Signing up for Medicare for the first time can be an overwhelming process. Factors to consider include eligibility, enrollment periods, employer coverage, different applications, and more. Understanding these various factors and how they apply to you can go a long way. Here is how to prepare to sign up for Medicare.
It’s helpful to know what Medicare is and your plan options before filing your application. Medicare is a national health insurance program run by the federal government for those 65 years and older. People under 65 with a disability can also enroll in Medicare if they qualify.
The program consists of four main parts: Part A, Part B, Part C, and Part D. There are also Medicare Supplement plans to help cover your share of Medicare expenses. You submit the application for Medicare Part A and Part B first through Social Security.
Part A provides coverage for inpatient hospital services, including hospice care, home health care, semi-private room stays, and more. Part A also applies to some skilled-nursing facility stays.
Part B covers outpatient services, including doctor’s visits, lab work, surgeries, and more. Part B coverage can include services like these in the hospital as well.
Part C is another name for the Medicare Advantage (MA) plan program. Private insurance companies run MA plans. If you enroll in a MA plan, you agree to receive your Part A and Part B benefits through a private insurance company.
MA plans operate within specific network areas and include built-in drug prescription coverage in place of a Part D plan. Advantage plans typically have low monthly premiums.
Part D provides coverage for prescription drug medications. Private insurance companies in each state offer these plans.
Medicare Supplement Plans
Medicare Supplement insurance, also known as Medigap plans, helps cover Medicare expenses. Medicare covers 80% of approved medical services, leaving you with the remaining 20%. However, Medigap plans help cover all or some of the 20%, depending on your plan. After Medicare pays its portion, Medigap plans help cover the “gaps” in coverage.
Currently, there are 10 Medigap plans to choose from: Plan A, Plan B, Plan C, Plan D, Plan F, Plan G, Plan K, Plan L, Plan M, and Plan N. The most popular plans are Plan F, Plan G, and Plan N as these offer the most comprehensive coverage. However, Plan F is only available to those eligible for Medicare before January 1, 2020.
After you have applied for and are enrolled in Part A and Part B, you can look at your plan options. One option is to enroll in a Medigap plan and a Part D plan. Medigap plans do not provide prescription drug coverage, so pairing it with a Part D plan will help cover your medications. Keep in mind each prescription drug plan has a drug formulary (list of covered medications), so make sure you choose a plan that covers all your prescription drugs.
Your other option is to enroll in an Advantage plan. Most Advantage plans include drug prescriptions coverage, so you will likely not need to register for a Part D plan in this situation. Be aware that you cannot enroll in a Medigap plan and an Advantage plan at the same time.
It’s also important to understand Medicare eligibility. Anyone 65 and older is eligible for Medicare. You must also be a US citizen or permanent resident who has lived in the US for five years or more. Your work history and current employment is not a factor in your eligibility.
It is also possible to be eligible for Medicare under 65. However, you must meet specific requirements. For example, anyone with End-Stage Renal Disease (ESRD) who receives dialysis treatment regularly or needs a kidney transplant is eligible for Medicare.
When to Enroll
Once you know that you’re eligible for Medicare, the next step is to know when to enroll. There are different Medicare enrollment periods meant for various reasons. Let’s look at the ones most important to first-time Medicare enrollment.
Initial Enrollment Period
The enrollment period you will likely need to focus on is your Initial Enrollment Period (IEP). The IEP is a 7-month long window to enroll in Part A and Part B for Original Medicare.
Your IEP begins three months before your 65th birthday month and ends three months after your 65th birthday month. For example, if your birthday is in April, your IEP will start in January and end in July. You will also want to enroll in a Medigap plan and a Part D plan or a Medicare Advantage plan during this time.
General Enrollment Period
If you miss your IEP, you will likely be subject to late enrollment penalties. These are permanent penalties that last a lifetime. Additionally, you will need to enroll in Part A and Part B during the General Enrollment Period (GEP). This period takes place each year from January 1 to March 31. If you enroll during this period, your coverage will not start until July 1.
Special Enrollment Period
You can choose to delay all parts of Medicare if you’re eligible for a Special Enrollment Period (SEP). A SEP is used for specific situations. You may be able to use one SEP to delay Medicare past 65 with large employer coverage.
Large Employer Coverage
If you or your spouse actively work for an employer with more than 20 employees and are covered under that employer’s group health plan, you can delay all parts of Medicare past 65 without penalty. You would not need to apply for Medicare. The employer insurance would be your primary insurance, and Medicare would be your secondary insurance. This means the employer insurance will pay first for medical services, and Medicare will pay second.
However, some people still choose to enroll in Part A because Part A is $0 in most cases. Enrolling in Part A can coordinate with your employer coverage to lower the costs for a hospital stay. To qualify for a $0 Part A premium, you need to have worked in the U.S. for at least ten years (40 quarters) and paid payroll taxes during that time. However, you will want to delay Part A if you plan to contribute to a Health Savings Account (HSA) as this will cause issues.
Small Employer Coverage
Working for a smaller employer works differently. If you or your spouse actively works for an employer with 20 or fewer employees, you do not qualify for a SEP. If you don’t qualify, you will need to register for Medicare Part A and Part B during your IEP to avoid any penalties. Medicare will be your primary coverage, and your employer coverage will be secondary.
It is also possible to be automatically enrolled in Medicare. Suppose you’ve been receiving Social Security benefits for at least four months before your 65th birthday month. In that case, you should automatically be enrolled in Part A and Part B. If you have been receiving Social Security Disability Insurance benefits for at least 24 months, you should also be enrolled in Part A and Part B automatically.
You should not need to apply for Part A and Part B in both scenarios. However, you would still need to enroll in a Medigap plan and a Part D plan or an Advantage plan on your own. As mentioned earlier, you can also choose to delay Medicare if you have creditable coverage.
The best way to prepare is to know the basics of the Medicare enrollment process. You can do this by understanding Medicare eligibility, the different parts of Medicare, and your plan options. Once you grasp this, make sure you know when to enroll, so you don’t accrue any penalties.