Happy 65th birthday! You’re now ready to enter the world of Medicare. It’s no walk in the park and certainly no picnic. That certainly doesn’t sound very appealing and the Medicare system is quite complex. Why? Part of the reason it’s so tough is its scattershot schedule for enrolling in or changing your coverage plans.
The year you turn 65 is the most crucial point since that’s when you have to enroll in Medicare or face stiff financial costs later. If you want to make amendments to your plan, you can only do so during relatively brief windows of time every year.
Yep, it’s that complicated. We’ll sort these schedules out for you and make it less complicated, so take notes.
Open enrollment periods apply to specific components of Medicare plans, so it’s worth reviewing exactly what those plans are. Let’s explore the ABCs of Medicare plans since they are divided into five categories.
Medicare Part A
Medicare Part A, one of the two parts referred to as “Original Medicare,” is basically hospital insurance. It covers your stays in medical facilities including general hospitals, skilled nursing facilities, nursing homes, home health care, and hospice care.
Medicare usually foots the bill for the first 60 days of your hospital stay, as long as you’re not in a private room. Part A is usually paid for by payroll tax deductions that you get while you’re working, therefore, most people in Part A don’t have to pay an additional premium for coverage.
Medicare Part B
Medicare Part B covers doctor visits and outpatient services including ambulance services, durable medical equipment, clinical research, a few prescription drugs, and inpatient or outpatient mental health services. This is the second part classified as “Original Medicare.”
Medicare Part C
Medicare Advantage, also known as Part C, is a plan sold by private insurance companies, rather than the federal government. It fills in some of the gaps that standard Medicare doesn’t include, but you still need to enroll in Parts A and B. Some of the optional coverages in Part C are vision, hearing, dental, fitness programs, transportation to the doctor’s office, and plans tailored to specific conditions. Medicare Advantage may also incorporate prescription drugs into its plans.
Medicare Part D
Medicare Part D covers prescription medications, including generic and brand-name drugs. Anything that’s not covered by the limited drug benefits in Part B is addressed in Part D.
Medicare Supplement Insurance
Medicare Supplement Insurance, aka Medigap, is sold through private providers. It pays for some of the extra costs for health care in the form of copayments, coinsurance, or deductibles. Medigap policies can also cover medical care obtained in countries outside the United States. You still need to be covered by Parts A and B if you get Medigap coverage.
That’s a very broad outline of the things covered in the various Medicare tiers. To dig deeper, you can visit the official Medicare website or speak to your insurance representative or benefits administrator.
Make sense? Feel like an expert yet? Keep taking notes because there’s more.
Initial Enrollment Period
The initial enrollment period is when you first sign up for Medicare on or around your 65th birthday. If you’re eligible, there’s a seven-month window in which you can enroll which includes the month you turn 65, plus the three months before and the three months after. During this period, you can sign up for Original Medicare, Medicare Advantage, or Part D.
It’s important that you enroll in Parts B and D within this time frame or you could face substantial penalties. If you don’t, your standard premium will increase by an extra 10% for every 12-month period you defer coverage. Part D has some additional price hikes as well.
If you already have employer-sponsored health coverage or a qualified drug plan, you don’t need to worry about the penalties. Also, if you’re already getting Social Security benefits, you’ll automatically be signed up for Original Medicare on your 65th birthday. Phew!
General Enrollment Period
The general enrollment period happens every year between January 1 and March 31. This time is important for people who deferred signing up when they were eligible to do so during the initial enrollment period.
If you sign up during general enrollment, your coverage will start the following July 1. You’ll be responsible for the penalties described above, as well as any health expenses you may have sustained while you were uninsured.
There’s a quiz after so I hope you’re paying attention.
Fall Open Enrollment Period
This period occurs every year from October 15 through December 7. The fall open enrollment period is used for Medicare enrollees who want to amend their insurance plans.
There are plenty of changes that you can make during fall open enrollment, such as switching from Original Medicare to the Advantage plan and vice versa. You can join the Part D drug program if you haven’t already and add or remove prescription coverage to or from your Advantage plan.
You can only make amendments to your plan once during fall open enrollment and the changes go into effect on New Year’s Day.
Medicare Supplement Open Enrollment Period
You can add Medigap coverage to your Part B plan during a six-month period, which starts the month you turn 65. You may be able to add Medigap after this time, but the open enrollment period usually offers more options and much better prices.
Medicare Supplement coverage is a little quirky because each U.S. state administers its own Medigap plan. Coverage specifics and consumer protections are different from state to state. Furthermore, in all but four states, seniors can be denied Medigap coverage for certain pre-existing conditions, such as heart disease and diabetes.
During the Medicare Supplement open period, you can purchase whatever Medigap policy your state offers, whatever your health status may be.
Special Enrollment Periods
You don’t always have to wait for open enrollment periods to make changes to your Medicare Advantage or Part D program. Medicare allows you to make coverage changes due to major life changes or unforeseen circumstances.
- Your insurer drops Medicare coverage
- Medical coverage through your employer is ending
- You move out of your plan area
- You move to an area with more plan options
- You’re no longer covered by Medicaid
- You’re moving back to the U.S. after living in another country
- You get out of jail
The Special Circumstances page on the Medicare website goes into more detail about what changes are eligible for the special enrollment periods.
If your head is spinning, so is mine writing this. There’s a lot of information to sift through and understand, so if you’re confused or overwhelmed, you’re not alone. The easy-to-use Medicare plan finder tool can guide you through all the coverage options that are available in your area.
Oh and now that you’re 65, make sure you do take that walk in the park and bring your picnic basket. It’s good for your health.
Here’s to the Wellness of Your Wallet!