During working years, most individuals have little choice in their health insurance coverage. Employees and their family members typically enroll in the health insurance plan offered by their employer and don’t ‘shop’ for a personal policy unless self-employed. However, once you turn 65 and are no longer working, typically you have choices to make about Medicare!
Initial Enrollment Period
Each individual has their own initial enrollment period, which begins 3 months prior to your 65th birthday and ends 3 months following your 65th birthday. If you want your coverage to start the first day of your birth month, you will want to enroll within the 3 months leading up to your birthday. If you are 65, still working, and enrolled in a group policy that covers 20 or more employees, you are eligible for an extended special enrollment period where you can enroll in Medicare after your 65th birthday. To avoid late enrollment penalties, you will need to enroll within 7 months of your group coverage ending. If you miss both of these enrollment periods you are eligible to enroll in Medicare during the general enrollment period January 1 – March 31, annually. However, late enrollment penalties may apply for each year you delay signing up.
Before You Enroll
Before enrolling, you may ask yourself, what does Medicare cover and what are my options? Original Medicare includes Part A and Part B. Part A covers hospitalization expenses and Part B covers doctor visits. If you or your spouse has paid into Medicare for over ten years, you will not owe a premium for Part A but will still be responsible for an annual deductible. With Part B, individuals are responsible for a monthly premium based on household income as well as an annual deductible and coinsurance. Because there are various out of pocket expenses associated with Part A and Part B, individuals have the option to obtain a standardized supplemental Medigap insurance policy to cover expenses original Medicare may not cover. If you enroll in a Medigap policy during your initial enrollment period, you will not be subject to medical underwriting and cannot be denied. Lastly, there is an option to enroll in a Part D drug plan through private insurers. Depending on your current prescriptions, you’ll want to shop around as plans vary in monthly premium amount, deductible, and coinsurance. If you have creditable retiree coverage through your employer, this may replace the need for a Part D and/or supplemental policy.
As an alternative to original Medicare, individuals have the option of enrolling in a Medicare Advantage (Part C) plan through a private insurer more like an HMO or PPO. Medicare Advantage Plans cover all care that Part A and B cover and sometimes include drug coverage. If you join a Medicare Advantage plan, you do not need a supplemental policy but are still required to enroll in Part A and Part B, as well as pay Part B premiums along with any premiums due for your Medicare Advantage plan. If you enroll in a Medicare Advantage plan and later decide to switch over to original Medicare, you may do so, but you will be required to pass health underwriting.
There are many factors to consider before enrolling in Medicare. Are you healthy or do you require a high level of healthcare? What prescription drugs are you currently taking? Do you travel a lot or live in multiple places throughout the year? Be sure to talk with your Financial Advisor and/or Medicare Specialist prior to enrolling to discuss which options may best fit your current health care needs.