When you turn 65, you have some important decisions to make about your Medicare benefits. You must also make these decisions within a specific time frame. It's important to understand your choices, and the timeline by which you must make them in order to avoid penalties.
Normally, most Americans become eligible for Medicare benefits when they turn 65. The process differs, however, depending on whether you are currently receiving Social Security benefits.
First, it's important to understand your Medicare enrollment periods. When you turn 65, you have an initial enrollment period of three months before the month in which you turn 65, the month you turn, and the three months after it.
After that, the Medicare open enrollment period lasts from Oct. 15 through Dec. 7 every year. If you want to enroll in a new Medicare program - for example, in a Part C (Medicare Advantage) or Part D (prescription drug) plan - you must do so between these months, or you will have to pay a penalty in the form of a higher premium.
If you enroll in a plan during the fall open enrollment period, coverage starts Jan. 1.
If you already receive Social Security benefits
If you are already receiving Social Security benefits, you will automatically be enrolled in Medicare Part A, which provides basic hospital insurance, and Part B, which covers doctors' fees, lab fees and durable medical equipment.
You don't need to take any action or contact anyone. Three months prior to your 65th birthday, you should receive a package in the mail with a Medicare card and a letter explaining the enrollment process.
Your monthly Part B premium will be automatically deducted from your Social Security check when your coverage begins. You do not have to take Part B if you don't want it. However, if you are on a low income, you may be able to qualify for a reduced Part B premium.
Most planners don't recommend opting out of Part B unless you are covered under an employer's medical insurance plan. Otherwise, you will not be able to enroll in Part B without paying a much higher premium for late enrollment. If you do nothing, you will be automatically enrolled in Part B.
<i>Note:</i> If you are covered by an employer plan and are considering opting out of Part B, contact your employer's HR professional and opt out if your employer plan is the primary insurer. If it is not the primary insurer, you may want to go ahead and remain enrolled in Part B.
If you don't yet receive Social Security benefits
If you are not receiving Social Security benefits yet, you will need to take proactive steps in order to enroll in Medicare. To do so, contact your local Social Security office. If you are covered by an employer's plan either via your own workplace or via your spouse's, you may wish to delay applying for Medicare.
You will not be penalized if you are covered by an employer's plan. However, COBRA coverage does not count as credible coverage for this purpose. If you are only covered by a COBRA plan from a former employer, you will not want to miss the next Medicare open enrollment period.
<i>Note:</i> For most people, Medicare pays for only about half your actual Medical costs, after you account for copays and deductibles. For additional protection, you may want to enroll either in a Medicare Advantage plan or a Medigap plan, both of which provide additional coverage in exchange for a monthly premium.
If you want prescription drug coverage, you can also enroll in Medicare Part D, or elect a Medicare Advantage plan that includes such coverage.
For details, or to design a combination of Medicare and Medigap policies that works for you, contact us.