What to do about healthcare in retirement is a major decision everyone will face one day. For some, that time is quickly approaching while others may choose to delay retirement past age 67 because they do not want to lose their employer sponsored health plan.
So, what do you do when you turn 65 and become eligible for Medicare? There are several things to consider:
- How you sign up: The rules that govern Medicare give most people access to the program when they turn 65. To avoid penalties you will need to sign up during your Initial Enrollment Period or IEP. This time frame is the 3 months before your 65th birthday, your birth month, and 3 months following your birth month. If you have other health care coverage then the special enrollment periods are available later to allow you access to Medicare after your existing coverage ends. How you sign up for Medicare is dependent on your particular situation. Those who are already receiving Social Security benefits prior to age 65 will typically get enrolled automatically at age 65. If you are not already receiving Social Security benefits you will need to actively enroll in Medicare Part A and B.
- Types of coverage available to you: There are 4 different parts to Medicare. Each of these parts offers protections against different types of health expenses.
Original Medicare: coverage managed by the federal government. Generally, there’s a cost for each service. Here are the general rules for how it works:
- Part A: hospital coverage, provides benefits for inpatient care and is typically offered free of charge and funded by the payroll taxes that either you or your spouse has paid into the system.
- Part B: medical coverage includes doctor’s visits, preventative medicines and outpatient services. There is a monthly premium for Part B.
- Part C, also known as Medicare Advantage plans, are alternatives to traditional Medicare. With MA plans, private insurers provide coverage similar to what the government program offers. They will typically offer supplemental coverage as well, in some cases they will even offer prescription drug coverage. Premiums differ from what you will pay under traditional Medicare, but in some cases the coverage you get will be broader and may protect against risks that traditional Medicare does not.
- Part D is your prescription drug coverage. It will pay for a portion of your medications and it will cost you a separate premium amount.
- Then there are Medicare Supplement plans (Medigap). These plans are offered by private insurance companies and help pay some of the costs or “gaps” that Original Medicare does not, like copays, coinsurance and deductibles.
- How Medicare coordinates with other health care coverage: If you are enrolled in an employer sponsored health plan it will be important for you to know how the two types of coverage would interact. The size of your employer will determine how Medicare will work for you. If you are covered by an employer group plan with fewer than 20 employees you will need to enroll in Medicare during your IEP. This is because of small employers, the group plan will stop being the primary payer of claims and will become “secondary” to Medicare. Larger employers with more than 20 employees must make their group coverage primarily responsible for cost, leaving Medicare as “secondary.”
It is easy to see that signing up for Medicare is anything but basic. From deciding which Medicare path to take to sorting through plans, there is so much information to keep straight. And if you don’t get it right, and don’t enroll in time you risk receiving a Late Enrollment Penalty that will last as long as you are enrolled in Medicare. The good news is that we are here to help. Let one of our trained experts help guide you through this process.
You owe it to yourself to take the very best care possible when it comes to your health as you get older. That means making sure to take advantage of these 3 key Medicare services that come at no cost to you.
If you have Medicare related questions give us a call and we can help you get the answers you need.
