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Once signed into law in 1965, Medicare quickly became the coverage of choice for many seniors, both working and retired. Regardless of your employment situation, it is important to sign up on time for Medicare when you become eligible to avoid penalties and to take advantage of great benefits.
Most people become eligible for Original Medicare by “ageing in” when turning 65, if they or their spouse have legally worked for at least 40 quarters (ten years) and have paid their Medicare taxes. Once enrolled in Original Medicare, you do not need to reapply each year.
Some people become eligible for Medicare due to a disability, if they are receiving Social Security Disability Insurance (SSDI) and have been for at least 24 months. Some specific illnesses also qualify, such as end-stage renal disease and Lou Gehrig’s disease.
If you are not sure of your Medicare eligibility, call one us and one of our licensed Medicare Agents will be happy to help.
Got Employer Coverage?
It’s important to consider your options early, especially if you are still working or have access to coverage through a spouse’s employer. Whether you will continue working, have already begun enjoying retirement, or have access to coverage through your spouse, it’s important to compare your options. My Medicare Partners can determine which option will provide you with the most convenience and the lowest costs. We’re here to help compare your options, even if you don’t enroll with us.
When you become eligible for Medicare, you are able to sign up during the 3 months before your 65th birthday, the month of your 65th birthday, and the 3 months immediately following your 65th birthday month. This time-frame is known as the Initial Enrollment Period (IEP). The IEP applies, whether you qualify for $0 premium Part A or if you have to pay for Part A premiums.
The seven-month-long IEP applies to Medicare Part A (hospitalization), Part B (medical care), and Part D (drug coverage). It also applied to Medicare Part C, also known as Medicare Advantage plans, which are one option to enhance Medicare coverage. Before deciding on a Medicare plan enhancement, be sure to analyze your healthcare costs, needs, and goals first. Picking the right plan could save you thousands!
While the IEP for Original Medicare lasts for seven months, it’s suggested to enroll before the month in which you turn 65 in order to take advantage of your benefits right away!
You’ll also want to keep in mind Medicare Supplement Guaranteed Acceptance period. During the 13 month Medicare Supplement Guaranteed Acceptance period, you can apply for a Medicare Supplement plan without having to go through medical underwriting. This is also called Guaranteed Issue. In other words, during this time, you cannot be denied acceptance in a MediGap plan based on your health conditions or prescribed medications.
The Medicare Supplement Guaranteed Acceptance period begins six months before the month you turn 65 (or become eligible for Medicare due to disability), includes the month of your 65th birthday, and continues for the six months following you 65th birthday. The sooner you enroll during your Guaranteed Acceptance period, the sooner you can begin taking advantage of great coverage!
Outside of a person’s Medicare Supplement General Acceptance Period, they may have to undergo medical underwriting. During this process, your Medicare Agent will ask you brief questions about any current medical conditions you have, recent hospitalizations, and your current medications. Medical underwriting questions and plan acceptance varies by state and insurance carrier. It’s best to get a licensed Agent’s assistance to find out which plans you may qualify for.
If you are already receiving your Social Security benefits, you will automatically be enrolled in Part A and Part B on the 1st day of the month in which you turn 65. This also applies if you are under age 65 but have been receiving certain disability benefits for 24 months. For example, if your birthday is July 5 and you are already receiving Social Security benefits, you will automatically be enrolled in Original Medicare and your coverage will begin on July 1.
If your birth date falls on the first of a month, your coverage begins the month prior. For example, if your birth date is July 1, your Medicare begins on June 1.
If you are automatically enrolled, your Original Medicare card will be sent in the mail 3 months prior to your effective date. Your Part B premiums will begin being deducted from your Social Security check the month your plan goes into effect. In this case, all you have to do is choose a Prescription Drug Plan and a supplemental insurance plan such as a Medicare Supplement plan. We’re here to help walk you thought this process!
If you are not collecting Social Security benefits, it’s extremely important you manually enroll in Medicare. Delaying your enrollment can result in penalties and delays to accessing your care! You may enroll by contacting the Social Security Administration if you are close to age 65 but are not receiving Social Security benefits (or Railroad Retirement Board, or Disability). You may contact Social Security up to 3 months before the month your 65th birthday to enroll in Part A and Part B, also known as Original Medicare.
If you self enroll, your Medicare card will be mailed several weeks after you enroll through the Social Security Administration. Your Part B premiums will be paid by you, quarterly, until you begin taking your Social Security benefits. The Part B premium invoice will be sent to you directly from and paid to the Social Security Administration.
If you miss your Initial Enrollment Period and do not enroll in Medicare Part A and Part B within the three months following your 65th birthday, you will likely have to wait to enroll in Original Medicare until the General Enrollment Period. Read more below.
Other Enrollment Opportunities
If you do not enroll in Original Medicare when first eligible and you do not have other creditable coverage, you may face penalties. It is important to end the compounding of these fees sooner than later, so don’t delay — enroll during your next opportunity. There are several important dates and deadlines to pay attention to.
Annual Election Period (Open Enrollment): applies to Part D and Medicare Advantage
Medicare Part D (prescription drug coverage) and Medicare Advantage plans (one of two options to enhancing your Medicare coverage) host an open enrollment period from October 15 through December 7 of each year, Formally known as the Annual Election Period, during this time you may add, drop, or change your Part D or Medicare Advantage plan. New plan selections become effective on January 1 of the following year.
General Enrollment Period: applies to Medicare Part A and B
If you miss your Initial Election Period, you may sign up for Part A and/or Part B (which make up Original Medicare) during the General Enrollment Period (GEP). The GEP takes place each year from January 1 through March 31. Coverage will begin on July 1 for people who enroll during the General Enrollment Period.
Unfortunately, during the time when a person is waiting to enroll during the GEP and waiting for their plan to become effective, they may have penalties for not having Medicare coverage.
Special Enrollment Periods: applies to a variety of situations and life events
Other special enrollment periods may apply for people with specific circumstances who would like to enroll in Part C or Part D as well as Original Medicare. Enrollment must be completed within 63 days of losing coverage for Parts C and D, and within 8 months of losing coverage for Parts A & B.
Special enrollment periods may apply to people who:
- Lose coverage through their/their spouse’s employer, union, or Veteran’s Administration plan
- Move out of their plan’s area
- Move into an area where they have new coverage options
- Receive Extra Help with their Part D prescription costs
- Have both Medicare and Medicaid
- And more
Late Enrollment Penalties
All Americans are required to have creditable health insurance coverage, and Medicare beneficiaries are not exempt. If you have creditable coverage, such as a group plan through your/your spouse’s employer or union benefits, you may be exempt from the penalties. It’s important to note that COBRA and Veterans Affairs (VA) Benefits are NOT considered creditable coverage for some parts of Medicare. Unless you are certain you have what is considered creditable coverage under Medicare law, it is important your enroll in Medicare during your Initial Enrollment Period so you do not pay penalties later.
If you have creditable coverage and lose it, you may qualify for a Special Enrollment Period (SEP). If you qualify for an SEP, you do have a limited amount of time during which you can enroll in Medicare. If you miss your SEP deadline, you will be subject to the penalties outlined below. We can help determine if you qualify for an SEP, if your current coverage meets the requirements, and ensure you enroll before your deadline!
The Part A penalty is 10% of the current Part A premium (in 2016, Part A can cost up to $411 per month). You will have to pay this penalty for twice the number of years you were eligible for Part A but did not enroll. For example, if you were eligible for Part A for three years and did not enroll, once you do enroll, your penalty of $41 will be tacked on to your Part A premium, and will be paid for six years!
The Part B penalty will last the entire time you’re enrolled in Part B, unlike the Part A penalty. The Part B penalty is 10% per twelve-month period that you do not enroll in Part B but were entitled to it. For example, if you delay your Part B enrollment 28 months after you were eligible, you will pay a 20% penalty every month you are enrolled in Part B (two twelve-month periods take place in a 28 month span) in addition to your regular Part B premium.
Medicare Part D Penalty
In addition to Part A and Part B being required, prescription drug coverage is also required by law – whether or not you are currently taking any medications. Coverage can be obtained by enrolling in a stand-alone Prescription Drug Plan (also known as Medicare Part D), or by enrolling in a Part C plan with prescription drug coverage (also known as Medicare Advantage with Prescription Drug Plans, or MAPD).
The penalty for not having Part D coverage is 1% per month, for every month that you were eligible for Part D coverage but did not have it. The penalty is added to the premium of the Part D plan you select and is paid for as long as you are enrolled in a Part D plan. The Centers for Medicare and Medicaid Services calculate the 1% penalty based on the national average Part D premium (in 2017, the average Part D premium was $35.63/month). If you are subject to the penalty, your fee will be calculated as 1% of $35.63, or $0.35 (35 cents), multiplied by the number of months you were late enrolling in a Part D drug plan. This total is then rounded to the nearest ten cent increment. The penalty is added to the Part D premium each month.
For example, Mr. Rogers was eligible for Medicare Part D in July 2014, however, he did not sign up for a Part D drug plan until July 2016. The plan he selects has a premium of $36.70 per month, but he still needs to calculate his penalty for not enrolling in Part D when he was supposed to. Since Mr. Rogers was 24 months late enrolling in Part D, his raw penalty would be $8.55, then rounded to the nearest ten cent increment, or $8.90. Per month, his penalty of $8.90 would be added to his regular Part D premium of $36.70. Mr. Roger will pay $45.25 for his Part D premium each month he is enrolled in a plan.
Of course, the drug plan’s premium may change from year to year. Each year, it’s important to evaluate your Prescription Drug Coverage. When coverage changes, so do out of pocket expenses — and it’s important to keep these costs to you as low as possible! Take advantage of My Medicare Partners’ free Annual Rx Checkup and we’ll make sure you’re saving the maximum amount on your prescription drugs.
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