Many of us are anxiously awaiting retirement. We have visions of doing whatever we want whenever we want to do it, right?
But we also know that we’ll need money to live in the manner to which we’ve become accustomed. That’s where Social Security and Medicare come in – the safety nets that provide us with a foundation of income and health insurance. It’s important to know the rules for eligibility and what exactly to expect from these government-sponsored benefit programs.
This post will cover the basics of Medicare – look for our other blog post on the basics of Social Security.
Initial Enrollment Period
Your Initial Medicare Enrollment Period begins three months prior to attaining age 65, includes the month of your birthday, and the following three months. During those seven months, you can enroll in Medicare without any penalties. If you apply early in the enrollment period, benefits can begin on the first day of your birth month.
Special Enrollment Period
If you are at least age 65 and you’re still covered by an employer plan or your spouse’s employer plan and you’re not ready to sign up for Medicare, you can delay your enrollment within eight months of the day you or your spouse stop working, even if your group health plan continues. This is called a Special Enrollment Period. Your coverage begins the month after you sign up.
General Enrollment Period
But what if you miss one of those enrollment periods? The bad news is that you’ll end up paying a higher premium that includes a late enrollment penalty . . . for the rest of your life. If you miss signing up during either your initial or special enrollment periods, you can sign up between January 1 and March 31 each year. Your coverage will begin the month after you sign up.
Benefits: Original Medicare
Part A (Hospital Insurance) helps cover inpatient care in hospitals, skilled nursing facility care, hospice care, and home health care. For many people, Part A coverage is at no cost
Part B (Medical Insurance) helps cover services from doctors and other health care providers, outpatient care, home health care, durable medical equipment, and many preventive services. The standard premium amount for Part B is $174.70, but if your modified AGI is more than $103,000 (individual) or $206,000 (married filing jointly), you will be assessed an additional premium amount.
Part D (Prescription Drug Coverage) helps cover the cost of prescription drugs including many recommended shots and vaccines. Plans that offer Part D coverage are run by private insurance companies that follow Medicare rules.
Supplemental Coverage (sometimes called Medigap). Original Medicare doesn’t pay all the costs for covered health care services and supplies, so many people purchase a Medigap policy to fill in the gaps (hence the name!). These policies follow Medicare rules, and insurance companies are required to sell only standardized plans. These plans are identified by letters A-D, F, G, and K-N (not be confused with Parts A, B, C or D). Every insurance company that offers supplemental plan G, for example, must provide the same basic benefits for the policy, though costs will differ.
To summarize: Original Medicare includes Part A + B + (optional) Part D + (optional) supplemental coverage.
Medicare Advantage
You may notice we left out Part C above, and that’s where Medicare Advantage comes in. Medicare Advantage is a Medicare-approved alternative to Original Medicare for your health and drug coverage. In many cases, you can only use doctors who are in the plan’s network and may need to obtain approval from your plan before it covers certain drugs or services. Medicare Advantage may also include extra benefits that Original Medicare doesn’t cover such as vision, hearing, and dental coverage.
How to Enroll
If you enrolled for early benefits from Social Security, you’ll automatically get Parts A and B starting the first day of the month you turn 65. Otherwise you’ll need to enroll in Medicare. To sign up for Part A and/or B, contact Social Security at 800.772.1213.
For More Information
It’s really important to consider your options with Medicare and to start thinking about it well before your 65th birthday. You don’t want to miss your enrollment deadlines, and you want to be sure that you sign up for a plan that’s right for you. Each year, you have the opportunity to review your Medicare health and drug coverage to be sure it still meets your needs and determine if changes are needed. The annual open enrollment period this year is October 15 to December 7, 2024.
This has been a high-level overview of a very detailed subject. For more information, refer to the publication Medicare and You, available at medicare.gov and by clicking here.