If you are better than 65 years of age, you should be signed up for Medicare. If you are not, you need to check with a Medicare expert to confirm what’s best for your situation. Everybody needs to keep a few deadlines in mind:
Annually
- January 1 to March 31 – Medicare Advantage open enrollment period for those already using Medicare Advantage.
- Switch to a different Medicare Advantage plan.
- Drop Medicare Advantage and return to Original Medicare (and sign up for a standalone Part D drug plan).
- Drop your standalone Part D drug plan.
- October 15 to December 7 – Medicare Advantage and drug plans open enrollment period for all.
- Change drug plans or enroll in a new drug plan
- Change Medicare Advantage plans.
- Switch from Medicare Advantage to Original Medicare or vice versa
When You Turn 65. Initial signup for Medicare Parts A and B. Starting 3 months prior to your birthday.
When You Lose Coverage at Work and are 65 or Better (Special Enrollment). You can enroll in Parts A and B anytime prior to your employer coverage ending.
When You Forget to Sign Up. (General Enrollment Period.) If you miss your initial signup or the special enrollment. Each year from January 1 to March 31 you can sign up for all coverages. Insurance will begin on July 1.
Initial Enrollment for Part C (Medicare Advantage) Anytime you have the chance to sign up for Parts A and B.
Initial Enrollment for Part D (prescription drugs) Anytime you have the chance to sign up for Parts A and B. If you are covered by employer or retiree drug coverage, you are not required to apply for Part D.
Open Enrollment for Medigap Policies. Medigap is private insurance that covers part of the Medicare deductible. Enrollment starts the first month in which you are BOTH over 65 and have Part B and last for 6 months. Medigap insurance companies are REQUIRED to take you regardless of health status.
Below are a few more details you should know about Medicare.
Four Parts of Medicare
Medicare is divided into four parts. Part A covers part of the costs of hospitalizations. Part B covers part of the costs of medical services, such as doctor visits, procedures, and diagnostic tests. The bills for Parts A and B are paid by Medicare.
Parts C and D are where the private insurance comes in. Part C is an alternative way to get Medicare. You can sign up for a Medicare Advantage plan offered by a private insurer and get coverage for all the services covered under Parts A and B, plus prescription drug coverage as well, through the plan. Instead of Medicare paying for your hospital and doctor bills, it pays the insurance company offering the Medicare Advantage plan a flat payment for each enrollee. Then the plan is responsible for managing and coordinating your care.
Part D is prescription drug coverage. It is offered by private insurers who contract with Medicare. Each prescription drug plan is slightly different, which is why you'll want to shop carefully for your drug plan. Even if you don't take any prescription drugs when you first go onto Medicare, you'll want to sign up for a Part D drug plan, because if you go without drug coverage for very long you'll face a penalty when you finally do enroll.
Two Ways to Have Medicare
FIRST – Original Medicare. You sign up for Parts A and B. Then you decide if you want prescription drug coverage under Part D. Often drug coverage is described as optional, but it can be dangerous to go without drug coverage, so most experts recommend that everyone plan to have some kind of prescription drug coverage starting from the outset of Medicare.
Next, you decide if you want supplemental coverage. Again, this is often described as optional, but we think it's pretty important because Medicare leaves too many gaps.
SECOND -- Medicare Advantage. These plans are offered by a private insurance company. There are many companies offering Medicare Advantage plans, so if you go this route it will be important to shop for plans and find one that meets your needs. There are several variables to consider with an Advantage plan. Be sure to consult with a Medicare expert to help you sort through your options.
DON’T MISS THE DEADLINE
If you don’t sign up on time, you will incur a penalty that increases the longer you wait to sign up. The penalty is assessed as an increase in your premiums for the REST OF YOUR LIFE.
And, if you sign up late, you may not qualify for coverage if you are in poor health or have a pre-existing condition.
Medicare Enrollment
- Enroll when you turn 65. Unless you are covered by an employer-sponsored health insurance plan that covers 20 or more people.
- If you are receiving Social Security when you turn 65,
- you will automatically be enrolled in Parts A and B.
- If you're working and covered by an employer group plan you may not want Part B. In that case, you can decline it.
- Otherwise, you'll go ahead and accept Medicare Parts A and B and your coverage will start on the first day of the month you turn 65.
- You will need to decide about Medicare parts C and D separately.
- Part C is a Medicare Advantage plan. You need to review the plans offered by insurance companies in your state.
- Part D is drug coverage, that MAY be needed in addition to other options. It’s wise to get this when you start Medicare, even if YOU USE NO PRESCRIPTION DRUGS. That way you will be eligible to switch later if you need coverage in the future.
- What if you are not receiving Social Security when you turn 65?
- You must proactively enroll in Medicare during a Medicare enrollment period. There are three main Medicare enrollment periods.
- Special Enrollment Period. If you were covered by a plan on your 65th birthday and then you leave the company, you have a special enrollment period around your last day of coverage from work.
- For Part B, you have 8 months from the time your employer coverage ends.
- For Part D, you have 63 days from the time your employer coverage ends.
- General Enrollment Period. Every year from January 1 to March 31 is the general enrollment period.
- You must wait to sign up until January 1.
- Coverage starts July 1.
- If you have not signed up for coverage, you may find yourself responsible for 100% of all medical expenses.
- If you are receiving Social Security when you turn 65,
Where to Start
- Visit www.ssa.gov. Click on Medicare and click on the big "Apply for Medicare Benefits" button.
- Or you can call Social Security at 800-772-1213.
- The best reference for finding out what Medicare covers is the Medicare & You book. Call 800-663-4227 or go to medicare.gov.
- Medicare offers an excellent resource to evaluate ALL the Medicare plans available in the U.S.A. in the Medicare Plan Finder.
What is Medigap Insurance?
Medicare supplement insurance, commonly called Medigap policies are issued by private insurance companies and are designed to fill in the gaps that Medicare doesn't cover. Although they are not affiliated with Medicare, they do have to follow certain federal and state laws designed to protect you.
Medicare is an important part of your financial game plan in retirement. There are plenty of important details. You need to be sure you have evaluated your options carefully. If you are reading this in the greater Saint Paul, Minnesota area I recommend you speak with Jennifer Yarusso at I-Care Insurance. Jennifer is the person with whom I consult about my personal health insurance needs. She’s great. Reach her here:
Jennifer Yarusso
I-Care Insurance Life & Health
(651) 788-9370
If you would like to talk with me about Medicare and your financial goals. I would be honored to have a chat. Follow this LINK to find a time that works for you.
As a financial planner who is ALWAYS an advocate for my client – a fiduciary advisor – I LOVE talking with new families and helping them move toward their financial goals. I would be honored to help you and your family.
I have more than 20 years of experience along with extensive training through the
CERTIFIED FINANCIAL PLANNER™ professional certification program.
Yes, I am a CFP® professional. I’m always a fiduciary and I work on a fee basis. And yes, I’m still taking on a few great families to be part of my financial planning practice.
If this article has you thinking about your own circumstances, contact my office at rdunn@dunncreekadvisors.com. I am always happy to meet with people who are working on their retirement plans. Dunncreek Advisors does not provide legal or tax advice, nor is this article intended to do so.