium is set at $104.90 per month, though people with high incomes may pay more.
Original Medicare provides a good foundation or starting point for senior health coverage, but given the shortfalls we’ve already discussed, more and more people are finding it necessary to choose one of the following two options, both of which require continued payment of the monthly Medicare Part B premium.
2. Medicare Advantage (Medicare Part C)
Medicare Advantage plans are primarily network-based plans offered by Medicare-approved private companies. Part C plans are available to people already enrolled in Medicare Part A and Medicare Part B. Medicare Advantage plans replace Medicare Part A and Part B coverage, and typically offer additional coverage in other areas of health including dental, vision, and hearing. Most Medicare Advantage plans also include prescription drug coverage.
As long as you are enrolled in both Medicare Part A and Medicare Part B, you can sign up for Medicare Advantage during your Medicare initial enrollment period. You will also have opportunities to enroll in a Medicare Advantage plan during an Open Enrollment Period, normally from mid-October until early December of each year, or during any Special Enrollment Period you may qualify for.
The most popular Medicare Advantage plans, by far, are Health Maintenance Organization (HMO) and Preferred Provider Organization (PPO) plans.
3. Medigap (Medicare Supplement Insurance)
Unlike Medicare Advantage plans, which replace Original Medicare, Medicare supplement plans are designed specifically to fill the gaps in Original Medicare.
There are 10 Medigap plans in all, spanning the alphabet from Plan A to Plan N. Each plan supplements Medicare Part A and B with a specific level of coverage. The most comprehensive Medigap plans, Plan G and Plan F, are best designed to fill the gaps in Original Medicare and make out-of-pocket payments a rarity.
Good to know:
If you are approaching 65, the best time to enroll in a Medicare supplement plan is during your six-month Medigap open enrollment period, which begins the first day of the first month you are at least 65 and enrolled in Medicare Part B. During your one-time Medigap open enrollment period, an insurance company cannot reject your application for any of the Medicare supplement plans it sells. You cannot be turned down, or charged more, for your Medigap coverage regardless of preexisting conditions. Although you can apply for a Medicare supplement plan at any time following your Medigap open enrollment period, it is important to be aware that medical underwriting will likely apply and you may not be able to enroll in the plan of your choice.
It is also important to be aware that insurance companies are known to charge very different rates for the very same Medicare plan in the same area. Failing to compare rates for the plan of your choice can cost thousands. If age 65 is in your sights, now is the time to start preparing for your Medicare years by requesting a free consultation with a MedicareMall enrollment specialist.