Welcome to Turning 65: Your Guide to Medicare. This post should help you completely understand how Medicare can work for you as you turn 65. You’ll learn what it covers and how to make informed decisions when choosing a health insurance plan,
Let’s start with Medicare basics. Medicare has four basic parts that together help with health care costs. Part A is hospital insurance. It helps pay for in-patient hospital stays. It also covers skilled nursing care, home health care, and hospice care. Part B is medical insurance. It helps pay for doctor’s services and many other services and supplies. Parts A and B are known as Original Medicare. Part C, also known as Medicare Advantage plans, offers medical and prescription drug coverage as an alternative to the original Medicare program. Then there is Medigap insurance which supplements original Medicare. Lastly, Part D is a prescription drug plan. It helps pay for your prescription medication.
Eligibility and Enrollment
Let’s talk about enrolling in Medicare Part A. You might even call it the best part since it’s free to most people. You simply need to meet a few requirements and you’re in. Here’s what we mean. First up, if you or your spouse have paid in Social Security for at least ten years, Part A is free to you. Your Part A coverage begins the first day of the month you turn 65. you should receive an enrollment packet about three months before your 65th birthday. The packet will contain your Medicare card as well as additional information about your benefits. If you don’t automatically receive an enrollment notice, call Social Security and request the Medicare enrollment packet. Second, if you’re a citizen or a permanent resident of the United States and aged 65 or more, you can still enroll in Medicare Part A even if you’re full Social Security retirement age is not 65. Third, if you receive Social Security or a Railroad Retiree benefit, you will automatically be signed up for Medicare Part A. Remember, by working past age 65, you still receive Part A and have employee coverage as second insurance if you’re enrolled in a group plan.
That’s all for Part A.
Now the next big question is ‘When should you enroll in Medicare Part B?” Consider your options carefully. Part B is optional Medical insurance that helps pay for doctors’ services and many other medical services and supplies. You pay a monthly premium for Part B coverage. You have several opportunities to enroll for Part B. You start with an initial enrollment period. This seven-month window begins three months before your 65th birthday month, continues through the month of your 65th birthday, and ends three months following your 65th birthday month. If you miss your initial enrollment period, you can still enroll during the regular enrollment period from January 1st through March 31st, however, a late enrollment fee may apply.
If you continue to work after you turn 65 and receive employer health coverage, you may delay enrolling in Part B until you retire. In that case, an eight-month special enrollment period is available. The enrollment period begins on the date employer or a union coverage ends. If you’re already receiving Social Security or Railroad Retiree benefits, you will automatically be signed up for Part B medical insurance.
Your Part B coverage will begin the first day of the month of your 65th birthday. If you decide not to enroll in Part B coverage, follow the instructions in your Medicare enrollment packet. If you did not receive the packet, you may contact the Social Security Administration. Keep in mind that you may face a late enrollment penalty of 10% for every year that you wait to enroll in Part B once your group coverage ends. For example, you have no employer group coverage and you fail to sign up for Part B during your initial enrollment period.
Filling the Gaps
Medicare Parts A and B or Original Medicare help cover many of your health expenses, but it was never designed to pay all your healthcare costs. Most people supplement Original Medicare with secondary insurance. These secondary health insurance policies are referred to as Supplemental Insurance Plans or Medigap Policies. They’re sold through private insurance companies and they’ll protect you against uncovered, unexpected medical expenses, costs that could drain your retirement funds.
Medicare Supplement Insurance plans are standardized, and identified by the letters A through N. Standardized means that all carrier’s plans are exactly the same. The only difference is price, reputation, and customer service. Each policy covers only one person and gives you the freedom to choose your own doctors, specialists, and hospitals. Medicare Supplement Insurance plans do not include prescription drug coverage. The best time to buy a Medicare Supplement Insurance plan is when you first become eligible. That guarantees you the right to buy a policy without regard to pre-existing conditions. You may enroll in a Medicare Supplement Insurance plan up to one year before your 65th birthday. Your coverage begins the same day that your Medicare Part B starts.
Remember, Original Medicare may only pay 80% for approved expenses. You’re expected to pick up the remaining 20%. That adds up quickly, unless you protect yourself. As good as Original Medicare is, it doesn’t cover everything including most prescription medications. With drug costs continuing to rise, Medicare Part D will help you pay for your prescription medications. To be eligible for Part D benefits, you must be entitled to Medicare Part A or enrolled in Medicare Part B. You also have to reside in your Part D carrier’s services area and enroll during an available enrollment period. One of those enrollment periods is the initial enrollment period, when you turn 65 or when you first become eligible for Medicare. If you do not enroll during this enrollment period when you’re first eligible, you may incur a late enrollment penalty.
Here are some things to keep in mind. If you have prescription drug coverage that is equal to or as good as the Medicare design plan known as creditable coverage, you may not need to enroll in a Medicare Part D plan. If you do not have creditable coverage and you do not enroll in a Medicare Part D plan when you’re first eligible, you may have late enrollment penalty added to your premium when you do choose to enroll. 1% penalty for each month you delay enrollment.
Keep in mind, without a Medicare Supplement you could be responsible for tens of thousands of dollars in uncovered Medicare costs. Medigap Insurance Policies protect you against that expense. It’s extremely wise to get the security that comes with knowing you will be protected yourself and your family.