The year before you turn 65 is a good time to review your
Medicare options
Jan
21, 2019 @ 7:00 am
I turned 64 last December. That means I am
eligible to enroll in Medicare at the end of this year. Based on the inquiries
I have received from friends and InvestmentNews readers,
the Medicare enrollment process is
filled with angst. But with a little preparation and help from online tools —
and sometimes professional advisers — this critical step in the retirement
journey can be accomplished with minimum of pain.
While the traditional retirement age of 65 is
still a key milestone for Medicare eligibility, the full retirement age for
Social Security benefits is 66 or older, depending on birth year. The
decoupling of the eligibility ages for these two essential retirement programs
— and the fact that many people continue to work beyond traditional retirement
age — complicates Medicare enrollment decisions.
The year before turning 65 is a good time to
review your Medicare options. The first question you need to ask yourself is
whether you or your spouse plan to continue working past age 65 and whether you
will be covered by an employer's group health insurance plan.
If the answer is yes, you can defer your
Medicare decision, penalty-free, until that employer coverage ends. But even
that exemption raises its own questions.
I received an email recently from a reader who
wondered how soon she had to enroll in Medicare once she retired. She assumed
it would be during the annual open enrollment period, which runs from Oct. 15
to Dec. 7 each year. While that is a logical assumption, it is wrong. Because
of her continued health-care coverage at work, she would be eligible for a
"special enrollment period" that lasts for up to eight months after
you retire or lose your insurance coverage — whichever comes first.
But if you don't have access to a group health
insurance plan, defined as a company plan for 20 or more employees, then you
must enroll in Medicare at age 65 or face lifelong late enrollment
penalties.
That's the situation that one of my friends
faced. She turns 65 in February and currently has health insurance through her
husband's small business. But because the firm has fewer than 20 employees, it
doesn't qualify as creditable coverage for Medicare purposes. That means she
must enroll in Medicare during her seven-month initial enrollment period that
began in November, three months before her birthday, and continues through May,
three months after her birthday.
I must compliment my friend on her impressive
transformation from Medicare neophyte to well-informed consumer over the past
few months.
At the beginning, she was vaguely aware of the
difference between original Medicare, which includes basic hospitalization and
medical insurance, and all-inclusive Medicare Advantage plans that offer extra
benefits in exchange for using network providers. But by the end of what she
described as "an incredibly exhausting process," she could clearly
articulate why she chose a plan G Medigap policy and how she selected the most
appropriate prescription drug plan for her health situation.
"I think the medicare.gov site is very
good," she wrote in an email to me documenting her enrollment experience.
"But there is a tremendous amount of
information when it comes to selecting the actual insurance company for drugs
and supplemental plans," my friend added. "I had to call some
insurance companies because they don't have premium estimates listed on their
website."
Another friend who also turns 65 in February,
and who spent most of her career working in health care, wrote: "My mind
is blown and overwhelmed choosing the drug plan. Monthly fees, deductibles,
copays, coinsurance, donuts, pricing tiers — I need help!" She and her
husband plan to meet with a medical insurance consultant to select their specific
drug plan and Medigap policy.
I confess, I expect to have a much easier time
when it comes to enrolling in Medicare — not because I have experience writing
about the topic, but because I will need to make fewer choices.
One of the benefits of being married to a retired
federal employee is we both have retiree health benefits for life. My husband,
Mike, enrolled in Medicare when he turned 65 and his federal health insurance
serves as his Medigap policy. But because it was my only insurance, we chose a
comprehensive plan. Once I enroll in Medicare at the end of the year, we can
scale back to a less-expensive health insurance policy designed to serve as
Medigap coverage. And as the federal health plan includes prescription drug
coverage, I won't need to choose Medicare drug plan.
Perhaps the best advice on how to tackle
Medicare enrollment came from a volunteer health counselor who posted her
comments in response to my recent Medicare cover story.
"Those soon to be Medicare-eligible will
need to take the initiative," the counselor wrote. "Allow plenty of
time to understand your options, weigh your tradeoffs and ask follow-up
questions," she suggested. "Finally, be prompt with decision.
Medicare tolerates no slack in deadlines."
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