If You Turned 65 Last Year, Take Note: Medicare General Enrollment Period
The Medicare general enrollment period closes at the end of this month. If you turned 65 last year but missed your initial enrollment period and are not currently covered by your or your spouse’s employer-sponsored health plan, the general enrollment period is your last chance to enroll in Medicare until January of 2022. Here’s what those who are newly eligible for Medicare (or soon will be) should know about the sign-up process and the program.
The Important Differences – And Deadlines – Between the Medicare Initial Enrollment Period, General Enrollment Period and Open Enrollment
Your initial enrollment period is when you are first required to enroll in Medicare. It is based on your age or when you leave your or your spouse’s employer’s group health insurance plan. You must enroll in Medicare within the seven-month period starting three months prior to the month you reach age 65 and ending three months after the month you reach age 65. If you fail to enroll during your initial enrollment period, you will pay a lifelong 10% surcharge for each yearlong period that you were eligible for Medicare coverage but didn’t get it – not to mention that you may face a dangerous gap in health care coverage.
You can delay enrollment if you are covered by your or your spouse’s employer’s group health insurance plan, but only if the employer has 20 or more employees. It’s also important to note that COBRA is not treated as a group health insurance plan for purposes of avoiding the late enrollment penalty.
If you’re enrolled in your former employer’s retiree health insurance plan, check with your provider to see if enrollment in Medicare Part B is required and how your plan coordinates with Medicare. If you are required to enroll in Part B and fail to do so, you may find that your retiree plan will not pay for services Medicare would have covered if you had enrolled.
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The general enrollment period runs from January 1st through March 31st each year, and is the time when those who have missed their initial enrollment period can still enroll in Medicare for the first time – but it’s important to know that coverage won’t begin until July 1.
Medicare open enrollment is when people who are already on Medicare can make changes to their existing health and drug coverage or plan provider. The open enrollment period runs from October 15th through December 7th.
Understanding and Choosing Your Medicare Coverage Options
The first step in selecting a Medicare plan is to understand the various coverage choices.
Medicare Part A, also called hospital insurance, covers care in a hospital, skilled nursing facility, and hospice. It provides limited coverage for nursing home and home health services.
Medicare Part B covers doctor visits, lab tests, outpatient surgeries, preventative care, telehealth, and medically necessary services and equipment. Together, Medicare Part A and Part B are often referred to as Original or traditional Medicare.
Medicare Part C, commonly known as Medicare Advantage, is the managed care alternative to Original Medicare that private insurance companies and health providers offer through Part C plans. The benefits and services provided by Medicare Parts A and B are included in Part C plans, but Part C plans also include telehealth coverage and may cover other services such as dental, hearing, and vision care.
Also, since 2019, health insurance companies that offer Part C plans can create managed care plans that target specific types of illnesses, such as diabetes and end-stage renal disease. Part C plans are usually a health maintenance organization (HMO) plan or a preferred provider organization (PPO) plan. With an HMO plan, you will select a primary care doctor; except for emergencies, that doctor will refer you only to health providers within the HMO network. With a PPO, you have the option of getting care outside the network, but your copay will be higher than for visits to in-network providers.
Medicare Part D is Medicare’s prescription drug benefit, and is the newest part of Medicare. Private health insurance companies offer stand-alone Part D plans for individuals who have Original Medicare. Most Part C plans include a prescription drug benefit.
Medigap is also called Medicare supplement insurance. It is not a separate part of Medicare. Medigap plans fill the cost sharing associated with the coinsurance and deductibles in Original Medicare. Private health insurance companies offer standardized Medigap plans, and each type of plan is identified by an alphabet letter. Although the benefits provided by Medigap plans are standardized, the premiums can vary by geographic area.
There are 10 types of Medigap plans, but only eight are available to new Medicare enrollees. Medigap Plans C and F are no longer available to new enrollees as of December 31, 2019, because of a change in federal law that prohibits Medigap plans from covering the Part B deductible. Medicare enrollees who had Plan C or Plan F prior to December 31, 2019, can maintain either Medigap plan. You cannot have a Medigap plan if you choose to receive your health care through a Medicare Advantage plan.
Paying for Medicare
Medicare is not free. To determine your estimated cost of Medicare coverage, you can review the information available at www.medicare.gov/your-medicare-costs. Most people do not pay a premium for Medicare Part A because they paid payroll taxes while they were working. However, there are premiums for Medicare Parts B, C and D, and for Medigap plans.
If you are already receiving social security benefits, Part B and Part D premiums may be deducted automatically from your monthly payment. The premium for Part C (Medicare Advantage), which includes both Part A and Part B, will depend upon the plan. Remember, you are still enrolled in Medicare even if you choose to have your benefits delivered through Part C. This means your Part C premium will include the Part B premium (and a Part A premium if you or your spouse do not have a sufficient work history). You are also responsible for deductibles, copayments, and/or coinsurance charged by Part D, Medicare Advantage, and Medigap plans.
To compare the costs and ratings of various Medicare Advantage and drug prescription plans, visit the Medicare website at www.medicare.gov/plan-compare. You can compare the costs of Medigap plans at www.medicare.gov/supplements-other-insurance/how-to-compare-medigap-policies. Once you’ve narrowed down your choices, contact the providers for more information on the differences between plans.
Presented by Vice President, Associate Financial Advisor Leisl L. Cording, CFP®. Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your representative. Weiss, Hale & Zahansky Strategic Wealth Advisors does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice. 697 Pomfret Street, Pomfret Center, CT 06259, 860-928-2341. http://www.whzwealth.com. © 2021 Commonwealth Financial Network®
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