American senior citizens who reach age 65 or people who have certain disabilities qualify for Medicare. Medicare is the federal insurance program that will provide seniors with inpatient and outpatient coverage. Unfortunately, many seniors who age into Medicare are not familiar with the many enrollment periods, the different parts, plans, and costs.
Medicare can be a challenging maze to some, and the government expects for you to have done your Medicare researchin order to enroll on time. However, it is not that simple for all. So here are five important facts about Medicare.
1. You must enroll yourself in Medicare
You will not be automatically enrolled in Medicare unless you have received Social Security benefits at least four months before your 65th birthday or you’re receiving Railroad Retirement benefits. If these two situations do not apply to you, you must enroll yourself in Medicare Part A (inpatient coverage) and Part B (outpatient coverage).
The Social Security office handles Medicare Part A and Part B enrollment, and they offer several ways to enroll in Medicare:
- Enroll in person at your local Social Security office
- Call Social Security and register over the phone
- Or enroll online at ssa.gov/benefits/medicare/
You can apply for Medicare during your Initial Enrollment Period (IEP). The IEP will begin three months before your 65th birthday month and end three months after your birthday month (seven months total). For example, if your birthday is in February, your IEP will begin on November 1st and end on May 31st.
There are no pre-existing questions or waiting periods when enrolling in Medicare. However, if you fail to enroll in Medicare during your IEP, you will be subject to late enrollment penalties. Therefore, your IEP is a crucial period that you should mark on your calendar, or you can be penalized.
2. Medicare comes with a cost
Although you have been paying into Medicare taxes all your working years, Medicare still comes with a price. However, if you have worked 40 quarters (10 years) and paid Medicare taxes, you will qualify for premium-free Part A. If you only have 30 quarters, you can purchase a pro-rated Part A, which is around $250 per month.
With that said, if you have been a legal resident or have had a green card for at least five years in the U.S., then you qualify to purchase Part A — the cost for Medicare Part A will be $400+ per month.
Medicare Part B comes with a cost regardless of your working hours. Your Medicare Part B premium is based upon your modified adjusted household gross income (MAGI). Social Security will pull your IRS tax returns from two years prior, and if you have a higher income, your premium will be higher than the standard Part B premium, which is $144.60 per month in 2020.
3. Medicare does not cover retail prescription drugs
Medicare Part A and Part B will only cover certain drugs in certain situations. For example, Part A will provide anesthesia coverage during surgery as an inpatient, and Part B will cover the flu vaccination. However, Original Medicare will not cover retail prescription drugs. Therefore, you will want to purchase a Part D plan.
Medicare Part D plans are sold through private insurers, and you can apply for one if you have Medicare Parts A and B. You can purchase a Part D plan to work alongside Original Medicare and a Medigap plan. (Most Medicare Advantage plans include Part D plans.)
Part D plans are strictly for your medication needs, and the Part D insurers will create your plan’s formulary. A formulary is a list of medicines that the plan will cover for you. With that said, when you are researching the different Part D plans, you will want to ensure that you enroll in a plan that will cover the specific medications you take.
4. Medigap Open Enrollment
Many seniors think they can enroll in a Medigap plan whenever they like. Now, that is technically correct, but your application may be denied if you don’t enroll during the Medigap Open Enrollment.
The Medigap Open Enrollment is a 6-month long period that will allow you to apply for a Medigap plan without underwriting. Therefore, a carrier cannot deny your application based on your health conditions. The 6-month-long window will begin the day your Part B becomes effective.
However, if you apply for a Medigap plan outside your 6-month Medigap Open Enrollment, the federal law does not require private insurance companies to accept your application in certain situations. What this means is that when you apply for a Medigap plan after your 6-month period ends, you will likely have to answer health questions, and a carrier can deny you based on pre-existing health conditions.
5. Annual Election Period
If you have a Medicare Advantage plan or a Part D plan, you can only change your plans during the Annual Election Period (AEP). During the AEP, you can enroll, drop, or change your Medicare Advantage and Part D plan.
For example, if you wish to dis-enroll from your Medicare Advantage plan or want to enroll in a new Part D plan, you can make these changes during the AEP, which begins on October 15th and lasts until December 7th.
There are many important facts in Medicare that seniors should know to help avoid penalties and ensure they receive the plan they want. If you need help finding the right plan for you, reach out to a licensed Medicare broker or visit medicare.gov for more information.
