Each day approximately 10,000 Americans reach the age of 65. While this is cause for celebration, some Americans are finding that the challenges of signing up for Medicare are taking some of the life out of the party. Many are finding that Medicare can be more costly than their current health plan and that there are specific Medicare deadlines that if missed will affect them financially for the rest of their lives. Below, we’ve answered a few of the most frequently asked questions. We have an additional article on Income-Related Monthly Adjustment Amounts (IRMAAs). If you have additional questions, feel free to give us a call.
Three months before your 65th birthday, reach out to your Human Resources department and talk to them about the coordination of your current health insurance policy and Medicare. Ask if the coverage you currently have is considered “credible coverage.” The coordination of benefits is determined by the number of employees participating in your employer’s health care plan.
If you are over age 65 and retire, you have eight months to sign up for Medicare. If you do not sign up during that time, you will pay a penalty for the rest of your life! COBRA is not considered “credible coverage” and therefore does not extend the amount of time you have to sign up for Medicare once you retire.
If you are receiving payments from Social Security for retirement or disability when you turn 65, you will be automatically enrolled in Medicare Part A and Part B. If you do not want to start Medicare (see above questions on the subject of deferring) you need to call the Social Security office three months before your birthday and tell them you want to decline Part B. Please document the time and date of the call and the person you spoke to. You cannot decline Part A without stopping your social security benefits and paying back the benefits you have received.
If you are not receiving payments from Social Security at age 65, you must sign up for Medicare or you must call Social Security and decline coverage.
You should only decline Medicare Part A and B if you have “credible coverage” through either your or your spouse’s employer.
If you’ve reach this section and we haven’t answered your questions or you are confused as to what to do next, please give us a call. We are happy to walk you through the process and if necessary we can meet with you and our Medicare expert to help steer you in the right direction.
Medicare Part A (Hospital Insurance)
Part A covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care.
Medicare Part B (Medical Insurance)
Part B covers certain doctors’ services, outpatient care, medical supplies, and preventive services.
Medicare Part C (Medicare Advantage Plans)
A type of Medicare health plan offered by a private company that contracts with Medicare to provide you with all your Part A and Part B benefits. Medicare Advantage Plans include Health Maintenance Organizations, Preferred Provider Organizations, Private Fee-for-Service Plans, Special Needs Plans, and Medicare Medical Savings Account Plans. If you’re enrolled in a Medicare Advantage Plan, most Medicare services are covered through the plan and aren’t paid for under Original Medicare. Most Medicare Advantage Plans offer prescription drug coverage.
Medicare Part D (prescription drug coverage)
Part D adds prescription drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private-Fee-for-Service Plans, and Medicare Medical Savings Account Plans. These plans are offered by insurance companies and other private companies approved by Medicare. Medicare Advantage Plans may also offer prescription drug coverage that follows the same rules as Medicare Prescription Drug Plans.
Medicare Supplement Insurance (Medigap)
A Medicare Supplement Insurance (Medigap) policy, sold by private companies, can help pay some of the health care costs that Original Medicare doesn’t cover, like copayments, coinsurance, and deductibles.
Some Medigap policies also offer coverage for services that Original Medicare doesn’t cover, like medical care when you travel outside the U.S. If you have Original Medicare and you buy a Medigap policy, Medicare will pay its share of the Medicare-approved amount for covered health care costs. Then your Medigap policy pays its share.
A Medigap policy is different from a Medicare Advantage Plan. Those plans are ways to get Medicare benefits, while a Medigap policy only supplements your Original Medicare benefits.
This information is believed to be accurate but should not be used as specific investment or tax advice. You should always consult your tax professional or other advisors before acting on the ideas presented here.