America’s senior citizens who are aged 65+ or have specific disabilities can obtain Medicare. Medicare is the United States national health insurance program that provides its seniors with the healthcare they need. There are many different parts, plans, and enrollment periods for Medicare, and it can turn into a confusing maze for some. So here is how you can start getting ready for Medicare.
Original Medicare has two parts: Part A and Part B. These two parts will be available to any American who qualifies.
Part A is your hospital insurance that will cover its share of your inpatient and skilled nursing facility (SNF) stays. You can think of Part A as your room and board in the hospital, meaning it will pay for your meals in the hospital and a semi-private room. With that said, Part A will not cover actual treatments, such as x-rays or surgeries – Part B will cover those services.
Medicare Part B is your outpatient coverage that covers things such as doctor’s visits, durable medical equipment, some vaccines, lab testing, emergency ambulance rides, and more. Without Part B, you would pay 100% for all services mentioned above.
However, Part B only covers 80% for Medicare-approved services. Therefore, leaving you responsible for 20% of the remaining bill. The 20% coinsurance you will pay can be pricey if you receive a service, such as kidney dialysis; This is why many beneficiaries enroll in a Medigap plan (which we will soon discuss).
Enrolling in Original Medicare
If you are receiving Social Security benefits for at least four months before your 65th birthday or taking Railroad Retirement Board benefits, you will be automatically enrolled in Original Medicare. If you are not taking these benefits, you must register yourself in Medicare through Social Security. There are several ways you can apply for Medicare:
- You can apply for Medicare on Social Security’s website: https://www.ssa.gov/benefits/medicare/
- Contact Social Security over the phone at 1-800-772-1213 (TTY users can call 1-800-325-0778)
- Or you can visit your local Social Security office and apply in person.
When you are aging into Medicare, you have an Initial Enrollment Period (IEP) to enroll in Medicare. Your IEP will begin three months before your 65th birthday and end three months after your birthday month (seven months total). For example, if your birthday is in March, your IEP will begin on December 1st and end on June 30th.
A Medicare Supplement, also known as a Medigap plan, is a type of health insurance private insurance companies sell. Since Medicare has gaps, such as copayments, coinsurance, and deductibles, Medigap plans are designed to help cover such things.
Medigap plans work alongside Original Medicare. When you receive a Medicare-approved service, Medicare will pay first, and then your Medigap plan will cover the rest. For example, since Part B only covers 80% of your outpatient services, Medigap plans will cover the remaining 20% you are initially responsible for.
Medigap Open Enrollment
Beneficiaries are given a 6-month Medigap Open Enrollment window to apply for a Medigap plan without answering health questions. Therefore, a carrier cannot deny your application based on any health conditions you may have. The 6-month window begins on the day your Part B becomes effective.
Since the Medigap Open Enrollment only lasts six months, if you apply after the six months has ended, you may be subject to health questions when applying for a Medigap plan. A carrier can deny your application based on pre-existing health conditions. Therefore, meaning, you may never qualify for a Medigap plan if you cannot pass underwriting.
Medicare Advantage and Part D
Medicare Advantage plans are another alternative to Original Medicare and a Medigap plan. Private insurance companies sell Medicare Advantage plans, and you will opt to receive your Part A, B, and D benefits through the carrier instead of Medicare. So instead of Medicare paying for your services, your Advantage plan will pay instead.
Medicare Advantage plans typically have an HMO or PPO network of doctors you will receive your healthcare services from. You must live in your plan’s service area and only receive healthcare from certain doctors that accept your plan in your network. Each Medicare Advantage plan will set its cost-sharing expenses. For example, some plans may charge a daily hospital copay, and other plans might charge a flat fee.
Original Medicare does not cover retail prescription medications. Therefore, you must purchase a Part D plan when enrolling in Original Medicare or when you have a Medigap plan. Most Medicare Advantage plans have Part D plans built-in, so you will already have a Part D plan when you enroll in a Medicare Advantage plan.
Private insurance companies sell part D plans, and each plan comes with a set formulary. Therefore, when you apply for a Part D plan, you must check the formulary to ensure your plan will cover all your prescription drugs.
Medicare Advantage and Part D enrollment
Your Initial Enrollment Period (IEP) is your chance to enroll in a Medicare Advantage plan and Part D plan. If you purchase a Medigap plan, you can buy a standalone Part D plan to go alongside it through a private insurer. Suppose you are going the Medicare Advantage route; In that case, you will apply for Original Medicare through the Social Security office and purchase your Advantage plan from a private insurer during your IEP.
If you fail to enroll in a Medicare Advantage plan or Part D plan during your IEP, you must wait until the Annual Election Period (AEP) to register. The AEP begins on October 15th and ends on December 7th. Keep in mind, though, even though Part D plans are “voluntary”, you will have a late enrollment penalty if you fail to enroll during your IEP.
The different parts, plans, and enrollment periods can be a maze to learn when you are new to the Medicare world. There are many options to choose from that all have different price tags on them. If you do not know which route to take, contact a trusted Medicare broker for help, and for more information.
Danielle Roberts is a Medicare expert and the co-founder of Boomer Benefits, a licensed insurance agency that helps baby boomers navigate their entry into Medicare in 48 states. She is the author of the best-selling book 10 Costly Medicare Mistakes You Can’t Afford to Make, which helps beneficiaries avoid critical but all too common Medicare pitfalls.