When you’re enrolling for
the first time, you may have no idea what to expect. Here’s what Medicare
newbies need to know
If you’re like many
working Americans, you’ve been picking an employer health insurance plan for a
long time. And while sorting out workplace coverage is not nothing,
the process isn’t particularly daunting either. So when the time comes to sign
up for Medicare, you may figure that enrolling will be no big deal.
Just wait.
Medicare may not be rocket science, but
it is complicated stuff for the estimated 10,000 people who sign up every day.
The Medicare Rights Center reports that
confusion about enrollment is the second most common reason people call them
for help (coverage denials is No. 1).
“A lot of people are
taken aback by the extent to which you need to become your own health insurance
expert when you enroll,” says Philip Moeller, author of Get What’s Yours for Medicare.
In a recent survey of adults 50 and older by the
Nationwide Retirement Institute, 72% of respondents said they wished they
better understood Medicare coverage. If you’re in that camp, start by educating
yourself on what’s most likely to take you by surprise.
1. You can’t just
sign up any time
Just like with most
employer health plans, Medicare has a fall open enrollment period, which runs
from October 15 to December 7. But when you’re signing up for the first time,
this isn’t when you do it.
Rather, as a new
Medicare recipient you have your very own Initial Enrollment Period,
which is the seven-month window around your 65th birthday (three months before,
your birthday month, and three months afterwards).
If you’re already
collecting Social Security when you turn 65, you’ll likely be automatically
enrolled in Medicare. If you aren’t, you need to make it happen.
What’s more, says
Moeller, “if you’re late signing up you could face lifetime penalties.” Your premiums
for Medicare Part B (the medical insurance part of Medicare) could be 10%
higher for every 12 months you delay.
Plus, the lag time
between enrolling and getting covered varies depending on when you sign up. If
it’s in the months following your birthday, you might have to wait as long as
three months.
If you’re still
getting insurance through your employer when you turn 65, you may not have to
enroll in Medicare just yet. Instead, when your workplace coverage ends, you’ll
qualify for an eight-month Special Enrollment Period,
when you can sign up without penalty.
But it’s crucial to
check with your benefits department to see if you can, in fact, stay on that
plan and how your workplace benefits coordinate with Medicare.
2. There’s no one
type of Medicare
At work, you may have
the choice of a few different types of plans (PPO, POS, HMO), deductibles, and
insurers. But with Medicare, the number of decisions you need to make can seem
even more daunting.
First you must decide
whether you want Original Medicare, which
includes Part A (hospital insurance) and Part B (medical insurance), or if you
prefer Medicare
Advantage (Part C), privately managed group health insurance that is
similar to workplace plans.
“Be prepared to spend a lot of time
researching your options and getting all the information you need.”
Fred Riccardi
Medicare Rights Center
With Original
Medicare, you’ll likely also want Part D (drug coverage) and
a Medigap policy, and
settling on those plans may involve sorting through dozens of options.
Medicare Advantage
wraps all of that into one policy, making it more convenient, but your choice
of medical providers can be quite limited. (For more on all of these plans,
check out our Guide to Medicare.)
What’s best for you
depends largely on your health needs, as well as your personal preferences. So
it’s important that you spend time—and it will take time—to explore your
choices and estimate your potential out-of-pocket costs.
“Don’t just consider the
cost of your premiums,” says Fred Riccardi, vice president of client services
for the Medicare Rights Center, a nonprofit consumer
service organization. Also factor in deductibles, co-pays, and out-of-pocket
maximums.
“Be prepared to spend
a lot of time researching your options and getting all the information you
need,” says Riccardi. (See No. 5 below for more on how you can do that.)
3. Your initial
choices can have lasting consequences
Once you’re on
Medicare, you can change your plans during the Open Enrollment period
every fall.
You can sign up for a
different plan with no adverse consequences, with one notable exception:
Switching from Medicare Advantage to Original Medicare can be problematic if
you also want to buy a Medigap policy, as many people do.
Here’s why: Under
federal law, insurers cannot deny you Medigap insurance when you initially
enroll in Medicare, and they must renew your coverage each year as long as you
continue to pay your premiums.
But if you try to buy
a Medigap policy later, insurers in many states are allowed turn you down based
on your health, or they can charge higher prices due to a pre-existing
condition.
“It’s important to be
aware of this from the start if you’re considering a Medicare Advantage plan,”
says Riccardi.
4. It’s not as
cheap as you may think
Medicare is a
government program, and you’ve likely been paying into it for most of your
working life. So Medicare’s steep costs may blindside you. In fact, in the
Nationwide Retirement Institute survey more than half of respondents weren’t
aware that Original Medicare isn’t free.
In 2018, most
Americans pay $134 a month for Medicare Part B, but if your annual income is
higher than $85,000 (or $170,00 if you and your spouse file jointly), you’ll
pay from $187.50 to $428.60 a month.
You’ve likely been paying in for most
of your working life. So Medicare’s steep costs may blindside you.
Premiums are based on
your income from two years earlier. If you’re no longer working or your
earnings picture has significantly changed, you can file an appeal to try to
lower your premiums.
In addition to
Medicare Part B and some Medicare Advantage policies, you’ll also pay for a
Part D drug plan and a Medigap policy. What’s more, you’ll be responsible for
your co-pays and deductibles, which can vary enormously from one policy to the
next.
5. The free help
isn’t half bad
Now for some good
news: There are a lot of great free resources and willing experts who are
available to answer your questions and steer you in the right direction.
To educate yourself
about Medicare, start at the official Medicare site, medicare.gov.
There you’ll find the agency’s Plan Finder tool, which lets you compare the
costs of plans in your area. (You can get the same information by calling
800-633-4227.)
You can get
personalized counseling through the State Health Insurance Assistance Program
(SHIP). To find your state’s program, go to shiptacenter.org or
call 877-839-2675.
Our Guide to Medicare answers the most common
questions enrollees ask. And the Medicare Rights Center has an interactive tool that walks you through
easy-to-use information about enrollment and plan options.
https://considerable.com/medicare-enrollment-first-time/
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