I am getting ready to retire and confused with how to approach the labyrinth of Medicare. I read that there is a penalty for not signing up for Medicare when you turn 65. Well, I’m 70 and I have Part A only, not Part B. I’ve always carried my employer insurance, but I won’t have the option to keep it once I leave. Any advice?
-Beth (Bel Air, MD)
This a great question! With so much information floating around it can be difficult to understand what you should really do next. I know retirement is right around the corner, so let’s analyze your situation.
First, once you turned 65, you were eligible to enroll in Original Medicare (Part A and B) during your Initial Election Period (IEP). Your IEP is a 7-month window that surrounds your 65th birthday, beginning 3 months before and ending 3 months after your birth month. Some people who do not pick up Original Medicare during this time may be penalized and/or must wait until the General Election Period (GEP) to enroll in it. The GEP for those who missed their IEP is January 1st to March 31st of each year. However, beginning in 2023 Social Security may allow some to enroll sooner based on individual circumstances.
Now, if the coverage you carried through your employer was considered credible, you’re not subject to penalties and won’t need to wait longer to pick up Part B. Usually your employer will send out an annual notice that informs you whether the coverage you carry is considered credible. If you do not have this statement, be sure to contact your benefits administrator or Human Resources office.
If your coverage is credible, you can proceed to the next step which would be applying for Part B of Medicare. You can do this by calling Social Security or going online to ssa.gov. You will have an 8-month window following your loss of coverage or retirement date (whichever happens sooner) to apply for Part B. Be sure to keep any notices you receive about your employer coverage because you will have to present Social Security with proof that you were covered from the time you turned 65 until now.
Most people receive Part A premium-free, but Part B does have a standard premium of $170.10. Part A and B are hospital and medical insurance, also known as Original Medicare. There are many things that Original Medicare does not cover like prescriptions, routine dental, vision, etc.
Since Original Medicare does not cover everything, most people pick up either a Medicare Advantage Plan (Part C) or a Medicare Supplement Plan (Medigap) to help lower their out-of-pocket costs. Keep in mind that neither of these options are mandatory to enroll in, and there is no penalty for choosing not to enroll.
However, if you do not pick up prescription coverage (Part D) within 63 days of losing your employer coverage, you may be penalized later or have to wait longer to pick up drug coverage. Drug coverage can be purchased as a stand-alone Prescription Drug Plan, or as part of a Medicare Advantage Plan.
When looking at additional coverage options, many people ask, “What’s better, a Medicare Advantage Plan or a Prescription Drug Plan?” Although this is a valid question, the answer really depends on the person asking the question since everyone’s needs are different. Below you will find a helpful chart to aid you in comparing your options. I hope this helps as you start your journey with Medicare, Beth!
-Your Medicare Advisor
|Medicare Supplement (Medigap)||Medicare Advantage (Part C)|
|How they work||Works with your Original Medicare benefits (Parts A & B)||Replaces your Original Medicare benefits (Parts A & B)|
|Eligibility||Must have Medicare Parts A & B||Must have Medicare Parts A & B and live in the service area1|
|Enrollment||May apply for coverage year-round||Has specific enrollment periods2|
|Underwriting||Subject to Medical Underwriting3 if applying outside of an Open Enrollment4 Period or Guaranteed Issue period 5 (state specific exceptions may apply)||No underwriting requirements|
|Premiums||Often higher premiums but may have little to no out-of-pocket expenses for Medicare approved services||Often lower premiums but may have deductibles, copays, and coinsurance for Medicare approved services|
|Network||No network- can see any provider throughout the country that accepts Original Medicare||Network plans (HMO, PPO, PFFS): the provider must agree to accept the plan unless in an emergency/urgent situation|
|Insurance cards||Use both your Medicare card and Supplement insurance card for medical services- you will have a separate card for prescriptions (if you purchased Part D)||Use only your Medicare Advantage insurance card for medical services and prescriptions (if included in plan).|
|Portability||Can be used in any US state or territory. Some plans offer foreign travel emergency benefits for international travelers.||Emergencies and urgent services are covered when travelling domestically or internationally (up to plan limits). Routine services may not be covered when travelling|
|Prescriptions||Prescription drugs are not covered. May purchase a Stand-alone Prescription Drug plan (Part D) at an additional cost||These plans can be purchased with or without prescription drug coverage|
|Additional Benefits||Not covered||May offer additional benefits like Dental, Vision, OTC allowance, Hearing, etc.|
|Renewability||Guaranteed renewable6 if you pay the premium when due||Plans are subject to change each year|
1. Service area: A geographic area where the plan accepts members. The plan may limit membership based on where people live.
2. Enrollment period: Defined period of time with a specific start and end date for registering in a plan to receive benefits.
3. Medical Underwriting: A process used by insurance companies to try to figure out your health status when you’re applying for health insurance coverage to determine whether to offer you coverage, and at what price.
4. Open Enrollment Period: This period automatically starts the first month you have Medicare Part B
5. Guaranteed Issue: Rights you have in certain situations when insurance companies must offer you certain Medigap policies.
6. Guaranteed Renewable: Once you are a member, the insurance company can’t cancel your Medigap policy if you pay the premium when due.
If you would like to review specific plan options, the licensed agents at AMAC are happy to assist you. We are licensed with top-rated insurers throughout the country.
Call 1-855-611-4856 or request a quote below!