Medicare eligibility opens a whole new world of healthcare options. Whether you are turning 65 or leaving employer coverage, there are some important things to know before you enroll in Medicare. Here are five things you need to know before enrolling.
1. How To Enroll In Medicare Part A and B
For most people, Medicare eligibility begins on the first day of the month of your 65th birthday. If you are born on the 1st, your Medicare coverage will begin on the first of the month preceding your 65th birthday. If you are leaving employer coverage and already enrolled in Part A, you can have your Part B effective date match the date your employer coverage ends.
The method you use to enroll in the Medicare program depends on a couple of factors:
If you are already receiving Social Security withdrawals, you will automatically be enrolled in Medicare on your eligibility date. About 8-10 weeks before the effective date, you should receive your Medicare coverage card in the mail. Medicare Part B premiums will automatically be deducted from your Social Security payments.
If you are not receiving Social Security withdrawals, you will need to enroll yourself in Medicare. There are three ways you can enroll:
- Call Social Security at 1-800-772-1213 (open 24 hours a day)
- Apply online at https://www.ssa.gov/benefits/medicare/. If you are within three months of age 65 or older, you can use this link to enroll with Social Security.
- Visit your local Social Security office.
2. Choose Whether To Continue Employer Coverage
If are already retired or are retiring before your Medicare eligibility, you can move on to the next section.
If you are planning on working beyond age 65, you have some choices to make about whether to enroll in Medicare. Your options will depend on the size of your employer. Here is some helpful information from the Medicare.gov website:
If you aren’t getting benefits from Social Security (or the RRB) at least 4 months before you turn 65, you’ll need to sign up with Social Security to get Parts A and B. However, depending on the size of the employer, you may be able to delay Parts A and B without having to pay a penalty if you enroll later.
The employer has fewer than 20 employees.
You should sign up for Part A and Part B when you’re first eligible. In this case, Medicare pays before your other coverage.
If you don’t enroll when you’re first eligible, you may have to pay a Part B late enrollment penalty, and you may have a gap in coverage if you decide you want Part B later.
The employer has 20 or more employees.
Ask your benefits manager whether you have group health plan coverage (as defined by the IRS). People with group health coverage based on current employment may be able to delay Part A and Part B and won’t have to pay a lifetime late enrollment penalty if they enroll later. If you want to delay both Part A and Part B coverage, you don’t need to do anything when you turn 65.
If you’re eligible for premium-free Part A, you can enroll in Part A at any time after you’re first eligible for Medicare. Your Part A coverage will go back (retroactively) 6 months from when you sign up (but no earlier than the first month you’re eligible for Medicare).
If you aren’t eligible for premium-free Part A, and you don’t buy it when you’re first eligible, you may have to pay a penalty.
Once the employment (or your employer/union coverage) ends, 3 things happen:
- You may be able to get COBRA coverage, which continues your health insurance through the employer’s plan (in most cases for only 18 months) and probably at a higher cost to you.
- You have 8 months to sign up for Part B without a penalty, whether or not you choose COBRA. To sign up for Part B while you’re employed or during the 8 months after employment ends, complete an Application for Enrollment in Part B (CMS-40B) and a Request for Employment Information (CMS-L564). If you choose COBRA, don’t wait until your COBRA ends to enroll in Part B. If you don’t enroll in Part B during the 8 months after the employment ends:
- You may have to pay a penalty for as long as you have Part B.
- You won’t be able to enroll until January 1–March 31, and you’ll have to wait until July 1 of that year before your coverage begins. This may cause a gap in health care coverage.
- If you already have COBRA coverage when you enroll in Medicare, your COBRA will probably end. If you become eligible for COBRA coverage after you’re already enrolled in Medicare, you must be allowed to take the COBRA coverage. It will always be secondary to Medicare (unless you have .
3. Medicare Costs and How They Affect You
The federal Medicare program provides two parts of coverage under Medicare – Part A and Part B. Those two parts of Medicare are listed on your Medicare card. There are actually four parts to Medicare in all. Medicare Part C and Part D are coverages that come from private insurance companies.
Cost for Medicare Part A
Medicare Part A for most people is usually free. There is no premium if you have worked 10+years (40 quarters) in the US. Payroll taxes collected from you during those years qualify you to have Part A at no charge. A pro-rated premium is available if you worked less than 40 quarters work experience but more than 30 quarters.
Cost for Medicare Part B is Based on Income
Medicare Part B (and Part D) premiums are based upon your modified adjusted gross income. Medicare will check your latest IRS tax return and use that to determine what you’ll pay for Parts B & D. The items that contribute to your modified adjusted gross income (MAGI) include any money earned through wages, interest, required minimum dividends from investments, capital gains, Social Security benefits, and tax-deferred pensions. Distributions from Roth IRAs and Roth 401(k)s, life insurance, reverse mortgages, and health savings accounts do not count in the MAGI calculation.
Social Security will send you a letter around the end of each year to tell you what your costs are for the upcoming year. Most Americans fall into the standard income bracket.
To see the current year Medicare Part A and Part B premium, as well as the high-income Medicare costs, go to this page – http://expertmedicare.com/medicare-costs/
4. Which Medicare Plan Should I Choose?
I mentioned that there are four parts to the Medicare program. They are:
- Part A – Inpatient care
- Part B – Physician services and outpatient care
- Part C – Medicare Advantage plans from private insurance companies
- Part D – Prescription drug coverage from private insurance companies
Medicare Advantage Plans (Medicare Part C)
There are generally two types of plans to choose from. The first option is Medicare Advantage plans. These plans have become very popular over the years. Most have low to zero premiums in exchange for using a limited network of providers and paying co-pays for many services. However, out of pocket costs can get very high if you are diagnosed with a serious illness or need chemotherapy and radiation because of a cancer diagnosis. Enrolling in a Medicare Advantage plan replaces Medicare Part A and Part B. I won’t get into the pros and cons of the Medicare Advantage plans here. I have a very detailed article comparing Medicare Advantage plans to original Medicare with a Medicare supplement, or Medigap, plan.
Original Medicare with Medicare Supplement
Your second option is to stay on original Medicare and enroll in a Medicare supplement plan. Under the Medicare Advantage plans mentioned above, your Medicare Part A and Part B are replaced with coverage from a private insurance company. This makes it fall under Part C of Medicare. With a Medicare supplement plan, you stay on Medicare Part A and Part B and choose a Medigap plan from a private insurance company.
There is a difference between the Parts and Plans of Medicare. The Medicare program is divided into Part A through D. Medicare supplements, or Medigap, plans are divided into plans. These are lettered A through N.
Medicare supplement plans offer no drug coverage. Therefore, you will want to also enroll in a Part D prescription drug plan.
Here is a YouTube video that explains the pros and cons of Medicare Advantage plans as well as Medigap plans:
5. An Independent Agent Brings Value
Yes, I know promoting independent agents sounds a little self-serving. But the service of a trustworthy independent insurance agent is free. Also, by shopping all the plans, they can save you money. I know many times people think of insurance agents and immediately picture someone pressuring them and shoving a pen in their face to sign on the line. Although I have seen that happen, it will never happen here. My job is to help you understand how Medicare and the various plans work. Your job is to take that information and make an informed decision.
We would love to earn your business. But we will never pressure you to make a decision. You can take the information here and take your time with it. No one is looking over your shoulder. No one is threatening to not leave your house until you sign up. We can help you enroll in the plan of your choice quickly and easily over the phone. With some companies, online enrollment is an option while still having me as your agent working on your behalf. My goal is for you to see the value in our knowledge and information, and know that we will use that information to help not only now, but into the future as changes come to Medicare over time.
Benefits of Using an Independent Agent:
- Customer service – A trustworthy independent agent will not treat you like a number. A trustworthy agent is going to take care of you. Their livelihood depends on it.
- Value – We will find the best deals possible for you. If an independent agent doesn’t get you the best possible deal for what you are looking for, they face the possibility of you leaving them to get coverage elsewhere. And with rates ranging widely from company to company, we can use our knowledge and resources to find more options than you can on your own. This is what we do every day.
- Knowledge – Insurance is a complicated subject and having someone that deals with it day in and day out can benefit you. Every day, independent agents help people avoid pitfalls that they may not even know to exist. Without seeing the advantages of one plan over another every day as an independent agent does, many people who have no insurance knowledge go with what they think is best without realizing there is something better available. Using an independent agent can save you money by avoiding those pitfalls.
- Trust – If you have an independent agent with integrity, you have someone whom you can consult now and into the future.
- Claims – An independent agent deals directly with the insurance company for you. After all, the independent agent works for you. We have a dedicated claims department to help you deal with any claims that may slip through.
- Unbiased advice – Working with an independent agent can also provide you with much needed, unbiased advice. When you work with a captive agent who can only represent one company and their subsidiaries, they will want you to believe that they are the best option for you. In reality, they may not even be one of the top three or even top ten choices that you should be looking at. We can help you choose among all the best insurance companies in the market.
- Education – There is a lot of information on Medicare.gov, but it can be confusing. And there is no information on individual Medigap policies there. You should understand at least in basic terms what your insurance will do for you. Your agent should make sure you understand the differences between different kinds of coverage. We have many YouTube videos that teach you the ins and outs of how Medicare works.
Contact us today a 1-888-228-6119 or fill out the form with your questions to take advantage of our free plan comparison service.
Keith Murray is an independent agent and the founder of Integrity Senior Solutions Inc. He has over 24 years of experience working with Seniors to meet their insurance and financial needs.