Medicare can be quite overwhelming for people who are newly eligible. We have developed a list of some of the most important facts everyone should know about Medicare. Learning these items can save your both time and money during your Medicare journey.
- Eligibility for Medicare
Just because you aren’t taking Social Security benefits yet, doesn’t mean you aren’t eligible for Medicare. Once you turn 65, you are eligible for Medicare, even if you delay taking Social Security Benefits.
- There are 4 Main Parts of Medicare
The first two parts of Medicare that you will need to enroll in are Part A and Part B. These two parts make up your Original Medicare. Part A is what covers your hospital stays, skilled nursing facility stays, and hospice services. Think of this as your room and board in an inpatient facility.
Part B covers medically-necessary services outside of the hospital. This includes outpatient services such as doctor visits, lab testing, medical supplies, day surgeries, physical therapy and home health care among other things.
Part C is optional and is not part of Original Medicare. You don’t apply for it at the Social Security office. Part C isalso known as Medicare Advantage. This is a type of private insurance plan that you can enroll in after enrolling in Part A and Part B that will allow you to get those benefits through a private network of providers.
Part D is your drug coverage. This is also optional, as some individuals may have drug coverage from other sources like the Veterans Administration. If you don’t have other drug coverage, you will likely want a Part D plan to receive coverage for your retail prescription drugs. There are many different plan options and some Medicare Advantage plans even include a Part D drug plan.
- Medicare Isn’t Free
Many people think that they pay into all parts of Medicare, therefore it should all be free, but that isn’t true. Technically, no part of Medicare is free. Part A seems free to most because they have been paying into it their whole life. Now that they’re 65, they don’t have to pay for Part A anymore. It is considered “paid-up.”
Medicare Parts B and D both have monthly premiums that you can expect to pay in order to gain those services. Many Part C Advantage plans also have premiums although some set their premiums as low as zero because they receive payment from Medicare to deliver benefits to their members.
- People with Higher Incomes Pay More for Medicare
Medicare Part B and Part D monthly premiums are partially based on income. The premiums you pay depend on which income level you fall in. Medicare has five different levels of income, beginning with the lowest Part B premium at $134/month while the highest premium can be as much as $428.60, as of 2018. These rates can change in future years.
- There is a 7-Month Initial Enrollment Window
Everyone has an Initial Enrollment window in which Medicare expects you to enroll in Part A and Part B. Your Initial Enrollment Period starts three months before your 65th birthday month and will end three months after.
You’ll want to apply for Medicare during this window to avoid late penalties in the future unless you have other creditable health coverage.
- There are Penalties for Enrolling Late
If you retire at 65 and don’t enroll in Medicare during your Initial Enrollment window, you will be penalized unless you have other health coverage. For every month you go without enrolling in Part B and Part D after your Initial Enrollment window has passed, your penalty increases. Depending on how long you go without coverage, these penalties can double your Part D premium.
- You Can Delay Enrollment if You Have Creditable Coverage
Creditable coverage is when you have some form of coverage that allows you to delay your enrollment into Medicare. The most popular form of creditable coverage is large employer coverage.
When you work for a large employer (an employer that has 20 or more employees) you have the choice to delay enrolling in Medicare. Instead, you can wait until you lose that employer coverage to enroll in Medicare. You will be given a Special Enrollment Period later on when you can join without penalty.
- Not Everything Counts as Creditable Coverage
To delay enrollment without penalty, you must have creditable employer group health insurance from a large employer. Group health coverage from a small employer with less than 20 employees is not creditable.
Neither is COBRA. Many people think that if they have COBRA benefits, they still have creditable coverage and can delay enrolling in Medicare. Unfortunately, this is not the case.
If you are over 65 and your employer offers you COBRA when you retire, you have eight months from your last active day of employment to enroll in Medicare. If you fail to enroll within that time period, you will gain late enrollment penalties.
- The Fall Annual Enrollment Period is for Part D and MAPD Changes
Each person that has either a Part D drug plan or a Medicare Advantage plan gets a specific window each year to make changes to their plan. This window begins October 15th and end December 7th each year.
During this time, you are allowed to change your plan within your provider or change providers all together. You are also able to drop your Medicare Advantage plan and enroll in a stand-alone Part D drug plan instead.
- Medigap 6-Month Open Enrollment Period
Everyone is entitled to a 6-month Open Enrollment Period for Medigap plans. If you choose to enroll in a Medigap plan during this period, you don’t have to answer any health questions at all.
If you wait to enroll in a Medigap plan after this period, you will have to answer health questions, and could be turned away for your medical conditions.