Medicare is a beast of a topic, and many people are overwhelmed when they dive into it initially. With so many parts, enrollment periods, and regulations, it can take a while to fully grasp the Medicare program. The good news is, when you’re starting out, there are only a few important facts about Medicare you need to remember, and these are the top five.
1. You’ll likely need to apply for Medicare during your Initial Enrollment Period
While a select few can skip their Initial Enrollment Period (IEP) and enroll in Medicare Part A and Part B later, most people should enroll during their IEP. Your IEP is based on your 65th birthday month.
The enrollment period starts on the 1st of the month three months before your 65th birthday month (four months before if your birthday is on the 1st) and ends three months after your 65th birthday month (two months after if your birthday is on the 1st). For example, if your birthday is on June 16th, your IEP starts on March 1st and ends on September 30th. If your birthday is on June 1st, your IEP starts on February 1st and ends on August 31st.
If you or your spouse continue to actively work past 65 for an employer that has 20+ employees and their insurance covers you, then you can delay Medicare past your IEP without penalty. If you have any other type of coverage, you’ll likely need to enroll during your IEP to avoid penalties.
2. Original Medicare has cost-sharing expenses you’re responsible for
Original Medicare includes Part A and Part B. Both of these parts of Medicare have deductibles, copays, coinsurance, and other cost-sharing expenses that come out of your pocket. Many new Medicare beneficiaries are surprised when they find out Medicare has premiums, let alone cost-sharing expenses. Also, there is no cap to how much you can spend in a year on cost-sharing expenses.
However, there is a way around this. If you enroll in a Medigap plan, most of these cost-sharing expenses are covered for you by a private insurance carrier. For example, Medigap Plan G will cover all of your Original Medicare cost-sharing expenses except for the Part B annual deductible. Another option you have is enrolling in a Medicare Advantage plan. While these plans still have cost-sharing expenses, they have a maximum out of pocket that will limit your spending for the year.
3. You still have to have Part B if you have a Medicare Advantage plan
A common misconception people have about Medicare Advantage plans is that they don’t have to continue to pay for Part B if they have this type of plan. People often think this because Medicare Advantage plans take over their Part A and Part B coverage. However, failing to pay your Part B premium would result in the loss of your Part B, and therefore, the loss of your Medicare Advantage plan.
To enroll in and keep your Medicare Advantage plan, you must be enrolled in Part A and Part B. The same is true for Medigap plans as well.
4. All Part D plans have the coverage gap
Medicare Part D plans, although sold by private insurance carriers, are regulated by Medicare itself. Therefore, Medicare sets the maximum deductible, coverage requirements, and overall cost structure each year. While prices, covered drugs, and other things can vary by plan, all Part D plans share the same structure; they all have a deductible, initial coverage, coverage gap, and catastrophic coverage stage.
Therefore, if you take several medications or a few expensive medications, you may experience the coverage gap, or donut hole, each year. However, if you take no medications or only a few inexpensive ones, you likely won’t enter the coverage gap.
5. The Annual Election Period is not for Medigap Open Enrollment
Most Medicare beneficiaries have just one opportunity to enroll in a Medigap plan without having to answer health questions. This one chance is known as your Medigap Open Enrollment. Your Medigap Open Enrollment starts on your Part B effective date and ends six months later. For example, if your Part B begins on June 1st, your Medigap Open Enrollment goes from June 1st until November 30th.
The Annual Election Period (AEP), which occurs from October 15th until December 7th each year, is not another Medigap Open Enrollment window. The AEP is for enrolling in, changing, and dropping Medicare Advantage and Part D plans. While you can apply for a Medigap plan during this timeframe, you will likely have to answer health questions and could be turned down for a pre-existing condition.
With the various important details Medicare has, it’s no wonder why so many feel overwhelmed when starting out. However, it’s essential you educate yourself on how Medicare works as certain Medicare mistakes can cost you time, money, and stress.
